188体育

A lease is entered into and commences on 1 June 2007 for a period of 78 months ending on 30 November 2013. Payments are made under the lease as follows.

Date of Payment	Amount Paid
1 June 2007	1,000
1 June 2008	5,000
1 June 2009	5,400
1 June 2010	5,800
1 June 2011	5,400
1 June 2012	4,000

This is analysed as follows:

听	Period	Rentals Payable
First reference year	2/6/07 - 1/6/08	5,000
Second reference year	2/6/08 - 1/6/09	5,400
Third reference year	2/6/09 - 1/6/10	5,800
Fourth reference year	2/6/10 - 1/6/11	5,400
Fifth reference year	2/6/11 - 1/6/12	4,000
Sixth reference year	2/6/12 - 1/6/13	2,000
Final year	1/12/12 - 30/11/13	2,000

Note that the payment on the first day of the lease is ignored and that the payment due on 1 June 2012 features twice.

The lease is a short lease because

• the rentals in the first reference year are only 7.4% less than the rentals for the second reference year (拢5,000 is 92.6% of 拢5,400), and
• none of the rentals payable in the third to sixth reference years and final year is more than 10% greater than the rentals due for the second reference year.

Assuming the rental in the first reference year remained at 拢5,000, then if the rental in the second reference year had exceeded 拢5,555.55 the lease would have been a long funding lease.

Assuming the rental in the first reference year remained at 拢5,000 and the rental in the second reference year was 拢5,400, the lease would have been a long funding lease if the rentals in any of the other reference years or the final year were more than 拢5,940.

The effect of the rules is to allow a low initial rental on day 1 but otherwise only to allow small increases in rentals over the term of the lease.