Linking headlease rent to underlease rents The rent payable under a headlease can be linked directly to the rent paid or payable under actual or potential underleases out of that headlease. In this scenario, the headlease rent may be interchangeably described as a ‘geared rent’, ‘shared rent’, side-by-side rent’ or ‘indexed rent’, and a lease in which such a rent appears is sometimes referred to as an ‘equity-sharing lease’. Typically, the headlease establishes a base rent with an additional rent then being calculated and payable as a defined percentage of the tenant’s ‘gross revenue’ (as defined in the headlease) from underlettings: see Calculating the tenant’s ‘gross revenue’ below. This type of arrangement: • is only really appropriate where underlettings are envisaged at the time when the headlease is granted—as a result, it is ideally suited to the scenario where a freeholder grants a long headlease interest (typically in excess of 125 years) to a developer who will carry out the development and then underlet it, usually in parts, to individual occupiers • tends to be favoured by freehold