Redeveloping an empty pub for commercial use

The coronavirus pandemic has seen the unfortunate closure of some public houses throughout our region and while this is a very sad fact, it could give rise to opportunities to find a new use for those pubs 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. 

If you’re considering negotiating on, buying and then redeveloping a pub, 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.  Once the building is operational you will need a lease with an operator. 

‘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 Ian Cowan commercial property solicitor with Richard Reed Solicitors.

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.  The seller will want to be sure that you are required to use every effort to get permission; 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.

Planning consent

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. 

Practical requirements

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.

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 Ian in the commercial property team on 0191 567 0465 or email: [email protected]

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