BERMUDA Law and Practice Contributed by: E Scott Swainson, Katrina Dickson and Erik Gotfredsen, Wakefield Quin Limited
6.7 Payment of VAT No VAT is payable on rent. Stamp duty on the lease document is paid based on the aggregate rent; see 2.10 Taxes Applicable to a Transac- tion . 6.8 Costs Payable by a Tenant at the Start of a Lease Many tenants will pay a material amount to fit out. Generally, they are required to remove that fit out upon expiry, unless the landlord agrees it may remain. A landlord will occasionally ask for a security deposit or parent guarantee, dependent on relative bargaining strength. If a unit is rented via a realtor, the landlord often pays one month’s rent as commission; such commission is occasionally absorbed by the tenant. 6.9 Payment of Maintenance and Repair Multi-Let Buildings The main structure and common areas are typically insured and maintained by the land - lord, with the costs of such maintenance being recouped from the various tenants via a service Some tenants negotiate a lesser rent in return for bearing all costs typically paid by a landlord (eg, structural repair, landscaping, insurance and property taxes). Maintenance Recovery The proportion of maintenance fees payable is typically based on the square footage of the area leased to each tenant, or fees are split equally. Service fees may be divided according to annual rental value (ARV) (relative size/value) on estates where there are radically different classes of accommodation. charge/maintenance fee. Single Tenant Buildings
Rents are generally paid monthly in advance. Service charge costs are generally paid monthly or quarterly in advance. Frustrating Events English common law does not assume that a lease is frustrated if premises are destroyed by force majeure events. In the absence of an express term, rent suspension and the ability to break a lease are not implied and the ten - ant remains liable to pay rent even after a total destruction. Rent Suspension and Break Options Most Bermuda leases include a suspension of rent to the extent that premises are rendered incapable of use due to an insured loss. Bermuda landlords may insure for loss of rent and often do so with grade A office space. The landlord will seek to recover the insurance pre - mium from tenants, which is often agreed on the understanding that the insured period matches the rent suspension period and that either party may break the lease once the loss of rent period has expired if the property is not then reinstated; see 6.12 Insurance Issues . 6.5 Rent Variation Rent review provisions during the term are com - mon with commercial leases that are granted for more than five years. Rents of residential units are often revised on term expiry. 6.6 Determination of New Rent Rent is generally either reviewed at open market rents, based on comparable rents at the time of renewal, or are increased in line with the con - sumer price index. Generally, rent adjustments are upwards only.
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