Peppercorn lease?

Have been made an offer to sub lease two leases I currently have via a "peppercorn lease" over the top for value of $1. Anyone have any experience with a similar deal that can walk me through the pros and cons?

 

Bulk upfront payment, $1 on lease term so no pro rata requirements if I was to sell the premises in years to come. No sale cost so lex tax payable. Purely repeating comments from the agent offering the deal at the moment hence wanting to do some more research into it

 

that sounds a little confusing.
Are you being offered a peppercorn lease to occupy a property, or is it more like this:
- you are the property owner
- you have a tenant on a lease
- they want to sub-let the property
- they are offering a lump sum payment to you to cover the existing lease conditions
- the sub-let tenant will be on a peppercorn lease

The term "peppercorn lease" would tend to refer a tenant being given access to a property for a trivial sum, with no real financial benefit going to the property owner. They may do it as a charity, or simply to have someone occupying an otherwise vacant space. I'm not sure how the lump sum you mentioned would come in to it.

 

These aren't quite the same as @Beano's properties, the tenant leases the land & owns the improvements.

In this case, the tenant (sub-lessor) buys the right to use an area of the building /land and erects it's own structure then subleases the space so created).

Landowner gets a lump sum, tenant is responsible for it's space. There are still maintenance obligations on the owner who supporting structure

 

Long term leases can be dutiable based on value. Could even be a false sale by instalment and a issue subject to GST based on market value.
Any existing loans may become non-deductible.

Definately a legal issue for advice. And lease terms.

 

Will it matter if it is a small part of the land as opposed to the entire site?

Would refinancing upon entering the lease solve the issue?