Buying a pub with the building or on a lease: what changes?
Owning the building ties up more capital and gives you control of the property, but you also carry its repairs and its resale. Taking over a lease keeps the purchase smaller, but the landlord’s term and renewal rights shape how long the pub is yours. Compare both routes on the same questions.
Some pubs are sold with the building, and many are sold as a business sitting in rented space. The choice changes how much money is tied up, who controls the property and what you can do when you want to leave. Neither route is better in itself. It comes down to the capital you have, the condition of the building and how long you plan to stay. Weigh the two routes on the same terms before you compare individual pubs.
Capital tied up in the property
Buying the building means paying for the pub and the property, and that money stays locked in bricks rather than working in the bar. Taking over a lease keeps the purchase smaller and leaves more cash for stock, repairs and a slow first season. Ask yourself what you would do with the difference. Your lender and accountant can help you weigh the extra cash against owning the walls in your own case.
The condition of the building
An owner carries the roof, the kitchen exhaust, the plumbing and the parking lot. Ask for a building inspection and records of past repairs, and ask what the seller has put off. A tenant often shares some of these costs under the lease, but not always. Read who pays for structural work, the roof and the heating and cooling before you assume the landlord covers them.
Lease term, renewal and landlord control
On a lease, the remaining term and the right to renew matter as much as the price of the pub. A short term can leave you building a business on borrowed time. Ask whether the landlord must consent to the sale, whether rent can be reset and what happens to your fit-out when the lease ends. Your lawyer reads these terms; the answers belong to the lease, not to a general rule. See how much cash you need to buy a bar for the cash side.
Financing and your exit
Lenders look at property and a lease differently. A building can be security for a loan, while a lease gives them less to hold, and they will set their own terms either way. Think about the exit as well. A pub with the building can be sold as a business, as a property or both. With a leased pub, a buyer will ask how much time is left on the lease and what your lawyer says about passing it on.
Related reading
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- Expert answerHow is buying a franchised pub different from an independent pub?
- Expert answerDoes a liquor licence transfer when you buy a bar or restaurant?
- GuideBuying a bar and pub in Canada
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- Expert answerWhat happens to a limousine service’s chauffeurs when the owner changes?
Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
- 02Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 03Business Development Bank of CanadaGovernment13 terms you need to understand before signing your commercial real estate lease
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