It’s important not to let a premises licence lapse, even when an outlet is shut, writes Peter Seymour of Graham & Sibbald
IN my opinion, in recent years, it has been apparent that elements of the market have stopped understanding the value of a liquor or premises licence.
It seems that those who dabble in the sector fail to properly advise clients on the merits of the licence and why it is so important to trade businesses.
There may be several factors behind this. It may be that due to the trading conditions of public houses, hotels and restaurants, licensing boards have been granting new licences in order to aid employment and their local economy. Or it may be the main institutional lenders who have been asking for valuers to advise the value of premises without licences in place.
It seems to me the market assumes that getting a premises licence is merely a bureaucratic exercise.
This is not the case.
A premises licence is a restricted legal consent to sell a restricted product, the product is heavily legislated and it is a criminal offence to sell alcohol without a licence.
If that was not enough of a reason why they have value, here are some of the more practical reasons:
If a premises licence is lost, for whatever reason, then an application for a new licence needs to be lodged with the licensing board.
To secure a new licence you will need Section 50 certificates from Planning, Building Control and Health & Safety.
Building Control has the right to demand that you physically adapt the property to comply with modern building standards before issuing its Section 50 certificate.
This may not be possible, either for planning reasons or, physically, there may not be a sensible way to comply.
Here the issue is obvious.
If you lose your premises licence in an area where there is overprovision, it is highly unlikely you are going to get it back.
This will prevent the sale of alcohol and therefore completely diminish the value of the underlying asset. Understanding this requires up to date knowledge of each board’s policy.
Landlord vs Tenant
We are regularly asked if landlords should hold the premises licence. In our opinion the answer is yes.
Whilst we acknowledge there is an ongoing liability which landlords should take seriously, handing over something which can fundamentally affect the value of your asset to your tenant is not something to be considered lightly.
There are always exceptions to any rule, but a premises licence can be surrendered or, worse than that, held in perpetuity by the licence holder, for as long as they pay the licence fee.
This would prevent anyone else from trading from the premises until this had been transferred to the landlord or new operator.
In summary, licensing is not something that should be taken lightly.
Changing licences is difficult enough and reinstating or obtaining a new licence can cause a PR nightmare or strong resistance from the local public.
This is a specialist subject, you should therefore trust that your advisors, either for valuation of assets or for other commercial property advice, understand some of the hurdles that obtaining a premises licence can bring and how best to overcome them. Do not de-value your asset by putting your licence in jeopardy.
• Peter Seymour is head of licensed trade and leisure agency at Graham & Sibbald.