In the latest season of Clarkson’s Farm, the petrolhead turned farmer has continued his diversification efforts in and around Diddly Squat Farm by opening his own pub.
But whilst even Jeremy’s hard-headed nature didn’t prevent Farmer’s Dog opening its doors, it’s no easy task with a range of issues to consider. Thrings’ Commercial Property Solicitor Annabel Rowland takes a look at some of the legal aspects landowners might want to consider before purchasing a pub.
Before the purchase
If you find an establishment that interests you, the first step should be to undertake a full suite of property searches. This includes a local authority search to check for any planning schemes, notices or enforcement history, a drainage and water search, an environmental search (to ensure there is no contamination of flood risk, and any others which could be relevant to the property – for example coal mines.
CPSEs (commercial property standard enquiries) will also need to be raised of the seller/landlord, which will provide detail surrounding information such as statutory compliance documentation, VAT status of the property, insurance claims history, historic disputes and what utilities and services are connected to the site. This can all be done by your purchasing solicitor.
You will also want a full structural survey of the property to assess the condition and ensure that all defects and needed repairs are properly factored into the business plan. Check for any warranties and guarantees for any works carried out in the last 12 years to understand the terms or limitations on liability.
Title and ownership structure
Is the property freehold or leasehold? If the former, then you will own the property outright subject to any rights or restrictions registered against the title. If, however, it is a leasehold, you’ll be subject to the terms of the lease, which will need to be reviewed to ensure they are suitable for the intended use, as a pub or otherwise.
Make sure to review the property’s title to check for any restrictions or covenants that might interfere with the plans for the pub or incorporating other wings of the business, as Clarkson did with his shop. Restrictive covenants could restrict the use in many different ways, such as preventing music at certain times of day, preventing people sitting outside, or operating at certain hours.
The sale
As Clarkson found out, it isn’t straightforward or cheap to create a fantastic new pub so thorough planning and research will be key to ensuring you are able to succeed, and within your budget.
With the contract for the sale being negotiated by your solicitors, it’s important to be clear on whether there are any conditional events that could impact the purchase, for example obtaining planning consent for a change of use or the carrying out of works. Ensure that contracts also confirm what fixtures and fittings are included, such as kitchen equipment, bar installations, furniture and outdoor structures.
If you are financing the purchase through a lender, their due diligence requirements will also need to be considered and dealt with by your solicitors. This will extend to the settling of a lender’s security documents.
Don’t forget to factor stamp duty land tax (SDLT) into your budget, payable on completion. This can often be complex and will require specialist advice to fully understand how the structure of the deal may impact of the amount, as well as whether any reliefs may be available.
There will also be licensing issues to consider – check out our planning-focused article next week where that will be covered.
Thrings Commercial Property lawyers support business owners and developers across a range of industries to maximise the benefits from their property portfolios, helping them to overcome complicated legal procedures and safeguard their assets. Whether you are needing advice on buying or selling property, seeking to secure a commercial letting or any other matter, get in contact to find out how they can help you.
Clarkson’s Conundrums are legal comments highlighting the issues farmers faced raised in Clarkson’s Farm. Thrings has no association with Jeremy Clarkson or Clarkson’s Farm and the comments made in this article are not endorsed by the show.