More than a bit part: pub fixtures and fittings

Davey Co sales director Barry Alldread explains: “The term ‘fixtures and fittings’ simply means loose trade inventory items, such as furniture and kitchen equipment, etc. Fixtures are items that are attached to the property.

“A tenant’s fixture is something that can be attached to the land or property for the purpose of running the business. For example, a free-standing wooden smoking shelter would be classed as a tenant’s fixture.

“However, if this was attached to the property or land and would cause damage to the property if removed would be classed as a landlord’s fixture.”

Who owns what?

Under a tenancy, Alldread explains: “Usually with a pub company or brewery, the tenant sells all fixtures and fittings to either the landlord or the incoming tenant. If during the period of tenancy, an item has been replaced this still belongs to the landlord and will be included in the trade inventory when sold.”

Alldread adds that under a new leasehold: “If a new lease is being granted, the tenant will purchase all fixtures and fittings from the landlord or, if purchasing the business as a going concern, will purchase directly from the current tenant.

“It is important that the tenant seeks legal advice on the terms within lease regarding fixtures and fittings as this is where the legal ownership will be stated.

“It is advisable to obtain a detailed inventory of fixtures and fittings and check them thoroughly before exchanging contracts or entering into any legal agreement between landlord and tenant.

“Keep detailed recordings of all new equipment bought, which are in addition to the inventory, because these are deemed tenant’s fixtures.”

What’s included in a premium?

Fleurets director James Davies explains: “Fundamentally, however good or bad they are, fixtures and fittings tend to just be included within the price.

“The quality of those fixtures and fittings, generally, will mirror the quality of the business. If you’ve got a failing business that isn’t making any money, more often than not, the chances are the fixtures and fittings may not be of the highest quality.

“If one is selling a freehold or leasehold pub, I’ve never known the fixtures and fittings to not be included. It’s part of that business.”

Venners general manager of inventory and valuations Wayne Chalk, has more than 30 years’ experience in fixtures and fittings. He explains: “Let’s say they’re saying the lease is worth £100,000 – they’ll have a quick look round and they’ll say, in our opinion, the [fixtures and fittings] are worth £20,000; whole figure £120,000.

“If you’re purchasing a freehold and you’re talking bigger sums of money then the inventory forms part of the package of when you’re purchasing.

“A full inventory should be prepared so that the purchaser knows exactly what they’re getting when they take the premises over.”

Create an inventory of F&F

A fixtures and fitting inventory goes far beyond a rough list of furnishings and should provide a meticulous breakdown of everything from light fittings to decoration.

Chalk explains: “Effectively, you go round each wall separately and describe everything in such a way that someone else could see exactly what you’re looking at.

“We’re finding people now who are saying ‘we’ve had an inventory done’ and when you get there it says ‘six tables, 24 chairs’. That means absolutely nothing.

“Yes, I can prepare what is a very basic inventory, ie, 80 bedrooms, 80 beds, 80 wardrobes, 80 bits of carpet – but that actually means nothing.

“It has to be a document that one can fully understand. If you’re describing an art print, say what the print is, whether it’s got a wooden frame or a metal frame.

“I do inventories for very well-known hotels and, to do that, you’ve got to go into minute detail. A standard pub inventory would be something like ‘a moulded timber-framed and glazed-coloured print, depicting boy playing with a dog.’”

How much is everything worth?

Venners’ Chalk highlights publicans should be wary that the value of a fixture may not match their expectations and that it takes an experienced head to tally up an inventory’s total value.

He says: “What you’re after is what is commonly known as an in-situ valuation. It’s what the goods are worth in-situ – not saying what it’s worth on eBay outside the trade.

“It’s worth what the market will pay and any member of the AVLP (Association of Valuers of Licensed Property) will have a better understanding of what those goods are worth in place. If you’ve got an ice-making machine, it might be worth £300 in the pub – you may take it outside and find it’s worth nothing.

“It is open to negotiation because it’s an opinion, but I would not negotiate it with someone who isn’t trained in that area.”

Being selective

While Chalk advises creating a comprehensive list of fixtures and fittings that may be of huge benefit should a publican need to make any insurance claims, Fleurets’ Davies suggests a more selective approach during the sales process.

Davies says: “Generally speaking, if the tenant is doing an inventory list themselves, or employing someone to do it, best practice would be to leave a few items that they intend to include off the list.

“Let’s say hypothetically, a couple of days before you’re due to complete, a glasswasher breaks down – and that’s included within the goodwill and is on your fixtures and fittings list.

“To buy a new glasswasher will cost X amount, but if you’ve left a few items of fair value off the list, you can simply say, ‘the glasswasher is broken, but to compensate, I will include another three tables or whatever it is’.

“The other thing, which is common sense, but if the seller has something that is of sentimental value or has a high value that they don’t want to include within the sale, then it is best advice to remove it from the property before they go to the market, because that way the buyer hasn’t seen it.”

Chalk adds that, from an incoming tenant’s point of view, there’s scope to make items optional, and not purchase the inventory wholesale.

“If there’s an item in the premises, let’s say a very good-quality antique, then we would say ‘make that item optional’ so that the in-going tenant has the right to say ‘I’m looking at a backstreet boozer, do I really want a £10,000 antique in my pub?’”

To find out more about pubs for sale, lease and tenancy visit our property site​.​