Fleurets says pub multiple of 3.67 is 'off the scale'

The increasingly difficult trading climate has had a marked effect of the value of leasehold pubs sold over the past year.

Leasehold prices increased by only 0.7% in the year to 30 September with the multiple (the ratio between turnover and selling price) up by 3.7%, according to a report released by property agent Fleurets.

By contrast, the report found that the scarcity of freehold pubs had pushed up prices by 11.5% with the multiple up by 15%.

There was also strong demand for bottom-end pubs with prices advancing by 13.5% and the multiple up 4.7%. Many of these pubs were bought for conversion to other uses, such as residential, said the report.

In London and the Home Counties, Fleurets said the very few freeholds that came on to the market had led to a huge increase in price, with the average "nearly £1.9m and the multiple of 3.67 is literally off the scale compared with previous years".

A steep rise in freehouse prices was noted in the north-east and East Anglia; however, prices were down in the West Country, south and central Wales and the West Midlands.

In the south, the average price was the lowest since 2003.

In the leasehold sector, the regions suffering the most were the north-west, East Anglia, West Midlands, central Wales, and London and the Home Counties, where the average prices fell below those achieved in the previous year.

Bottom-end disposals showed remarkable price increases in all regions except the north-west. In London and the Home Counties, the average price more than doubled to £650,000.