CAYMAN ISLANDS Law and Practice Contributed by: Adam Johnson, Appleby
6.7 Payment of VAT No VAT is payable on rent, although stamp duty is payable on the lease. Stamp duty is usually paid by the tenant and is calcu - lated at the following ad valorem rates: • if the term exceeds 30 years, 7.5% of the full market value of the leasehold interest in the real property; or • if the term is 30 years or less: (a) where any premium or valuable consideration other than or in addition to rent us provided, 7.5% of the amount of the premium; and (b) where the consideration or any part of the con - sideration is rent: (i) if the term is less than one year, 5% of the aggregate rent; (ii) if the term is between one and five years, 5% of the average annual rent or of mar - ket rent, whichever is higher; (iii) if the term is between five and ten years, 10% of the average annual rent or of mar - ket rent, whichever is higher; or (iv) if the term exceeds ten years, 20% of the average annual rent or of market rent, whichever is higher. 6.8 Costs Payable by a Tenant at the Start of a Lease Stamp duty (see 6.7 Payment of VAT ), any registration fees (nominal) and a security deposit are typically paid by the tenant at the start of the lease. 6.9 Payment of Maintenance and Repair It is common for the lease to assign responsibility to the landlord for the maintenance and insurance of the common areas, and the landlord typically recovers their costs from the tenant through rent or common area maintenance charges. 6.10 Payment of Utilities and Telecommunications Where tenants have not purchased their electricity, water, gas and telecommunications services directly from suppliers, they will typically pay a share of these services provided by the landlord by reference to the
• to permit the landlord or their agent, with or without workers or others, at all convenient times and after reasonable notice, to enter the leased premises and examine their condition; • to repair or otherwise make good any defect or breach of agreement for which the tenant is responsible and of which notice has been given by the landlord to the tenant, within such reasonable period as may be specified in the notice; and • not to transfer, charge, sublease or otherwise part with the possession of the leased premises or any part thereof without the previous written consent of the landlord (such consent shall not be unreason - able withheld). 6.4 Typical Terms of a Lease Because of the stamp duty treatment on the grant of longer leases (see 6.7 Payment of VAT ), a lease term of five years (or less) is relatively common and may include an option for the parties to renew for one or two further terms. Responsibility for repairing the demised premises is typically assigned to the tenant. The landlord is usually under an obligation to insure and maintain the build - ing and the common parts, and will usually recoup these costs from the tenant through rental payments or common area maintenance charges. Although always subject to agreement between the parties, rent is commonly paid monthly or quarterly in advance or arrears. Following the outbreak of the COVID-19 pandemic, parties are advised to pay close attention to force majeure and rent abatement provisions when negoti - ating new leases. 6.5 Rent Variation It is typical for commercial leases to make provisions for rent to be reviewed. 6.6 Determination of New Rent Typically, rent is reviewed in line with the consumer price index (CPI), by a fixed percentage or by market review.
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