Pub sites flood the market
Cheap pub sites are flooding the market ahead of April 1, when full rates become payable on vacant commercial premises, agents are reporting.
Under the current system, businesses pay no rates for the first three months a property is empty and just 50 per cent of the normal bill after that.
But in last year's Budget, the government announced it would scrap concessions for empty properties to help housing associations buy cheap sites for social accommodation.
London-based agent Paramount Investments said it expected pub prices to fall after seeing a "glut of properties" enter the market as pub companies seek to sell vacant sites before the system changes.
It said it had sold £10m worth of pubs to housing associations in recent months.
Managing director Mark Greig said: "Pubcos will find themselves having to pay full rates on vacant properties whereas previously they paid nothing for three months and 50 per cent thereafter.
"My view is that they will seek to sell these pubs, and that this will depress prices.
"Add in the effect of the smoking ban this winter, the credit crunch and recession fears, it seems likely the pub property market is undergoing a dramatic shakeout."
But he added that this could benefit the industry in the long term. "It might be painful initially, but it should create a healthier situation and a leaner, fitter industry," he said.
Meanwhile Yaser Martini, executive director at national agents Fleurets said he had also noticed an increase in pub sites entering the market - but the effect of the change to business rates was not yet clear.
"Whether the change in rates will have a big impact remains to be seen," he said. "But we already have more freehold properties on our books than at any time I can remember in the last 15 years.
"What we are going through is a transition period. Sellers are still thinking about 2007 prices and hoping they can achieve those rather than realising we are in 2008 and the market has changed.
"It will take some time for that to filter through."
