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PROPERTY


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Chartered surveyor Sidney Phillips explains the process newcomers need to follow when aquiring their first pub


The process and time scale depend upon what type to business you are buying, whether it be freehold, leasehold or tenancy. What follows are the most typical scenarios.


BUYING A FREEHOLD Let us assume you have sufficient knowledge for a lender to be comfortable with lending you the required mortgage, as well as the necessary deposit, and have made an offer for a busi- ness that has been accepted, subject to contract.


NOW YOU MUST RAISE THE FINANCE: •


• • • •


The agent declares the offer acceptable and solicitors are instructed when you have a confirmed offer of finance


You provide details of the business to your bank or mort- gage broker, and accounts for the business that confirm the value of trade


The lender makes an ‘in principle’ offer, you pay a valu- ation fee


Hopefully you will have a valuation report and loan offer within two to four weeks


Assuming the business is still available, you confirm your funding is in place and the sale is agreed, subject to any clauses in the contract


The various processes can typically take four to 12 weeks. •


THE CONTRACT PROCESS INCLUDES: • • •


• •


The seller’s solicitor produces a contract Your solicitor prepares questions for the seller


Your solicitor confirms with the Local Authority, the Land Registry and Land Charges Registry that the ownership of the property and business are as expected


If the building is old or you have doubts about its condi- tion, commission a structural survey. This takes 10 days First-time publicans need to apply for a personal licence


DURING THE PRE-CONTRACT PERIOD YOUR SOLICITOR WILL: •


• •


Arrange for the mortgage funds to be drawn from your lender


Co-ordinate the draw down of the funds, completion of the mortgage deed and the purchase of the business


Your solicitor will not recommend exchange of contracts until he has unconditional confirmation that the loan will be made available in readiness for the proposed completion date


• •


Fairly soon after solicitors are instructed concerning the sale, a detailed inventory of the business will be prepared


After the inventory has been approved by the seller, copies will be provided to the solicitors for use with the contract


COMPLETION OF THE DEAL: • •


You will discuss potential completion dates with the seller


When your solicitor confirms that the contract is satis- factory you will pay him a deposit, usually 10% of the


58 TWENTIETH FEBRUARY 2012 • •


purchase price, which will be passed to the seller’s solici- tors when contracts are exchanged. When contracts are exchanged you are committed to purchase the business and will forfeit the deposit if you fail to complete the deal


It is usual for the sale to be completed within 14 days of exchange of contracts, giving time for arrangements such as stocktaking and furniture removals


BUYING A LEASEHOLD This is similar to freehold, but let us assume you have at least half of the purchase price as cash in the bank.


RAISING THE FINANCE: Borrowing is generally restricted to no more than half of the purchase price. A valuation is not always necessary.


THE VALUATION PROCESS IS REPLACED BY: •


An application to the landlord/freeholder for consent to take the assignment of the lease. This can be a fairly drawn out process, which includes interviews with the landlord, the supply of references, and the preparation and approval of a detailed business plan. It is likely that you will need to go on a compulsory training course run by the pubco landlord


You will also be strongly advised to commission a sur- vey of the property to ensure that it is in good condition, bearing in mind that you will be responsible for keeping the property in good order. However, most pubcos com- mission a schedule of dilapidation on assignment, which you will see, letting you know the landlord’s view on the condition of the property


Once you have been approved by the landlord, the sale and contract negotiations are broadly similar to those for a freehold transaction


THE CONTRACT PROCESS: This is also similar to the freehold transaction. Your purchase cannot be completed until the landlord has given formal con- sent to the assignment.


TAKING ON A BREWER’S TENANCY: This is the quickest process by far because: • •


• •


This well-appointed, traditional inn is located in the coastal town of Great Yarmouth, Norfolk. The Cremorne is ideally situated just outside


the town centre and close to the seafront of Great Yarmouth, which is Norfolk’s largest and most vibrant holiday resort and enjoys trade from not only the local community but also from holiday- makers and tourists, especially during the sum- mer months. There is huge potential for a new hands-on,


fully-focused partnership to build on this well es- tablished business and take it to the next level. The inn is decorated and furnished to a good


standard with one large public lounge/ bar (circa 50), catering kitchen and self-contained owner’s accommodation with private kitchen.


HIGHWAYMAN’S HAUNT CHUDLEIGH, DEVON Price: £69,950 Tenure: Leashold Turnover: £450,000 Agents: Bettesworths – 01803 212 021


THE CREMORNE TAVERN GREAT YARMOUTH ,NORFOLK Price: £179,000 Tenure: Freehold Turnover: £154,000 Agents: Guy Simmonds – 0133 286 512


This pub is a beautiful, 13th century thatched build- ing, steeped in over 700 years of history. The property is well established and stands


The length of tenancy is usually fairly short


Your responsibilities and liabilities in respect of the property are far fewer than for a longer lease The agreements are generally fairly simple


Once you are approved by the landlord and have pro- duced proof of funds to cover the costs, you take over at fairly short notice – four weeks would be considered a leisurely time scale and one week is not unusual





During this time you need to make arrangements to have the inventory that you are to purchase valued. The details of this should be agreed between your valuer and the valuer of the outgoing tenant


in generous grounds. The notorious Highwayman, Jack Witherington, used this house as his hide-out, until he was captured on 1 April 1691, while hid- ing in the main chimneybreast of the house. The trading areas include a bar with a con-


servatory dining area with 42 covers. The main dining room seats a further 48 and


has an open fireplace, exposed stone walls and beamed ceiling. There is outside seating for about 75 in the


gardens, which are very popular in the warmer weather. The commercial kitchen is well equipped to handle growth in business. The accommodation for the owners is spa-


cious and includes four bedrooms, a lounge with a vaulted ceiling, and a kitchen. The attractive gardens, partly landscaped, are


a feature of the property. There is also plenty of parking and a paddock included.


pub&bar


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