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As Sean Randall's timely article Call of (lease) duty reminds us the abnormal rent increase provisions start to bite as stamp duty land tax leases granted on or after 1 December 2003 become five years old.
The current provisions introduced in 2006 appear benign compared with those in FA 2003. Rents can increase at 20% a year on average before those increases are judged abnormal. We have to go back to 1980 to find inflation at that level.
Unfortunately the provisions contain some nasty anomalies and it is important to structure lease arrangements in ways that mitigate their effects. But let's start with a reminder of the rules. All references are to FA 2003 Sch 17A.
The test
Only rent increases after the first five years of the term need to be tested for abnormality (para14(1)). Remember that the 'first five years...
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