Licensable activities in England and Wales — including the sale and supply of alcohol, provision of late night refreshment, and regulated entertainment — require a premises licence under the Licensing Act 2003. For commercial landlords of pubs, bars, restaurants, late-night venues, off-licences, and entertainment venues, the premises licence is fundamental to the tenant's ability to trade. Without it, the tenant cannot operate the business for which the property is let, creating enormous commercial risk for both parties. The interaction between the premises licence regime and the commercial lease creates a unique set of obligations and potential liabilities: the landlord has a legitimate interest in ensuring the tenant maintains the licence (since licence revocation destroys the value of the demise for licensed use); the tenant needs certainty that the landlord's actions — or the landlord's own failure to cooperate — will not jeopardise the licence. This guide sets out the key legal framework, the division of obligations, the consequences of licence loss, and the rules specific to Scotland and Wales.
The Licensing Act 2003 Framework
The Licensing Act 2003 provides a unified licensing regime in England and Wales for four categories of licensable activity: (1) sale and supply of alcohol; (2) provision of late night refreshment (hot food or drink between 11pm and 5am); (3) regulated entertainment (performance of live music; playing of recorded music; theatre; cinema; indoor sport; boxing or wrestling; dance). A premises licence grants authorisation to carry on one or more licensable activities at specified premises. It is granted by the local licensing authority (typically the district or borough council), is tied to the premises (not the individual), and can only be transferred to a new licence holder or DPS by formal application. Every premises licence that authorises the sale or supply of alcohol must name a Designated Premises Supervisor (DPS) — an individual who holds a personal licence granted by the licensing authority.
- Premises licence: authorises licensable activities at specified premises; granted by the local licensing authority; tied to the premises not the person
- DPS: Designated Premises Supervisor — an individual named in the premises licence; must hold a personal licence; must consent to being named as DPS
- Personal licence: granted to an individual by the licensing authority; requires a licensing qualification (APLH or equivalent); enables the holder to be named as DPS at licensed premises
- Licensable activities: sale/supply of alcohol; late night refreshment (hot food/drink 11pm–5am); regulated entertainment (live music; recorded music; theatre; cinema; indoor sport; boxing/wrestling; dance)
- Licensing objectives: the Licensing Act 2003 requires the licensing authority to promote four licensing objectives: prevention of crime and disorder; public safety; prevention of public nuisance; protection of children from harm
Lease Obligations and the Premises Licence
Commercial leases of licensed premises typically contain specific covenants addressing the premises licence and DPS. Standard provisions include: an obligation on the tenant to maintain the premises licence throughout the term; an obligation on the tenant to ensure that a valid DPS is in post at all times; restrictions on making any material variation to the premises licence without the landlord's prior written consent; an obligation to notify the landlord immediately if the premises licence is reviewed, suspended, or revoked; and (in some leases) a provision enabling the landlord to intervene to apply for the premises licence in the tenant's name if the tenant fails to maintain it. Landlords should be aware that the premises licence is a separate legal instrument from the lease — the landlord cannot simply take possession of the licence from the tenant or transfer it themselves without the existing licence holder's cooperation.
- Obligation to maintain the licence: tenant covenants to maintain the premises licence and ensure a valid DPS is in post throughout the term — failure = breach of covenant potentially giving rise to forfeiture
- Material variation restriction: tenant should not materially vary the premises licence (e.g., extend permitted hours; add licensable activities) without landlord consent — changes affect the premises and potentially their planning position
- Notification on review/revocation: tenant obliged to notify landlord immediately on receiving a review application or suspension/revocation notice — landlord may have standing to make representations
- Landlord intervention: some leases include step-in rights enabling landlord to apply for a new premises licence if the tenant fails to maintain the existing one — essential protection for the landlord's investment
- Alienation provisions: lease should specify that on assignment, the outgoing tenant must cooperate with the transfer of the premises licence to the incoming tenant before or simultaneous with completion of the lease assignment
Licence Review and Revocation
Any responsible authority under the Licensing Act 2003 — including the police, fire authority, environmental health, planning authority, trading standards, or the Home Office — can apply to the licensing authority to review a premises licence. Local residents and businesses can also apply for review in certain circumstances. On a review hearing, the licensing authority can modify the conditions of the licence; exclude a licensable activity from the licence; remove the DPS; suspend the licence for up to three months; or revoke the licence. Revocation of the premises licence is the most serious outcome: the premises can no longer be used for licensed activities. For a landlord, revocation destroys the commercial use of the premises, making the property effectively unlettable for its intended purpose. Landlords should ensure that the tenant's obligation to maintain the licence is backed by appropriate lease covenants and insurance, and should consider whether the lease contains provisions addressing the scenario of licence revocation (e.g., rent suspension; landlord's ability to forfeit; ability to terminate the lease).
- Review applications: any responsible authority or (in some cases) local community member can apply to review the premises licence; grounds include crime/disorder; public nuisance; public safety failures; DBS concerns
- Outcomes of review: modify conditions; exclude licensable activities; remove DPS; suspend licence (up to 3 months); revoke licence
- Impact of revocation: premises can no longer be used for licensed activities — tenant may be unable to trade; rental income at risk for landlord
- Forfeiture on revocation: landlord may be entitled to forfeit the lease for breach of the covenant to maintain the premises licence — but must follow s.146 LPA 1925 notice procedure; consider whether forfeiture is the right remedy vs rent abatement / restructuring
- Licence insurance: specialist licensed premises insurance products cover loss of licence scenarios — landlords should encourage tenants to maintain this cover
Assignment and Transfer of the Premises Licence
When a commercial lease of licensed premises is assigned, the premises licence must be formally transferred to the incoming tenant — the premises licence does not automatically transfer with the lease. The transfer of a premises licence is governed by ss.33–34 of the Licensing Act 2003. The incoming licence holder must apply to the licensing authority for transfer using the prescribed form, paying the applicable fee. The police have a right to object to the transfer on grounds related to the prevention of crime and disorder. If no police objection is received, the transfer takes effect immediately on receipt of the application by the licensing authority (provisional transfer); otherwise, it awaits a decision. The outgoing tenant (or the landlord, if the landlord holds the licence) must consent to the transfer. The timing of the premises licence transfer should be coordinated with the completion of the lease assignment — ideally on the same date, or with provisional transfer arrangements in place.
- Licence does not transfer automatically: premises licence is tied to the licence holder (not the lease) — it must be formally transferred to the incoming tenant under ss.33–34 Licensing Act 2003
- Transfer application: incoming licence holder applies to licensing authority using prescribed form LA3; police may object on crime/disorder grounds; provisional transfer effective on receipt
- DPS change: incoming tenant must also notify the licensing authority of a change of DPS using prescribed form LA4 (or include with the transfer application)
- Coordination with lease assignment: lease assignment and licence transfer should be coordinated — incoming tenant should not take possession without the licence being in their name or a provisional transfer in place
- Landlord holding the licence: in some cases the landlord holds the premises licence and grants the tenant permission to use it — in this case, the landlord's involvement in any transfer is even more critical
Scotland, Wales and the Pubs Code
In Scotland, the licensing of alcohol sales is governed by the Licensing (Scotland) Act 2005, which created the Licensing Board system. Scottish licensed premises operate under a premises licence granted by the local Licensing Board; the DPS equivalent is the 'Premises Manager'. The premises licence can be reviewed and revoked by the Licensing Board on similar grounds to England and Wales. Minimum unit pricing for alcohol applies in Scotland at 50p per unit (since 2018) and in Wales at 50p per unit (since 2020) — an important consideration for the economics of licensed premises in both nations. In England and Wales, tied pub tenants are subject to the Pubs Code Regulations 2016 (Small Business, Enterprise and Employment Act 2015), which gives qualifying tied pub tenants the right to request a Market Rent Only (MRO) option — allowing them to move to a free-of-tie tenancy at the open market rent. Landlords of tied pubs must comply with the Pubs Code and the Pubs Code Adjudicator's framework, which imposes significant obligations on pub-owning businesses with 500 or more tied pubs.
- Scotland: Licensing (Scotland) Act 2005; Licensing Boards; Premises Manager (equivalent to DPS); review and revocation on similar grounds to England/Wales
- Minimum unit pricing: Scotland 50p per unit (since 2018); Wales 50p per unit (since 2020); affects the commercial economics of licensed premises in these nations
- Pubs Code 2016 (England/Wales): tied pub tenants (tied to a pub-owning business with 500+ tied pubs) have MRO right — market rent only tenancy; free of tie; triggers include rent review; renewal; significant increase in costs
- Pubs Code Adjudicator: independent regulator overseeing the Pubs Code; hears disputes between tied pub tenants and pub-owning businesses
- Northern Ireland: Licensing (NI) Orders; separate regime; entitlement hours; Sunday trading; similar licensing objectives to England/Wales
Frequently asked questions
What is a premises licence under the Licensing Act 2003?+
A premises licence is an authorisation granted by the local licensing authority (typically the district or borough council) permitting specified licensable activities — sale and supply of alcohol; provision of late night refreshment; regulated entertainment — at a specific premises. It is tied to the premises (not to any individual), and must name a Designated Premises Supervisor (DPS) where it authorises the sale of alcohol.
Who is responsible for maintaining the premises licence — the landlord or the tenant?+
Under a standard commercial lease of licensed premises, the tenant is responsible for maintaining the premises licence and ensuring a valid DPS is in post throughout the term. The lease will typically contain specific covenants to this effect. Failure to maintain the premises licence is a breach of covenant, potentially entitling the landlord to forfeit the lease. The landlord may have step-in rights to apply for a new licence if the tenant fails to maintain the existing one.
Does the premises licence transfer automatically when a lease is assigned?+
No — the premises licence does not automatically transfer with the lease. The incoming tenant must apply to the licensing authority for a formal transfer of the premises licence under ss.33–34 Licensing Act 2003. The transfer should be coordinated to take effect on (or before) the same date as the lease assignment completion. The police may object to the transfer on crime/disorder grounds.
What happens if the premises licence is revoked?+
Revocation of the premises licence means the premises can no longer be used for licensed activities. For a landlord, this destroys the commercial use of the property for its intended licensed purpose. The landlord may be entitled to forfeit the lease for breach of the covenant to maintain the licence (subject to s.146 LPA 1925 procedure). Tenants should maintain licensed premises insurance covering loss of licence scenarios.
What is the Pubs Code and who does it apply to?+
The Pubs Code Regulations 2016 (made under the Small Business, Enterprise and Employment Act 2015) applies to pub-owning businesses in England and Wales that own 500 or more tied pubs. It gives qualifying tied pub tenants the right to request a Market Rent Only (MRO) option — a free-of-tie tenancy at the open market rent — in specified trigger circumstances (including rent review, tenancy renewal, and significant increases in tied product costs). The Pubs Code Adjudicator oversees compliance and resolves disputes.