A premium is a one-off lump sum. There are many leases – usually residential leases – where you only pay premium, and no rent at all, or very little. If you buy a flat from a developer, that’s what will happen. You buy the lease and you pay a price – that is the premium. You may also pay a rent, but it will be in the hundreds of pounds not thousands, or it may even a purely nominal one – a single peppercorn a year is a typical rent when you buy a flat.
At the other end of the spectrum, if you rent a flat for a year or two, everything you pay will be rent, usually monthly.
There is a similar, if reversed, system with business leases. With most business leases, you just pay rent. But there are occasions where you may have to pay a premium as well. This is when you’re taking premises which have a particular rarity value. For example, it often used to be the case that you had to pay a premium up front if you took restaurant premises, because they were in high demand. Someone taking on a restaurant might pay £40,000 premium up front and £50,000 a year rent.
You’ll soon find out from your investigations into properties on the market, what the situation is. It’s all down to market forces.
A premium is not tax deductible.
A premium is not the same as a rent deposit which you can get back.