Pubs are closing all too often nowadays and while this is a sad sight, it means there may be opportunities to find a new use for one as a commercial development project. If an empty pub is well-located, it could make an ideal setting for a new business, such as a care home, convenience store, or flexible workspace.
As well as negotiating, buying and redeveloping the building itself, you will need to get to grips with planning permission and other regulatory requirements for your proposed new business. You will need contracts with professional advisers, including surveyors and architects, and with building contractors.
‘Your commercial property solicitor will be a key person in bringing this complex project to fruition, and the sooner they are consulted and involved, the sooner they will ensure your interests are protected,’ explains Darren Heard Commercial Property Solicitor with WBW Solicitors in Newton Abbot.
You will not want to purchase the pub unless you can proceed with your proposed redevelopment, so one of the first steps will be to protect your interests by negotiating a purchase agreement or option agreement, conditional on you getting planning consent for the change of use, conversion work and building regulations approval to carry out the conversion works. The seller will want to be sure that you are required to use every effort to get your permission and approval; your solicitor needs to balance this risk by including a right for you to walk away if it is clear that the local council will not agree to your plans. Once planning permission is obtained and the purchase completed, unless you have finalized your building design contracts previously, these will need to be negotiated unless you are able to carry out all works without continuing with third parties.
Public houses are still regarded as part of our national life and local authorities are reluctant to let them close. One of the key things to consider is what role your proposed new use will play in the community, as creating jobs or a new focus for community activity is important. The local authority could ask you to enter into a binding agreement to provide space for community use in your development
One potential hurdle is the possible listing of a pub as an Asset of Community Value, which means that if the owner wants to sell it the community has a period to raise funds to try to buy the asset before it is sold on the open market. This will not affect the value but it can delay a sale.
Do not be put off a viable project, as your legal team will be able to help you obtain permission for a change of use and can advise whether other permissions are needed, for example if the pub is a listed building or sits in a conservation area, you will need additional consents for development work.
In addition, your legal team can review the local authority’s development plans and policies and make representations to a planning officer to determine whether the development is likely to be granted planning permission before you incur significant expense.
Pubs tend to benefit from ample parking and good access for deliveries, and neighbours will be accustomed to delivery vehicles and long operating hours, but you may need your solicitor to negotiate additional access rights over adjoining land.
You will need to consider all the practical needs of any new use. For example, with a care home it will be important to be close to public transport for staff and visitors. A rural business centre will need high-speed broadband, but you may find that you would need to install new cabling or fibre to the building, so factor in the time it will take your solicitor to negotiate the necessary rights with the provider.
Building and professional contracts
Once you secure the site and have permission to change use, you will need a good professional team to carry out the building works. Your solicitor will probably have agreed a contract with the architect and surveyor at the planning and design stage and can do the same with your building contractor.
Building contractors can employ sub-contractors to carry out construction works in which case it will be necessary to secure additional contractors from the sub-contractors to you in relation to the works carried out under the sub-contracts. The wording of these is important as they determine the standard of the works to be carryout out and this standard is often subject to negotiation. Breach of a warranty can allow you to claim damages and your commercial property solicitors should ensure these are comprehensive for your protection.
There are also different forms of construction contracts to allocate risks between the various parties and your commercial property solicitors can explain these to you and ensure the balance of risk is acceptable to you. Some might be structured in favor of the building contractors having been produced by their industrial builders and may need to be re-negotiated.
Letting the building
Unless you have the relevant experience, you will want to know that you have a tenant lined up to run the new business when the conversion is finished. Your solicitor can start negotiating early in the project – it is common for a tenant to enter into an agreement to take a lease once planning consent has been given and the works are complete. This gives you the comfort of knowing you have an income stream lined up and ready to go at the first opportunity and will be important to your lender if you are borrowing money to finance the development.
The key to any redevelopment project is to plan carefully, research the market and work out whether you will be able to get all the necessary permissions. Good advice from your solicitor from the outset will give you the best chance of success.
For further information, please contact Darren Heard in the Commercial Property Team on 01626 202382 or email firstname.lastname@example.org. WBW has nine offices across the South West in Newton Abbot, Bovey Tracey, Torquay, Paignton, Exeter, Launceston, Exmouth, Sidmouth and Honiton.