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How to Lease Commercial Property in Jersey
While the terminology may seem quite familiar to real estate practitioners in the United Kingdom and elsewhere, the legal practice of Jersey commercial leases can be very different.
There are many great reasons to lease commercial property in Jersey. After all, house prices on the island continue to rise at a steady pace (so your investment will likely be very profitable) and, no matter where you are, you’re never far from the beach.
However, there are also some important things to bear in mind with regards to the law and the way things need to be done. So, here’s a brief overview of what to expect when entering into a commercial lease in Jersey.
1. Figure Out the Terms of Your Lease
Commercial leases for a term in excess of nine years must be passed before the Royal Court of Jersey on a Friday afternoon. Under Jersey law, a commercial lease with a term of nine years or less can sorted out without the formality of attending the Royal Court of Jersey. These can be completed on any day by the parties executing the lease document itself.
2. Understand the Security of Your Tenure
In Jersey, there is no equivalent to statutory legislation such as the UK Landlord and Tenant Act 1954 relating to a prima facie right to remain in commercial premises after the expiry of a lease.
However, under Jersey law, if a tenant remains in occupation after expiry of the term and rent continues to be accepted, a new tenancy may be deemed to arise on identical terms, save as to guarantors.
3. Learn About Lease Assignment
There is no presumption under Jersey law that a tenant may assign a lease without the consent of the landlord.
Jersey has no equivalent to statutory overrides such as section 19 of the UK’s Landlord and Tenant Act 1927, which includes a qualified tenant’s covenant against assigning the lease. In this case, there is a statutory duty on a landlord not to unreasonably refuse consent. In Jersey, this is not the case and the contract lease will govern this.
4. Know What to Do in the Event of Breach or Termination
Jersey has no concept of forfeiture of leases. The landlord is likely to have the right to cancel the lease on specified grounds if the tenant is in breach, subject to obtaining an appropriate court order. There is no equivalent of the UK Law of Property Act 1925 section 146’s procedures.
5. Make Sure That You Pay the Right Tax
There are certain tax laws which make Jersey very attractive for businesses. For example, unlike the UK, there is no capital gains tax in Jersey.
However, Goods and Services Tax (GST) may be payable on commercial leases. This is currently 5% on rental, though there are exceptions to this. International service entities (such as banks, trust companies and other financial institutions who have been granted such an exemption) will not incur GST.
Non-resident landlords are taxed at a rate of 20% on rental income derived from Jersey property. Then there is stamp duty on leases, which is payable if the term of the lease exceeds nine years.
6. Hire The Best Lawyers in Jersey
If you want to lease commercial property, then a lawyer in Jersey is a must. Ideally, you should be doing this wherever you purchase property in any country but, in Jersey, it’s especially important. Jersey law is a complicated thing. After all, the island’s independent status has its roots in a battle that the English lost to the French in the 13th Century. When your country’s complicated relationship with the British government is that old, you’re going to need a lawyer to help you figure it out.
Different lawyers in Jersey specialise in different areas of law, so you’ll want to make sure that your Jersey lawyer knows property law. It’s also worth bearing in mind that some Jersey law firms specialise in several different areas of law with several different kinds of lawyer.
Be sure to hire a law firm or a lawyer in Jersey that knows how to look at Jersey law from a top-down perspective, as well as focus on property law specifically. Legal issues in Jersey can get complicated fast, so you want a person, or a team, that knows how to navigate the whole system.
About the author
Carl Parslow is a Jersey-based lawyer who specialises in property. Carl is the managing partner at the law firm Parslows, where he and his team specialise in giving expert advice on all things relating to Jersey law.