Buying and selling pubs, hotels and restaurants
Associate Solicitor Sue Scott gives her advice for buying and selling leisure sector properties.
Whilst the market in leisure sector properties and businesses has declined recently, predominantly because finance is much harder to obtain, there are still opportunities to be had and business to develop, if you have relevant experience and take appropriate advice.
Whether you are looking to buy a hotel, pub, or restaurant, your priority should be a full structural survey as soon as possible. If the property you are buying is leasehold, you will inherit whatever repairing liabilities the seller has under the lease. During, or at the end of, of a lease the landlord can produce a list of required repairs and maintenance (a schedule of dilapidations), and completing these repairs can be expensive. A survey will tell you what needs doing and what it could cost, to enable you to negotiate a sensible price with the seller.
If the property is freehold a survey is equally important, as the time prior to exchange of contracts is your only opportunity to negotiate the price.
If you are buying a leasehold pub, matters can be more complicated if the landlord is one of the big pub operators, such as Enterprise, Greene King or Marstons. All these companies have their own specific requirements on lease assignments: e.g. the applicants ( that is the buyers) will need to have an interview and they will need an acceptable business plan prepared by an accountant (recommended by the pub operators). Again there will be dilapidations to negotiate and these need to be done as part of the assignment. There are many fees involved whether you are buying or selling.
You need to decide whether to buy assets or shares (if the business and possibly also the property is in the name of a company.) Your accountant will advise on this as there can be pros and cons with either route. You will also need to take account of any employees and their rights.
The moral of the story is to seek professional advice at the outset. Sue Scott is based in Cockermouth and has more than 20 years’ experience of working in the leisure sector and is familiar with the requirements of all of the main operators. Contact Sue on 01900 510366 or email firstname.lastname@example.org.
About the author
Susan is a Practising Consultant in Burnetts' Commercial Property team.