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Pub Tenancies - Wise Up On The Facts

25 November 2009

If you’re thinking of taking a pub tenancy, first seek independent advice. Pub chains are experienced negotiators – but are you?

The warning comes from Richard Horton, consultant on property law at leading regional law firm Furley Page, who says: “We are in a recession. Pub chains want to trade profitably. They just might be tempted to ignore promises they made in better economic times.” 

Richard cites obligations involving repairs as an example. Under most tenancies the tenant must keep the pub ‘in repair’ but before you sign on the dotted line ask yourself if the obligation is fairly worded. Think about the ongoing costs involved. If the document makes no reference to a side letter from the chain agreeing to do repairs and offer a rent concession, don’t take it as read. It may not be legally enforceable.

The tenancy agreement governs the relationship so read it carefully, advises Richard. Some chains say their tenancy document is standard and non-negotiable. Not so. You don’t have to sign an agreement that contains unreasonable terms.

Watch out for rent review clauses that are worded in favour of the chain. Do you want your rent reviewed to ‘the best rent payable by a tenant desperate to take the pub’ or would you rather ‘the least rent payable by a tenant who doesn’t want the pub’? The fair rent is somewhere in the middle. Why accept a lease which has upwards-only reviews of the market rent and annual increases in line with RPI - which means you pay twice – and doesn’t allow for a drop in market rental values and RPI? 

If that dream of running an old thatched pub is still as enticing, make sure you’re armed with the facts.

For further information ask to speak to a member of our Commercial Property Law Team on 01227 763939.
 

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