Hotels, Restaurants, Wine Bars & Pubs for Lease in the UK
Paramount Investments are licensed property agents and valuers offering leasehold pubs, pub tenancies and freehold pubs for sale in the UK. Pubs are sold for a variety of alternate uses. Some continue to be run as pubs and many are acquired for their development potential and diverse number of uses. The investments team can advise you in all of these areas.
Leasing a Pub: References
When a new tenant enters into a lease, the landlord will normally require
the provision of satisfactory references as a condition of the lease being
In these circumstances, the tenant is usually required to provide references
from a bank, an accountant and two trade references, although this may vary
depending on each individual case.
Pub Lease Sales and Pub Lease Assignment
An assignment of a lease takes place when the tenant (assignor) transfers/sells
to another person (assignee) their entire interest in the property for the
unexpired residue of the lease.Section 52 (1) of the Law of Property Act
1925 requires that for the legal estate to pass to the assignee, then the
assignment must be by Deed.Under the doctrine of "privity of contract",
the original tenant remains liable to perform all the covenants in a lease
throughout the term. Thus, if the lease is assigned to a third party, in
the event that the new tenant defaults, the original tenant remains liable
for the covenants contained therein.
In some cases therefore, if an assignee is found to be in breach of contract,
the landlord is able to look to the assignor to seek redress; even though
the original tenant has no control over the subsequent occupiers business.The Landlord and Tenant (Covenants) Act 1995 sought to address this issue
and relieve the original tenant from such liability upon assignment. Modern
leases granted on or after 1st January 1996 usually incorporate this change
Pub Lease Incentives
An incentive is a payment or concession that often arises when a lease
is first granted or subsequently assigned during the course of its term.
A common example might be where a landlord pays a new tenant a sum of money
to take on a new leasehold contract.
This sum may be in the form of a capital contribution towards the tenants
initial fit out costs. Or it might be in the form of rent free period or
stepped rent until the first rent review date.
Pub Leases: Length of Lease
A lease is a legally binding contract between a landlord and a tenant which
sets out the basis on which the tenant is permitted to occupy a property.The
length of the term will vary depending upon the particular requirements
of the landlord and the tenant and will be influenced by business requirements,
investment strategy and general matters such as economic conditions.
In broad terms, the landlord will often seek to create a lease of between
15-25 years, whereas the tenant is more likely to require a shorter term
of 5-10 years, particularly in times of economic and political uncertainty.
The lease length may also be influenced by the incidence of break clauses
and the prospect of a formal option that might exist to extend the lease
Large properties, or those involving the tenant in significant investment
in fit out costs, might attract longer leases in order to allow sufficient
time for the tenant to recoup the initial costs of taking on the property.
Pub Leases: Break Options
A 'break option', 'break clause' or 'option to determine' is a clause in
a lease which gives either the landlord, tenant, or both, a right in specified
circumstances to terminate the lease before it's contractual expiry date.
The break option will usually define the length of notice to be given by
either party in order to operate it and any other conditions.
A break clause may also be subject to contractual or statutory financial
provisions that need to be complied with in order for it to be legally binding.
In addition, it can also be linked to a pub rent review date and its subsequent
operation may make "time of the essence" for the purpose of invoking
the rent review provisions within a lease.
Pub Leases: Ground Lease
This is usually a long lease, granted at a ground rent but subject to an
initial premium payment. A ground lease can vary in length from 30 years up to 999 years.
The principle of a ground lease is that the rent paid relates to the value
of the land only.
The terms of the tenant's lease usually provide an obligation to develop
the land. The building is then owned by the tenant, usually free of any rent.
Ground Rent levels vary from a peppercorn, i.e. nil rent, to a percentage
of the open market rack rental value of the building.
Pub Leases: Expiry and Renewals
The Landlord & Tenant Act 1954 limits the way in which a business tenancy
may come to an end.
Thus a tenancy that falls within the provisions of the Act, will not come
to an end unless it is terminated in accordance with the provisions set
out in the Act.The statutory methods of terminating a lease are set out
in Part II of the 1954 Act. Namely:-(i) by a Landlord's notice under Section
25(ii) by a tenant's request for a new tenancy under Section 26, or (iii)
a tenant's notice to quit under Section 27.
The landlord and the tenant must comply with the provisions set out within
these various notices, since failure to do so could result in the loss of
the automatic right for a new tenancy.
There are also strict procedures to be followed during the interim period
between the expiry and grant of a new lease, either by negotiation or through
Pub Leases: Schedule of Dilapidations
This is a list of outstanding repair and maintenance items, that a landlord
has assessed have accrued under the terms of a tenant's repair and maintenance
obligations.It is often served by the landlord at the end of the lease in
the form of a "Terminal" Schedule of Dilapidations.
The tenant is obliged to carry out the outstanding works listed in the
schedule or pay damages which represent the cost to the landlord of doing
the works.The items in a Schedule of Dilapidations are often the source
of dispute between the landlord and the tenant and a court will ultimately
decide upon the relevance or otherwise of the contents of the Schedule.
In certain situations the tenant is entitled to relief from the obligations
set out in a "Terminal" Schedule of Dilapidations, as provided
for by Section 18(1) of the Landlord and Tenant Act 1927.An "Interim"
Schedule of Dilapidations can be served by a Landlord during the course
of a tenancy, specifying outstanding works of disrepair that need to be
attended to whilst the tenant is in occupation.
Relief from complying with the obligations of an "Interim" Schedule
may also be available in accordance with the provisions of the Leasehold
Property (Repairs) Act 1938.