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Rental survey

Free-of-tie rents in London increase 21% over five years

By Liam Coleman , 05-Dec-2016
Last updated on 05-Dec-2016 at 17:16 GMT2016-12-05T17:16:57Z

Money: Free-of-tie rents across the country are rising
Money: Free-of-tie rents across the country are rising

Fleurets annual rental survey has shown a 21% increase in rents for free-of-tie leases in London, with the average free-of-tie rent in the capital now costing £107,674.

The survey - which covers rental information relating to rent reviews and lease renewals in the licensed and leisure market, including pubs, bars and restaurants - represents a comprehensive summary off all deals undertaken by Fleurets in the past five years.

As well as the headline figures for free-of-tie leases in London, the survey reported an 8% increase in free-of-tie leases over the past five years in the south and west as well as the Midlands. The north, meanwhile, has seen a 12% increase in free-of-tie lease rent over the past five years.

"With the current weakness of sterling we anticipate further overseas investment into the London market. Investor landlords are seeking to increase rents, which are being driven by operator demand. With a restricted supply of new properties, rents have inevitably increased. We have also witnessed £1m plus rents in prime locations further confirming London as one of the most expensive cities in the world in which to occupy space," Fleurets said in the report.

Shell-shock

Shell properties have also seen a significant increase in all parts of the UK over the past five years. The average rent for a shell site in London leased by Fleurets has increased 22% to £144,902. Elsewhere, the Midlands saw a 9% rise, the south and west a 6% rise and the north a 1% rise.

Reflecting on the report and the state of the licensed trade market, Fleurets added: "The recent announcement that the Government will be lifting its austerity measures should have a positive impact on the sector. With a greater flow of cash throughout the economy, some of it will end up in the leisure sector. In many city centres and in London in particular much of any potential gain will, however, be offset by a significant increase in the burden of higher business rates.

"Despite concerns in recent years the pub industry remains healthy, with continued new entrants into the market. Fleurets considers that the sector remains strong and with the benefits of tied lease rents being able to be negotiated to market rent (be that upward or downward), the market will continue to stabilise."