Up, up and away

Pub values have risen again this year, with the biggest increases in freehouse prices coming in the Midlands and the North, according to Fleurets' latest annual survey.​While the average cost of a freehold freehouse is £392,000 in England and Wales - up from just under £390,000 last year - a rise of only one per cent, the Midlands and the North have seen prices rise by 23 per cent and 27 per cent respectively. Last year the demand for freehouses saw prices across the country go up five per cent. The situation in the letting market is even more interesting as the average price of a leasehold has spiralled by some 36 per cent. Prices have jumped from £67,415 to a new high of almost £92,000 - influenced by the huge number of high street disposals, says the agent. The average price of a bottom-end disposal, which can be a non-trading site or pub being transferred to residential use, has increased by one per cent from £154,287 to £156,000 for the year. The survey covers the period from October 1, 2002 to September 30, 2003.Freehouses​London and the South are still the most expensive places to buy a freehold freehouse, with prices coming in at an average of £605,000 and £404,500. But, due to the lack of freehouses available for sale in those areas, it seems that licensees are sticking with the pub they already have. The survey says that the small number of sales being made in these areas makes it hard to estimate accurate average prices. If you want a freehouse in the Midlands you are looking at paying £397,215, a big step up from last year's £311,000. The price hike in the survey is partly due to the sale of ten properties last year sold in excess of £400,000 and the sale of the Mundy Arms Hotel to Chef and Brewer for over £1m.In the North of England, which includes areas of Cheshire, Humberside and up to the Scottish borders, prices average £402,000 - up a huge 23 per cent on last year's figures.According to Simon Hall of Fleurets' Leeds office this is because "the number of freehold public houses in the market are at an all time low and there has been strong competition for good freehold quality sites".In the largely rural East of the country, covering Essex, Suffolk, Norfolk, Cambridgeshire and Lincolnshire, there are still a lot of low volume country pubs, says the agent. But values are still high at £345,000 up 11 per cent on last year. In the West of the country, which includes Oxford, Wiltshire, Dorset, Cornwall and South Wales, the freehouse market has been very quiet over the last year. According to the report "the market has been quiet due to businesses generally trading successfully and corporate acquisitions leading to quite a lot of off-market deals".But prices have remained fairly steady in the area with the average price of a freehouse hitting £287,000 - up five per cent on last year.According to Fleurets, pub companies are at the forefront, snapping up every available freehouse coming onto the market, leaving private purchasers simply unable to compete. These pub companies are paying an average of between £350,000 to £380,000 per freehouse, except in the South, where prices are consistently higher. Leases​Inevitably, London is the most expensive place for a leasehold pub, with the average price coming in at £162,000. But even in the West of the country the average price of a leasehold pub is £105,000 per annum, nearly double that of last year. The prices have been boosted by the sale of 10 sites by the agent which have managed to bag over £100,000 each.Lease prices are going up in the Midlands and the North of the country. If you want a lease in the Midlands you are looking at paying an average of £71,000 per annum, up from £65,000 last year. In the North prices are up 16 per cent on last year's figures, hitting £52,000. This a marked change for the region, which has been witnessing an over-supply and lack of demand in the leasehold sector. Simon Hall said: "The common theme is that good quality pubs situated in attractive and reasonably affluent areas with good rent to turnover ratios are selling very well, with high premiums achieveable."The majority of new lettings, especially in the North and Midlands, are transfers from managed houses. These are relatively high volume businesses for leases - at around 500 barrels and therefore are getting premium prices. Since early 2001, Fleurets has been involved in the letting of 750 pubs, including Voyager, Enterprise and Avebury Taverns, which is a launching a new type of lease for business people outside the industry called Starters Dream.However, prices are not spiralling across the whole country. In the South the abundance of leases has sent prices dropping this year to £74,000, down from £89,000 in 2002. Fleurets says most of the pubs let further south have been ones recently acquired and often run by temporary agencies until pubcos have been able to sort themselves out. Therefore the rents, ingoing and barrelage is lower.Definitions​

• Freehold/freehouses:​ freehold pubs sold with the benefit of accounts
• Leases:​ most are pub company leases with five to 15 years unexpired, mainly tied with market rents, although the figures include some free-of-tie leases and some of longer length
• Bottom-end disposals:​ freehold pubs soldwithout the benefit of accounts. They are often closed and/or vandalised.

Freehold prices at a glance​