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Buying a Pub - Buying a Freehold Pub - Buying a Leasehold PubPotential licensees should be aware that getting a mortgage when buying a pub is not the same as walking into a building society or bank when buying a house. Buying a pub requires a more specialised type of funding and even though there are many banks which are willing to give mortgages, there are a wide range of other funding sources, such as private lenders, where you could get a better deal Buying a Pub: Freehold PubThis is the term used as shorthand for the tenure of an estate in land
which exists in "fee simple absolute in possession" and identifies
the ultimate owner of a property. Such ownership usually includes not only the surface land or building,
but also the sub surface of a property and all the air space above. As part of the aim of simplifying the conveyancing process, the Law of
Property Act 1925 set out two estates or interests in land, namely the "fee
simple absolute in possession" or 'freehold' and the "term of
years certain" or 'leasehold'. Buying a Pub: Private TreatyThis is the most common form of buying / selling a property and essentially
involves a binding private contract for sale to be drawn up between the
parties. A sale of a property or investment opportunity by "private treaty"
allows the vendor a much greater degree of control over the actual sale
process and any specific conditions that should apply. However, unlike a
sale by auction, the actual completion of the sale can take considerably
longer to achieve. A commercial property agent is usually appointed to manage the disposal
process and a marketing strategy and marketing budget should be agreed with
the vendor, to meet the client's particular requirements. The agent's fee is usually based on a percentage of the sale proceeds achieved
and tends to be in the region of between 1% to 2.5%. This will usually be exclusive of VAT and disbursements, and legal costs. Buying a Freehold Pub: Purchase CostsWith property acquisitions, a prospective purchaser will normally incur
"acquisition" or "purchase costs" in addition to the actual purchase price.
These costs are essentially legal and surveyor's fees, VAT and stamp duty. The level of these costs will vary depending on each particular property,
the nature of the client/surveyor relationship and any changes in the rate
of Stamp Duty imposed by the Exchequer. At present the purchaser of a property sold with a purchase price in excess
of £500,000 could expect to have a combined acquisition cost equivalent
to about 5.75% of the purchase price. A prospective purchaser may have additional costs of acquisition arising
from a building survey or environmental survey. Buying a Pub: Stamp DutyThis is a Government fixed tax, chargeable on the execution of documents,
pertaining to transactions such as Leases, Agreements for Leases and Conveyances. The duty is payable by the purchaser or lessee, and the disposal document
can not be adduced as evidence of the transaction unless adequately stamped. The rate applicable is set by Central Government and varies depending upon
the value of the transaction.Current rates are as follows:· Up to
£60 000 - nil· Over £60 000, up to £250 000 - 1%·
Over £250 000, up to £500 000 - 3%· Over £500 000
- 4% Buying a Pub: Building SurveysA building survey is an examination of a building by a surveyor (which
may include specific tests by the surveyor or other experts) in order to
produce a report on the structural integrity of a building and the state
of repair. Such a report would usually cover the condition of the structure, incidence
of any defects to the fabric of the building and the state of repair of
fixtures and fittings, services and plant installations. Depending upon the instructions given to the surveyor; these physical features
would also be described in relation to safety, stability, strength, efficiency
and economy in use, ease of maintenance and other factors as required. A building survey is often required as a condition to the grant of a mortgage
or loan secured against the value of a pub or licensed property. Buying a Pub: Local Authority SearchesA local authority search is essentially an application for an official
search of the Local Authority's records, for written confirmation or a certificate
disclosing matters or encumbrances affecting the land. Where a lease is being granted or conveyancing takes place, a local authority
search should be undertaken. Typical information that might be revealed by a local authority search
includes:-(i) ownership of roads and sewers affecting the property.(ii)
any road widening schemes in the vicinity of the property.(iii) any breaches
of planning legislation.(iv) a history of the planning applications made
in respect of the property.(v) details of any pending Compulsory Purchase
Orders (CPO's).
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