Leisure Sector Update: The Hidden Challenges of Regaining Possession of Closed Pubs

Welcome to the Harrison Drury Leisure Sector Newsletter. Your regular update on legal developments across the leisure, hospitality and tourism sector. Our aim is to keep you informed, prepared and ahead of the curve with insights tailored to support you and your business.

Recent analysis provided by the real estate intelligence company, Altus, found that on average 50 pubs per month closed in England and Wales in the first half of 2024. This is clearly not welcome news, and it also serves as a timely reminder that there are key consequences all owners must remain mindful of when seeking to take back vacant possession of such pubs. 

It is common for pub tenants to reside at the premises, commonly in residential accommodation located above the pub itself, and they may reside with their partner, spouse or children. 

It is also common for staff at a pub to live in the residential areas and service occupancies are becoming ever more normal.  Service occupancies present various issues to consider from both an employment and property standpoint.  They arise when an employer requires an employee to reside in the employer’s property for the better performance of the employee’s duties.  This provides the employee with a personal licence to occupy the property for so long as they are employed by the employer.  Common examples of employees who might acquire service occupancies include caretakers, hotel managers, pub operators or housekeepers.

Terminating such occupancies (especially where no written agreement is in place) may not be as straight forwarded as relying upon the termination provisions in the lease, which grants the demise for trade but remains silent on residential occupation.  Owners of such properties can find themselves in a predicament where the property is empty from a business trading perspective due to the pub’s closure, but they are unable take back vacant possession due to occupiers residing in the premises.

We have a team of solicitors across a range of legal disciplines all with significant experience in supporting businesses in the leisure sector. Meet our leisure sector team to see how our team can help support you. If you wish to subscribe to our leisure newsletter, please do so here.