Smoking ban to start affecting property prices this year

The issue of smoking in pubs looks set to have the biggest impact on property prices over the next year, leading property agents have predicted.

Fleurets chairman Barry Gillham said that a partial ban would hit the "nice inner city pubs that get the best prices" the hardest, with the market likely to remain unpredictable until definitive legislation is passed.

"The thing the market really hates is uncertainty," he said. "The industry will only be able to plan ahead when it has a firm plan from the government and, ideally, time to implement it.

"People would be a lot happier with a full ban because at least then everyone would know what they're doing and it would be a level playing field."

He added that low interest rates will mean the price of freeholds are likely to remain strong, but said the market was becoming slightly more open as the pubcos become less acquisitive.

"In the last six months, the pubcos have stopped their door-knocking, mainly because the big boys have reached their targets. There's more scope now than there has been the last three or four years," he added.

Christie & Co director Colin Wellstead agreed that a smoking ban was likely to have a big impact, adding that the freehold market was the most likely to be affected.

"It will be really interesting how that pans out," he said. "I think the individual freehold market might just slow down a fraction, but it depends on what the government decides it's going to do."

Mr Wellstead added that there would be a likely increase in managed pubs converting to leases, with a continued increase in merger, acquisition and disposal activity. He also said that the leasehold assignment market would "continue to grow and grow".

However Mr Gillham warned: "The demand for leases remains very much in the hands of the pubcos, but there have to be good opportunities to make money if lessees are to work the long hours involved.

"The partnership of those owning the assets and those providing the muscle must be more than mere words."