'Average' pub costs £390,000

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Related tags: Licensed property agent, Price, Value, Cost

Pub values have risen again this year with freehold prices up five per cent, according to the latest annual survey from licensed property agent...

Pub values have risen again this year with freehold prices up five per cent, according to the latest annual survey from licensed property agent Fleurets.

The average cost of a pub in the UK is now up to £390,000 while the biggest price increases have been in the east of the country where prices have gone up from £227,000 to £311,439 over the past two years.

The affluent South has remained the most expensive with the average price of a pub up to £613,571.

"It defies any gloom that there is any problem with the prices of freehold freehouses," said Barry Gillham, chairman of Fleurets (pictured)​.

"For the first time ever the average price of a freehold in London has broken the £500,000 barrier."

The cheapest place to buy a pub is in the west of the country where the average price is £272,625.

But Mr Gillham added that buying in the Midlands, where the average price of a pub is £311,174, is the best value for money. Agents work out the best value by calculating the price of the property as a multiple of its turnover. This indicates its value as a business rather than just a building.

Mr Gillham said: "In terms of value for money, the West Country and the Midlands are the areas property can be bought for the lowest multiple of turnover, while London, as expected, is the most expensive."

The survey also revealed that the price of bottom-end brewery disposals has fallen slightly.

The average is now at £154,000, down from last year's boom price of £177,000.

This could be due to the fact that increasing number of people are buying pubs for alternative uses such as housing.

But the long-term trend is still upwards, said Fleurets.

Mr Gillham said: "These prices continue to be influenced by underlying increases in residential values and certainly quite a lot of pubs are being sold for alternative uses."

Prices of second-hand leases are struggling as many of the larger operators have been flooding the market with available sites.

This means, according to Mr Gillham, that existing leases will have to be more attractively priced.

High street brands fail to reap the rewards

Pub companies are losing money on high street properties, according to the survey.

Failed high street brands are failing to bring any profits in for pub companies, especially in London.

In the capital, sites had an average turnover of nearly £500,000 but the price achieved for the sites was only £126,000 - 26 per cent of turnover.

But in the north of the country average prices were higher at £236,500 with a turnover of £318,000 - 74 per cent of turnover.

Related topics: Other operators, Property law

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