Shut freeholds a hit

There are great benefits to buying pubs that have been closed down, claims John Williams, managing director of agent Sidney Phillips.

The agency, which is based in Herefordshire, has reported five sales of previously- closed freeholds in the last three months.

"With people showing renewed confidence in the trade, we've seen a wave of buyers, who want a change in their lifestyle, moving to Herefordshire," said Williams.

He added that people are particularly interested in boarded-up pubs because they tend to be freeholds.

"There is a shortage of freeholds and people who are making a lifestyle change do it because they want to work for themselves. They are usually successful business folk who have a large amount of capital to invest in a transforming a previously run-down freehold," he said.

Boarded-up pubs tend to be cheaper because the lack of trade information means a valuation by profit isn't always possible.

"The sites tend to be valued only on bricks and mortar," said Williams. "For example, the Sun Inn at Winforton, Herefordshire, was valued at £360,000 for the freehold. But if the pub had planning permission to be converted to a house, it would've been worth more like £500,000."

Grand openings are the key to successfully re-opening a pub.

"Of the four or five closed pubs we have sold in the last three months, licensees have invested £100,000 to £200,000 in them and marketed them as a new pub with a grand opening."

But understanding why a pub was closed in the first place is important, he insisted. "We always make sure we know why a business closed. Usually, it is because of poor operators or people who don't know the trade," said Williams.