Premium tenancies are created outside of statute law and are thus governed by common law.
Premium Leases are bought for a tenancy term.
The price or consideration is the premium paid – in advance.
There is no break clause nor entitlement to a refund for any unexpired use. However, importantly, such a lease is intrinsically valuable and can be sold or reassigned to recover any loss.
Essentially the premium is an advanced rent but it is called a premium for tax reasons.
The rent is small – a peppercorn rent.
The low rent is reflected by the advanced disproportionally large up front payment – known as front loading, like top slicing.
The rent may be as little as £1 and is also known as the consideration. This arrangement can have tax advantages for employees in a company let, since the rent is low the taxable benefit is negligible resulting in less tax for the employee to pay. In 2009 saw reforms to outlaw such aggressive tax avoidance.