(1)The following rules apply for determining the effective duration of a lease for the purposes of this Chapter.
Rule 1: A lease is not to be treated as having been granted for a term longer than one ending on a date before the end of the term for which the lease was granted if—
(a)—the terms of the lease or any other circumstances make it unlikely that the lease will continue beyond that date, and
(b)—the premium was not substantially greater than it would have been had the term been one ending on that date.
Rule 2: If the terms of the lease include provision for the extension of the lease beyond a given date by notice given by the tenant, account may be taken of any circumstances making it likely that the lease will be so extended.
Rule 3: If the tenant or a person connected with the tenant is, or may become, entitled to a further lease or the grant of a further lease (whenever commencing)—
(a) of the same premises, or
(b) of premises including the whole or part of the same premises,
the term of the lease may be treated as continuing until the end of the term of the further lease.
(2)The rules are to be applied in accordance with section 304.
(3)In this section and section 304, in relation to Scotland, “term”, where referring to the duration of a lease, means period.
Modifications etc. (not altering text)
C1S. 303 applied by 2001 c. 2, s. 360I(3)(a) (as inserted (7.4.2005 with effect in relation to expenditure incurred on or after 11.4.2007) by Finance Act 2005 (c. 7). s. 92, {Sch. 6 para. 1}; S.I. 2007/949, art. 2