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Fears over pub tenant

A shadow licence provides complete protection to the landlord

Q:  I recently bought my second pub which currently has a tenant in situ but the tenancy is due to end in less than 12 months when I expect the tenant to leave.  I will then take on the running of the pub and I am anxious to ensure the safety of the Premise Licence.  I am somewhat nervous about the existing tenant and whether they will be able to continue to pay the rent since I know financially they are struggling.  The previous owner of the pub also did not have a very good relationship with the tenant.  Is there anything I can do to protect my position in terms of the premises licence which is in the name of the tenant for the time being?

A:  Any person with a legal interest in a property may give notice to the Licensing Authority of their interest, in order to be kept informed of any licensing applications in respect of that property.  Once received, the Authority will record your interest in the premises, endorse the notice and return it to you.  You will then be formally notified of any subsequent applications relating to licences under the Licensing Act 2003, in respect of the premises indicated.  This may include new applications, variations of existing licences, transfers, reviews, or notification if the licence lapses or is surrendered. 

The notice of interest is valid for 12 months from the date of receipt, and tacit consent applies.  After this time, if you still wish to be kept informed of any applications or changes made for licences in respect of the premises, you may submit a new notice. 

However, you will not be made aware of by the Licensing Authority of any insolvency of a tenant and you would have to keep a close eye on their solvency by ensuring a credit check is done every 2-3 weeks.  If you find that the company or individual has entered into any form of insolvency, then you will need to lodge an application to transfer the Premises Licence within 28 days. 

Should you still be concerned about your position in terms of the Premises Licence, as a belt and braces approach, you could apply for a shadow licence in your own name to mirror the existing licence that is in the name of the tenant.  The shadow licence can provide complete protection to the landlord, should unforeseen circumstances arise including the lapse of the licence through insolvency. 

These are not uncommon and “sit behind” the licence held by the tenant.  The term is not defined in either statute or case law.  In Extreme Oyster Ltd and Star Oyster Limited v Guildford Borough Council, the High Court has confirmed that shadow licences may be granted by a Licensing Authority to landlords, if the application falls within the statutory framework in the Licensing Act 2003. 

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