Negotiating Terms

The interview with the Business Development Manager/Area Manager is an opportunity to discuss the main terms of the agreement, such as repairs and rent. If you feel that the initial rent is too high or there is a number of outstanding repairs, it is worth asking whether the brewery or pub company would consider providing some additional support for a new tenant or lessee, such as reducing the rent for a set period, agreeing to complete any major repairs or spreading the cost of fixtures and fittings etc. The best approach is to seek support and not make demands, which is likely to put you in a negative light.

Being Offered The Pub

You could be verbally offered the pub at the end of the interview or you may have to wait until other interviews have taken place, and be contacted later. A written offer should follow, which you will need to sign to confirm that you wish to go ahead. This outlines the major terms of the agreement, including annual rent. The letter will be subject to contract, which means that it is not binding until a tenancy or lease has actually been signed. It is good practice to send you a draft copy of the agreement with this letter; if you are not sent a copy, you should ask for one. This gives you the chance to read through the agreement (or seek advice) so that you fully understand it.

Viewing The Pub

It is important to view the pub thoroughly, including the domestic accommodation, before signing the tenancy or lease. It is an opportunity to raise any concerns you may have with the Business Development Manager/ Area Manager. Make sure that any promises made by them are put in writing to you, prior to you signing. (See the ‘Repairs’ section below.)

Fixtures And Fittings And Stock

Any figures quoted by the Business Development Manager/Area Manager relating to the value of the fixtures and fittings and stock, will be estimates. The valuation of these items takes place on the day you move into the pub. The actual valuation could be higher or lower than quoted and you need to budget for the possibility of paying more than the estimated figures. This may involve finding additional capital or gaining support from the brewery or pub company to help finance the difference.

Repairs And New Leases

In the case of new leases, repairs need special attention. The lease may well be ‘fully repairing’, which means that once you sign it, the responsibility for all repairs at the pub will be yours. This may include a requirement for you to repair any faults or damage that you inherit when you take on the pub.

Prior to signing a lease with these terms, you should obtain your own independent assessment of the premises, via a structural survey report and any additional reports (eg electrical tests, etc) that your surveyor may recommend. You need to discuss the findings with the Business Development Manager/Area Manager and make sure that any verbal assurances are put in writing before you sign the lease. Where there are significant repair issues, the following options could apply:

• Option 1: The brewery or pub company agrees to undertake all repairs over an agreed timescale.
• Option 2: You agree to make repairs for a reduction in rent or at the quoted rent.
• Option 3: Your responsibility for these repairs is removed and agreed in writing (and the repairs are not completed).

 

Option 1 is the best solution for the new lessee, as the cost will be borne by the brewery or pub company. How good option 2 is for a new lessee will depend on the cost of the repairs versus the reduction in rent. There is also the inconvenience factor of having to organise the repairs yourself. (However, you may be told that the rent quoted was set to reflect the current state of the premises, and therefore no rent concession is available.) Option 3, while removing liability for the repairs, leaves them undone, which is likely to cause a problem at a later stage if the issues worsen. It can also cause problems when the new lessee decides to sell their lease, affecting the price and leaving a subsequent lessee responsible for repairs (as the immunity from repairing these may not be applicable to them).