Leaseholds
There are effectively two leaseholds:-
Sale or assignment of an existing lease
Leaseholds are usually sold as a going concern which include trade fixtures and fittings, but the occupier holds the property for a fixed number of years in accordance with the outlined lease – which is usually a lengthy agreement.
The lessee/tenant pays rent and is obliged to comply with the conditions in the lease in order to stay on site. The main terms and conditions are usually to pay the rent, insure the property, keep the property in good repair, trade within statutory regulations and to comply with the law and comply with the company’s purchasing obligations.
Many pub leases are granted for initial terms of between 10 and 25 years and the lessee must pay the rent throughout the term unless they can sell the interest by assignment. The purchaser of the lease is obligated to comply with the same terms and conditions as the original lessee for the remainder of the term. An assignable lease may be sold in the open market for whatever price the seller can obtain and where a business has been taken from a level of modest profitability to a much higher trade profitability, the lessee can sell for a much higher price than the original cost.
New lease by a Landlord/Brewer
New leases are offered by brewers/pub Company’s and private owners. Sometimes “without a premium”. This means that the new lessee/tenant does not make any payment for trade goodwill. You would only purchase the trade fixtures and fittings, stock and glassware and security deposit. New leases are usually restricted to a non assignment period of between 12 to 24 months from the start of the lease, but after that period the lessee can sell the business.
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