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Teach Me about Buying A Bar Restaurant Leasehold

Buying A Bar Resaurant Leasehold

In response to several enquiries, I am writing a post on Selling a Bar Leasehold, and this information can of course be applied equally to buying leasehold.

 A 5 Or 10 Year Lease

When you sell a bar lease hold you can choose to offer either a 5 or 10 year lease. The price of the lease which, is a one off payment is based on the value of the business. If the bar is closed the price will be quite low, whereas a bar which has been up and running and taking good money for say 10 years will be priced higher.

When you sell the lease you are effectively selling everything within the bar and the established client base, but you are not selling the bricks and mortar.

The new owner will pay you a monthly rent on which you, as the freeholder are obliged to pay about 15% income tax. The new owner is required to pay VAT on top of the rent.

The new owner can renew the lease after the term has expired. At this point the rent is renegotiated slightly within laid down boundaries and the new owner carries on for another term of 5 or perhaps 10 years. NB: The new owner does not have to pay the lump sum to renew the lease.

The owner may sell the lease on to a third party after first offering it backs to the freeholder. If the freeholder does not intend to buy the lease back, the lease may be sold on in which case the freeholder is entitled to a commission from that resale.

I am not a layer or an accountant, so I have just given you a rough guide to how the leasing system works the reader is advised not to make any financial decisions without first consulting a professional for precise information.

This entry was posted on Tuesday, March 25th, 2008 at 1:37 pm and is filed under Business. Find similar posts by selecting and of the following tags: . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.