Freehold shortage drives up price of leases

The shortage of freehold sites is continuing to drive up the price of leases, according to agent Christie & Co.​ It says that the lack of quality freeholds means that the sector continues to be a seller's market as independent and corporate operators compete for sites.

The agent claims that although the slow-down in house price growth in some areas is starting to affect first time buyers' ability to raise equity quickly, there is still considerable interest from people looking to get their hands on a pub property.

Pub operating companies are continuing to churn their estates which, according to the agent, means they can benefit aspiring entrepreneurs who are able to purchase these properties. Their own creative flair can help build a more profitable pub business, it claims.

The leasehold market has been improving in "leaps and bounds" because of the lack of freehold properties available. And more leases are hitting the market as an increasing number of former managed houses are being converted by pub companies into quality leasehold pubs.

"This sector has the added advantage of providing buyers with a lower entry cost as leasehold pubs are always cheaper to buy than the equivalent freehold property," says the agent.

However, according to property agent Bettesworths the proposed changes to the residential housing market, which will require all information to be provided upfront including surveys, could speed up the sale of commercial property.

Stephen Lofthouse, a director of commercial property agent Bettesworths, believes these changes which come into force in 2007, will have a knock-on effect on the pub sector, encouraging vendors to carry out a considerable amount of preparation before going onto the market.

According to Mr Lofthouse, the new regulations will help improve the present situation which is already changing and benefitting clients through a closer co-operation between local solicitors, vendors and purchasers.

"If there's good co-operation between the three, sales do not need to drag on, as all the information required by the purchaser is obtained by the vendor's solicitors enabling a quick sale to take place," he added.

"This shows that preparation by the vendor and the vendor's solicitor can assist the sale."