In the next article in our series we set out some of the title searches, investigations and queries that a property purchaser might need to undertake or raise to ensure a property meets their commercial requirements and there are no nasty underlying issues that might crop-up later down the line.
Whilst Covid-19 has no doubt put some brewers plans to move or expand on hold, the recent announcement of North Brewing Co’s move to the multi-million pound “Springwell” site in North Leeds is a positive example of how the industry is still buoyant and we expect to see further craft breweries upscaling to meet demand in the coming year.
Whilst this article is framed from the perspective of a freehold purchaser, the points below are equally applicable to a purchaser of long leasehold property interest.
Searches
As a minimum, a purchaser should instruct their solicitor to undertake a local land charges search, a local authority search and raise drainage and water enquiries. These searches will flag potential issues such as conditions in planning consents, listed building notices and charges recoverable by the local authority for drainage and sewerage works amongst other things.
In the case of a purchase of unregistered land (that is yet to be registered at the Land Registry) an Index map search and Land Charges Department search will also need to be undertaken to show any adverse entries affecting the land.
Title Investigation
The purchaser and their solicitors should examine the official copies of the title register, the accompanying title plan and similarly, review any documents referred to in the register to check that the property recorded on the register aligns with the description of what they expect to purchase and crucially, that there are no adverse entries, such a restrictive covenants, that will impact or restrict their planned use of the land once acquired.
In the case of leasehold property, a purchaser will need to carefully check the terms of the lease they are acquiring to ensure all rights and easements required for their proposed use of the property are contained within. Of particular concern, in the case of an assignment of a lease, is that the lease allow you to use the property to produce alcohol, and if you wanted to open a bar on site then you would need to make sure that you could allow alcohol to be sold/consumed on site.
Replies to Enquiries
In addition to the searches outlined above, it is customary for a purchaser to raise pre-contract enquiries which will draw out a significant amount of information regarding the property. Whilst, these could be a completely bespoke set of enquiries, purchasers will often utilise the Commercial Property Standard Enquiries (CPSEs) and supplement these with a few additional enquiries if there are specific matters they need further information around.
A purchaser will need to be mindful of the VAT status of the property as property is not automatically subject to the charge of VAT meaning there must have been an express opt-in for the sale of the property to be treated as a “taxable supply”. If this option has been exercised, then the purchase will be subject to VAT, and will increase the purchase price by 20% (albeit as long as the purchaser is VAT registered, they should be able to reclaim the VAT).
The purchaser should also review the insurance arrangements for the property and check that the landlord/seller has been able to insure the property historically at reasonable commercial rates.
Planning Permission
It will be important to check whether any planning permissions are required for the intended use of the property and in the case of a leasehold purchase, the application for and subsequent grant of the necessary planning permission could be made a condition of entry into the lease.
Similarly, the purchaser will need to check any existing planning permissions that might impose conditions upon the intended use of the property. Conditions might include specific hours that the property cannot be used/accessed or even a limit on noise omissions from the property (if for instance the property is within a certain distance of residential housing).
Contract Matters
As mentioned above, a purchaser will need to be mindful of whether VAT is to be charged on the purchase and the effect this will have on the price and your advising solicitor will flag this.
There might also be a deposit that needs paying in advance that will be held to the purchaser’s order pending completion of the purchase and your solicitor will help organise these arrangements.
Post-Completion
Unfortunately, it is not usually as simple as paying the price and taking the keys. There will usually be Stamp Duty Land Tax (SDLT) payable within 14 days of the purchase and incrementing from 0 - 5% dependent upon the purchase price. There will be penalties and interest for failure to pay SDLT and your solicitor will normally arrange payment on your behalf.
Likewise, there are registration requirements associated with a transfer of freehold and leasehold (over 7 years in duration) interests in property and you will of course want to make sure that your solicitor deals with the requisite Land Registry registrations to ensure you are registered on the public record as the property owner.
Licensing
Any buyer in this scenario may want to open an on-site bar or sell alcohol for consumption off site from the premises, and therefore you may need to take advice on the licensing aspects of the purchase.
If you are considering a freehold or leasehold property purchase or lease renewal and would benefit from advice, please do feel free to contact Daniel Finn or the co-author Tom Wright who would be happy to discuss your requirements.
