Leasing a pub to someone can cause problems if you’re not careful

By Jack Cummins

ARE you a landlord in the hospitality sector? 

Perhaps you’re thinking of leasing out licensed premises? In either case, be aware of the risks and the potential for outright disaster. 

The first big decision is this: who should hold the premises licence – the landlord or the tenant? 

In my view, there’s only one course. There’s no advantage in the licence being held by a tenant. And in fact that arrangement could sow the seeds of a catastrophe. 

Over the years I’ve become involved in a few cases where a fall out between the landlord and tenant has led to the malicious surrender of the licence.

The licence can be lost in other ways if you pick the wrong tenant. There are two typical scenarios: the venue that has become the epicenter of violence in the local area and the so-called ‘drug pub’. 

Let’s take these in turn. 

The odd disturbance involving an aggressive customer is one thing; but when fights break out on a regular basis, leading to multiple calls to the police, the licence is on the road to a review if the tenant doesn’t get a grip. 

In the worst cases, the police find the staff totally unhelpful and unwilling to identify those involved, who have of course fled the scene. 

Violence has taken root to such an extent that management have simply lost control. 

When it comes to the ‘drug pub’, a culture of drug dealing and drug taking has become endemic. This is best illustrated by a case in Glasgow a few years ago. Over a period of about a year there was abundant evidence of drug consumption. For example, customers had been found in possession of cocaine, drug wraps were found in the toilets and a line of cocaine discovered on a toilet seat. 

There were also a number of other incidents, including fights and the alleged illegal broadcasting of Sky Sports. It would be fair to say that the police exercised considerable patience, carrying out three constructive ‘interventions’ when recommendations were made with a view to getting the problems under control. 

But ultimately, the police were left with no choice and called a review hearing at which the licence was revoked. The board concluded that the pub had become a focal point for drug misuse over a significant period of time. 

In the statement of reasons for the decision, they said that, “the situation would not substantially improve if the premises were permitted to continue to operate… those in a position of responsibility had shown themselves to be either unwilling or unable to operate the premises in line with the licensing objectives”. 

If the position could have been salvaged, then in all probability the licence would have been suspended rather than revoked; but clearly this was considered to be a hopeless case.

How does a landlord avoid this drastic outcome? At a basic level, a properly-drafted lease will of course contain robust conditions requiring the tenant to conduct the premises in accordance with the licensing objectives and not to put the licence at risk. 

But in the case of a rogue tenant – or one who simply isn’t up to managing the premises – those obligations won’t head off disaster. 

There are steps that can be taken to minimise risk. 

For example, regular unannounced visits to the premises, particularly on busy evenings and – perhaps most importantly – regular liaison with the local licensing police with a view to ensuring that there are no developing concerns over the way the premises are being managed.

Of course, when the relationship between landlord and tenant falls apart and it’s clear that storm clouds are on the horizon, terminating the lease will be the only option. 

Even that step may be fraught with difficulty; installing a tenant is far easier than getting one out of the door. 

The bottom line is this: landlords need to be proactive – a licensing board will not be impressed by a landlord whose only involvement is collecting the rent.

Q&A with Jack Cummins

Q: Is there anything to prevent my 17-year old niece from working in my restaurant? She would only be taking food orders and serving food. Another member of staff would deal with drinks orders.

A: There’s no problem with that arrangement, but with  provisos. Check that your premises licence allows young persons to be on the premises during the hours your niece would be working. Also, since she would be going back and forth to the kitchen to place orders and collect food, ensure that she has access to that part of the premises, not simply the dining area. I’m aware of a case where a licence had to be varied so as to allow waiting staff aged under 18 to enter a pub’s kitchen. The premises licence simply provided that young persons (and children) had access to “all public parts of the premises”.

Q: I’m the holder of a personal licence. Last year the police found me sleeping in my car on a street after a row with my girlfriend and following a visit to the local pub. I had no intention of driving until I’d sobered up but the police said I was in charge of the car. The case came to court and I pled guilty. I notified the licensing board of the conviction and they’ve arranged a review hearing. The letter from the board says that the licence may be endorsed, suspended or revoked. I’m currently the premises manager at a pub. If I lose the licence or it’s suspended the likelihood is that I’ll lose my job or be demoted. What can I expect at the review hearing?

A: If the police haven’t recommended that the licence should be refused that’s a promising starting position. Otherwise, assuming that you have a previously clean record, I reckon the worst you can expect is an endorsement. It is of course important that you get expert professional representation at the hearing.