Pub prices hit peak

By Ewan Turney

- Last updated on GMT

Related tags Real estate Managing director

A classic pub
A classic pub
Property prices in both the freehold and leasehold markets have peaked - that's the view of several leading agents. A downturn in profitability...

Property prices in both the freehold and leasehold markets have peaked - that's the view of several leading agents.

A downturn in profitability caused by increasing overheads coupled with the dumping of a large number of nil-premium leaseholds on the market mean prices may even see a slight drop over the coming months.

Realism"Prices have gone as high as they can at the moment,"​ said Guy Simmonds managing director Stephen Taylor.

"In general it is the overheads and red tape, plus interest rates have gone up. Lenders are getting tighter on lending for tied leases and there is also a sense of realism in the domestic housing market."There are quite a few overvalued at present​Graham Allman, Managing Director, GA-Select

Taylor added that the nil-premium leases were also having an adverse effect but warned buyers to carefully consider all options before taking one.

"Often, those with nil premiums are not good quality and are not good businesses and have high rents. It is far better to pay a premium for a good business than pay a nil premium for one with a negative cash flow."

GA-Select managing director Graham Allman believes the market will be flooded in two years when the current batch of pubs being taken on a nil premium come up for assignment.

Unsustainable"They have substantially high rents and I believe some are unsustainable. In two years when they come up for assignment they may well be impossible to sell,"​ he said.

Allman believes overvaluation of properties is another problem facing the market."If properties are valued correctly they will sell quickly, if not they don't. There are quite a few overvalued at present."

Cookseys DMP managing director David Morgan added:"There is no reason for prices to go up further at the moment as overheads are increasing more than turnover."

Are you astounded by the prices of pubs?Are you being excluded from the market by the huge sums of money involved?Please let us know by clicking this link​ - please include "Pub Prices" in the subject line.

Related topics Property law

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