Five out of every six pubs sold in 2016 remained as pubs

Speaking ahead of the launch of the company’s Business Outlook 2017​ report, the company’s managing director for pubs and restaurants, Neil Morgan, told The Morning Advertiser​ (MA​) that it was "continued evidence" that UK pubs are "stronger and more sustainable businesses".

When asked if this meant British pubs currently had adequate protection from developers, Morgan said that the legislation protecting community pubs was a tough balancing act. "There are cases where pubs sold for residential use did still have life in them as a viable pub business. On the other hand, I've seen unsupported pubs that have really lost their way [remain open]," he said.

First-time buyer boost

More positive news from the industry comes from Christie & Co reporting an 8% increase in the number of first-time buyers entering the pub market.

"Banks are generally more readily willing to lend on pubs now. We have seen the likes of HSBC and other major lenders become more keen on the sector," Morgan told MA​.

Brexit blues? 

However, there were warnings for the industry in the Business Outlook 2017​ report of a potentially tough 2017. "The average costs of running a pub are at a seven-year high, with payroll costs accounting for almost 30% of turnover," the report said.

"With the Government looking to introduce further increases to the national living wage, some operators have no choice but to absorb at least some of these additional payroll costs.

"Uncertainty over the UK’s EU exit could undermine security in the sector and threaten investment, particularly if restrictions on foreign labour are introduced."

The main figures released in the report showed that the average pub price increased by 4.4% during 2016. A figure lower than the 10.1% reported in 2015 and the 8.6% seen in 2014.

"You've got to factor in a bit of post-Brexit on that because there was uncertainty for that period," Morgan said.

2017 - the year of M&A?

Looking ahead to 2017, the Christie & Co report forecasted an increase in M&A (mergers & acquisitions) activity.

"The proposed​ Heineken acquisition of Punch does boost confidence in the industry," Morgan said of potential M&A activity.

"It may lead to pubcos that have a mixed tenanted and managed house model looking into the possibility of selling their tenanted estate," he added.