Pub Tenancy Vs Lease: What Is The Difference?

pub tenancy, pub lease, pub agreements
Written by: Pub Partners Team
Date added: Mon, 01/10/2018 - 10:00

One of the most common questions we get asked by people interested in running a pub is “what’s the difference between a pub tenancy and lease?”

There are actually three different ways you can run a pub, which we explore in more detail in this post on Pub Tenancies, Leases and Freeholds. But if you’re not in the market to buy a pub outright, you’ll be looking at whether a pub tenancy or pub lease is the best option for you.

Here’s a quick overview of both types of pub agreement. If you want to discuss these options in more detail, please get in touch with our team. We can talk through your specific circumstances, your plans and goals, and what type of pub agreement is best suited to you.

Pub Tenancy Agreement

A pub tenancy has the lowest entry costs and therefore is perhaps the easiest way to get your own pub business. Tenants don’t own the pub, instead they rent the premise off the pub landlord (a brewery or Pub Company like Greene King). This includes fixtures and fittings, stock, glassware, crockery, cutlery, fuel and other supplies.

Pub tenancy agreements are generally a ‘full tie’. This means that you must buy stock such as ales and cider from the pub landlord. A tied tenancy may also cover other drinks and bar snacks. Some tenancy agreements are ‘partial ties’, which may allow the pub tenant to purchase products from other suppliers. However, if the pub is owned by a brewery – expect to be tied to sell that brewery’s ales!

Pub tenancies are usually for five years. Often pub operators will renew their agreement after this period and continue to run the same pub for many years.

Tenancy Overview

  • You rent a pub property from a brewery or pub company
  • You’re self-employed and you employ everyone in the business
  • You have shared responsibility for repairs to the property
  • You cannot sell on the goodwill of the business
  • Usually a short term Agreement (5 years)

Always seek independent advice before taking on a pub tenancy.

Pub Lease Agreement

With a lease agreement the licensee purchases the lease of the building to run the pub as your own business. This is a more expensive option, but the terms of the lease are longer than a tenancy and the pub operator has more control over the premises and the direction of their business.

One of the key differences to a pub tenancy is that you are responsible for all the repairs and maintenance for the building. However, you do have the option to sell on the goodwill of the business – so if you build a very successful pub you could sell the business in the future and get a good return on your investment.

Lease agreements are usually for 10 years plus, which means licensees can develop business plans for the medium and long term.

Lease Overview

  • You rent a pub property from a brewery or pub company
  • You’re self-employed and you employ everyone in the business
  • You have full responsibility for repairs to the property
  • You can sell on the goodwill of the business
  • Usually a long term Agreement (10+ years)

Always seek independent advice before taking on a pub lease.

The Standard Tenancy Agreement and the Standard Lease Agreement are the most common pub agreements, but Greene King do offer other options too. Details can be found here about all our agreements.

If you are uncertain as to which option is right for you, get in touch with our team to discuss this in more detail. We would be delighted to explore the various ways of running a pub with you, and discuss your experience, circumstances and goals. Click here to arrange a call back at your convenience.