As Julian says, a tenancy for life is converted to a tenancy by s. 149(6) of the Law of Property Act 1925, although the term is 90 years determinable by one month’s notice following the death of the tenant. And as Paul says, s. 43(3) of IHTA 1984 applies, since this is “a lease of property…which is terminable on, or at a date ascertainable only by reference to, a death…”. It is therefore likely to be a settlement for IHT purposes, even though it is not a trust as a matter of property/trusts law.
Surrender is a consensual act that does not require a power in the lease, so long as the tenant and the landlord agree, although HMLR may be right that it is not in the best interests of the donor of the LPA to surrender the lease.
The daughter could give a good title by conveying the freehold and assigning the lease. The two would then merge in the buyer. Some thought would have to be given to the application of the sale proceeds, since part would represent the lease and part would represent the reversion.
Josh Lewison
Radcliffe Chambers