BARS operating without liquor or restaurant licences have been fined, forced to close, or banned from selling alcohol following the Lan Kwai Fong New Year tragedy. However, owners of illegally operating premises claim delays in licensing procedures have forced them to open before gaining formal approval. Otherwise, they face losing money on premises that are closed and making no return on rent paid. The delays are making developers think twice about producing restaurant space, and are making buyers and tenants cautious, according to Vigers assistant director Mr Paul Dwyer. ''The problem with licensing has not yet filtered through to the market, but it will be making prospective investors in restaurants and bars a lot more wary,'' said Mr Dwyer. ''Something they will be looking at is the length of the rent-free period they can get from the developer. ''If they can't be up and running, selling food and alcohol because of a delay in licensing, it means someone is incurring an overhead that cannot be supported by turnover. ''The amount of a rent-free period given is a direct reflection of supply and demand in the market and, at the moment, the office market is on an upswing.'' If the market indicated that it was necessary to grant rent-free periods of six months for restaurants but only two months for office space, it might not beneficial for developers to produce as much restaurant space. However, the Urban Services Department (USD) claimed a well-planned application could get the go-ahead within three months. Only if a venue failed to meet requirements, and changes were necessary, did a vicious cycle of referrals between government departments begin, which could delay approval for up to two years. There were two legal requirements for opening a restaurant: a liquor licence, and a general restaurant licence. Applications for liquor licences were relatively simple, and were usually dealt with speedily, but they could not be endorsed until a general restaurant licence was awarded. This involved premises meeting multiple health and safety regulations, and having plans and premises checked and approved by three separate government departments. USD assistant staff officer for licensing Mr Peter Tang said plans for the premises had to satisfy the buildings and lands department for structural safety and means of escape, the fire department for adequate fire installations, and the licensing department for health requirements. An official from each department inspected the plans and reported whether they had any objections in principle. Construction could start once approval was given, although work often started in advance. ''Good planning can lead to quicker licensing,'' said Mr Tang. ''If you plan well beforehand, find suitable premises, and submit a good proposal which meets the licensing requirements, it is not surprising to find a licence being granted within three months. ''For those who have to change the layout all the time, it can take one or two years. Once a change is made, the cycle has to start all over again. ''Changing something for health rules, for example, may have an effect on structural safety, and the application will have to be referred back to the buildings department. ''Licensing regulations are not difficult to comply with. They are mostly structural safety concerns, but we have an obligation to ensure customers are safe.'' Building management also has a say in the interior design of premises, and every building comes with a ''fit out '' guide in which management dictates the constraints of equipping and furnishing the premises. Mr Branco Pahor, a director of Damask Design, an interior design company that specialises in restaurants and bars, warned that fit-out guides could restrict design considerably. ''Once the contract is signed, it is too late to negotiate. It is vital to agree to any alterations in the fit-out policy with the management before signing,'' said Mr Pahor. ''For leaseholders, another problem is that most fit-out guides are aimed at offices and should not apply to retail space. Times Square has published two separate guides, one for office and one for retail, but that is uncommon.''