This abbreviated guide explains how to complete Legalo’s Deed of Surrender of Lease template, which should be used where the landlord and tenant have agreed to terminate the lease early. For a lease that is registered at the Land Registry, you can use a TR1 to surrender it, but most parties prefer to use a deed of surrender, as it is a more appropriate form to use as a starting point (and indeed it is recommended by the Land Registry). (The full guide to our deed of surrender comes with the template when you purchase it.)
As the guide explains, our template deed of surrender has various options built in, so it works if:
1. another person has guaranteed the obligations of the tenant in the lease or not;
2. either party registered the lease with the Land Registry or not;
3. the Landlord & Tenant (Covenants) Act 1995, section 1(3) classes the lease as “old” or “new”; or
4. the tenant has security of tenure (i.e. the right to extend its lease as it expires) or not.
This template is meant for surrendering the whole of the leased site, but, with suitable adaptation, you can use it as a surrender of part of the leased site.
If the landlord is granting alternative premises to the tenant along with the surrender, then do this in a separate document (to be signed at the same time as the surrender deed) by a separate lease for the alternative premises. A lease template can be downloaded from Legalo’s website.
For leases registered at the Land Registry
If a party has registered the original lease, then the landlord can close the Land Registry title for the lease. To do so he can use a form TR1 (signed by tenant and landlord), instead of a deed of surrender signed by both. However, the Land Registry themselves recommend that you use a deed of surrender, such as our template. You will also need a form AP1 as your application to the Land Registry (downloadable from the Land Registry’s website for free). You register it and pay the applicable Land Registry fee. The fees are shown here: https://www.gov.uk/guidance/land-registry-registration-services-fees#leases
For further details on how to register it with the Land Registry, see: https://www.gov.uk/government/publications/leases-determination/practice-guide-26-leases-determination#determination-on-surrender-by-deed. See in particular part 4 and, for the payment of Stamp Duty Land Tax on surrender (or SDLT), see part 4.2.
If the tenant is not paying the landlord a fee for accepting the surrender, then it may be that it falls into the category of “not requiring notification to Her Majesty’s Revenue and Customs”. Therefore there will be no SDLT to be paid. If so, you include a note explaining why it does when you apply to the Land Registry for registration of the surrender.
Guide to Clauses in the Deed of Surrender of Lease
The remainder of this page is an excerpt from the guide to our deed of surrender.
Land Registry – Complete the details of the registration that apply if a party has registered either the freehold title or the lease. Then delete the bits that are not relevant.
Date – Type in only the year for now, then fill in the rest once the agreement has been signed.
Party clauses – Complete the details of the landlord (party 1), the tenant (party 2), and, if there is a guarantor of the lease, the guarantor (party 3), or, if not, remove party 3.
(B) You can delete this paragraph if no-one has guaranteed the lease.
Numbered clauses in the Deed of Surrender
In this clause we explain the principal terms in the template.
- Guarantee – where this applies, complete the relevant details for the guarantee. If the lease contains the guarantee, then the definition can be deleted.
- Lease – complete as applicable.
- Property – fill in the premises’ address. If this lease lets only part of a building, set out what part.
- Rent – if the tenant is yet to pay some rent to the landlord in accordance with clause 5.1.2 or if the landlord is to refund some rent to the tenant in accordance with clause 3.1, then keep this definition. If neither applies, then it can be deleted.
- Service Charge – if the landlord is to refund part of the service charge to the tenant in accordance with clause 3.1, this definition should be used. If not, then it can be deleted.
For 2.1.1, if the landlord is making a payment to tenant or vice versa, then fill in the details. NB VAT would not normally apply to such a payment, unless the party receiving the payment has opted to tax the property to VAT, in which case that party should produce a VAT invoice for the party making the payment. If there is no such VAT here, it would be best to specify this. In clause 2.1, if clause 4.2 doesn’t apply, delete the reference to it here.
3. Refund of advance rent, etc
If the landlord agrees to refund any rent and / or service charge, then complete the details. Otherwise, delete clause 3.
This clause provides for the parties to release each other. If there is no guarantor, delete 4.2. If there is a guarantor, then in clause 4.2 select the correct document that contained the guarantee: either the Guarantee as defined in clause 1.1 or the Lease. When there are actual or potential liabilities (including ones perhaps unknown at present to one or more of the parties) that have not been paid for (e.g. for breaches of the lease), then keep the words at the end of clauses 4.1, 4.2 and 4.3 where applicable.
If the tenant is making a payment to the landlord for the surrender, then insert the details in clause 5.1.1. The tenant might owe some rent or other money to the landlord. For example this might be for service charges or in compensation for repairs or redecoration that it has not carried out (called “dilapidations”). If so, then fill in the details in clause 5.1.2. If neither applies, delete all of clause 5.
6. Documents and the Land Registry
If the lease registered at the Land Registry and/or noted against the landlord’s title, you need to register the surrender. Delete clause 6 if neither the lease, nor the landlord’s freehold title, have been registered at the Land Registry. If you keep the clause, then note in clause 6.1.2 if there are any other documents that the tenant must give to the landlord. Also note if the tenant is paying the applicable registration fees that the Land Registry will charge.