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Proprietary leases.
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7.— (1) In this Act “proprietary lease” means a lease in respect of which the conditions specified in subsection (2) of this section are complied with and includes a lease which is deemed to be a proprietary lease by subsection (4) of this section.
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(2) The following are the conditions to be complied with:
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(a) that the lease is a sublease (whether mediate or immediate) under a building lease; and
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(b) that the land demised by the lease is the whole or part of the land comprised in such building lease; and
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(c) that the lease—
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(i) is made for a term of not less than ninety-nine years, or
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(ii) if made for a term of less than ninety-nine years, is made for a term which equals or exceeds whichever of the following periods is the lesser, that is to say, twenty years or two-thirds of the term of such building lease, and in any case expires at the same time as, or not more than fifteen years before, the expiration of such building lease; and
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(d) that the lease was made—
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(i) partly in consideration of the payment of a sum of money (other than rent) by the lessee to the lessor at or immediately before the grant of the lease, and, for this purpose, any money paid in redemption of any part of the annual rent reserved by the lease (whether such money is paid in pursuance of a covenant contained in the lease or pursuant to an agreement made between the lessee and the lessor during the currency of the lease) shall be deemed to be part of such consideration, or
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(ii) partly in consideration of the expenditure (otherwise than on decoration) of a sum of money by the lessee on the premises demised by the lease, or
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(iii) partly in consideration of both such payment and such expenditure; and
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(e) that the said sum of money so paid or expended or the total of the said sums of money so respectively paid and expended (as the case may be) was not less than fifteen times the yearly amount of the rent or the greatest rent reserved by the lease.
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(3) In determining the greatest rent reserved by a lease the following provisions shall have effect:
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(a) where during the currency of a lease part of the annual rent reserved thereby is redeemed by a capital payment, the reduced rent shall be deemed to be the greatest rent reserved by the lease;
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(b) a penal rent payable for any breach of covenant and any exceptional rent reserved for a specified period not exceeding five years shall be disregarded.
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(4) A sublease of the whole or part of the land comprised in a built-on lease, which would be a proprietary lease if the partly-built lease were a building lease, shall be deemed to be a proprietary lease.
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