When and how is rent paid?

As well as stating that rent is payable, the demise should set out how and when the rent is to be paid. The most common arrangement is for rent to be paid quarterly, in advance. Most leases require rent to be paid on “the usual quarter days” (25 March, 24 June, 29 September and 25 December), although some landlords specify other quarterly payment dates. Most landlords also require rent to be paid by direct debit.

What does the rent include?

The demise will normally list a number of items that will be treated as rent:

• The principal rent – the yearly rent agreed for the Property. If the lease has rent review provisions, the definition of principal rent should include the rent as reviewed from time to time. The lease should also state expressly that the principal rent is exclusive of VAT (see VAT on rent).
• Insurance rent – the amount the landlord is entitled to recover from the tenant in insuring the Property as required by the lease (see Insurance).
• Service charge – this will be calculated by reference to the relevant part of the lease (see Service charge).
• Interest on any payments the tenant makes late (see Interest)
• VAT on the rent (see VAT on rent)

VAT on rent

The landlord may charge VAT on rent if it has elected to waive the exemption from VAT in relation to the Property. [Will there be a general note that detailed consideration of tax is outside the scope of this section?] The landlord will want to charge VAT in addition to the principal rent agreed.

The lease should also include a tenant’s covenant to pay rent, VAT and interest.