You should be allowed a full viewing of the entire pub and its grounds and you should take careful notes about the trading and ancillary areas and the private accommodation so you have a clear picture of what you are proposing to undertake.
If you are successful you will be offered the pub in writing and from then on you should put yourself in the hands of your solicitor and your chartered surveyor.
The solicitor will deal with all the legal documentation and requirements relating to the tenancy and in some instances the Premises Licence. The surveyor you employ will undertake a full survey and report on any defects or repairs required. The report is sometimes called a schedule of dilapidations or a schedule of condition and it is vital you have this report to clearly establish the state of repair of the property when you take it on. You will need to agree in writing with the landlord who is responsible for what repairs and who will pay for them before signing the tenancy or lease agreement. You will probably not be able to get your landlord to agree to repairs or paying for them or reducing the rent in respect of outstanding repairs after you’ve signed up. (See my separate article on Structural Surveys for more advice).
You will also be given the details of all staff employed by the current operator under the Transfer of Undertakings (Protection of Employment), also known as TUPE, regulations at least 28 days before you take on the pub. You will be obliged to take on the staff under the terms of their existing employment contracts.
In addition to taking on the tenancy or lease you will be required to purchase the Fixtures and Fittings (all the furniture, carpets, machinery, etc) and the Stock & Glassware (at the very least the tied products but sometimes all the drinks and food stock as well, provided they are all “potable”). The area manager will probably give a figure for these items, but you should be aware that these will be an estimate only. All these items will be valued on the day you move in to the pub by a professional, licensed stock taker and valuer. (See separate article on Pub Handover Days)
Top Tip – within reason you are under no obligation to buy all of these items if they are, say, out of date or broken and the stocktaker/valuer should deduct the cost of these items from the final cost. You can elect to provide your own stocktaker/valuer or agree with the outgoing tenant/lessee to share the cost of a joint valuation. Pay special attention to items such as electrical appliances that they carry a current Portable Appliance Test certificate / label and to items such as fire extinguishers that they are within their inspection dates.
You should make provision for any additional cost above the estimated values in your business plan, for instance between you being offered the pub and taking it on old fixtures may be replaced with new ones, additions to the fixtures may have been made and the amount of stock held by the outgoing tenant may be greater than previously held and in consequence of greater value.
Providing all has been agreed to both yours and the landlord’s satisfaction you will be given a moving in date, by which time your solicitor or your landlord should have organised the transfer of the premises licence (if held by the tenant/lessee) or nominated your Designated Premises Supervisor.
Now a word of warning, sometimes the documentation for a tenancy or lease gets delayed for whatever reason and the landlord may ask you to sign take occupation of the pub on a temporary tenancy agreement (sometimes known as a licence to occupy). In my opinion you should never sign a temporary agreement as if, for whatever reason, you should fall into dispute with your landlord at a later date your chance of resolving any issue can be severely limited, especially in relation to any compensation or costs incurred in any court action you might be involved in.
If the paperwork is not ready my advice is to simply refuse to take up occupation until it is ready, the potential problem of an empty pub is the landlord’s not yours.
During this whole process your accountant can do their bit to smooth things along by doing things such as registering your business for VAT, registering you as an employer and setting up your PAYE and payroll. (See my separate article on registering as an employer in the Staff section of this website).
You should have also approached an insurance broker to get your contents insurance organised as you need to have effective insurance cover in place from the moment you move in. (See my separate article on pub insurance in the General section of this website).
On the day of moving in make sure that you and the valuer take meter readings for electricity, gas and water and that these figures are included in the paperwork relating to the change in tenancy or lease. (See my separate article on energy contracts in the General section of this website if you decide to change energy supplier).
To help you in your application or acquisition of a pub click here to download a free Business Plan Template
Remember if you are in any doubt at any point in the process then consult with your professional advisors before proceeding.
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