Leasehold pub prices increase, says Fleurets survey

The annual report also found sale prices in the north-south divide remain more or less on par with last year – the north had an average price of £26,063 and in the south the average price was £55,070.

The number of leasehold pub sales has risen by 400%, with free-of-tie leases accounting for 75% of activity in the 12 months to 30 September. However, author of the report Simon Hall, director and head of pubs at Fleurets, explained that the 400% rise is “from a very low base”.

He said: “In 2010, assignments were few and far between and a high proportion of activity involved the under letting of failed high street units often at subsidised rental levels. The last 12 months however has seen a much higher assignment volume, with some notable deals at significant premiums, both for tied and free-of-tie leases.”

Low-end freeholds​
The average sale price for bottom-end freehold sites has fallen 3.2% to £186,988, with a major north-south divide – the north saw an 11.6% decline, and there was an increase of 1% in the south. The north-west saw the lowest price at £142,759. Hall said that this could mean that some operators are willing to do deals on “problem sites” at lower prices.

The number of these sites being sold for alternative use is also on the up. According to the statistics, 54% went for alternative use, compared to 50% in 2010 and 42% in 2009. “The overall figure for the industry may actually be slightly higher as many pubcos have been dealing with the more obvious alternative use sales in off-market deals to the likes of convenience stores and care homes,” said Hall.

“This type of property has dominated public house transaction activity for the last three years, with only a marginal reduction in volumes in 2011 from the peak of activity in 2010,” added Hall. “Consistently with previous years, two thirds of the transactions have been in the northern regions.”

He added: “The sale of large numbers of pubs by the pubcos has resulted in large numbers of properties being released from the tied model of operation. Many have sold to private individuals for owner operation thereby increasing the total number of freehouses in the market, and many have been sold to some of the smaller regional managed house operators and brewers.”

Freeholds​
The report also found that on average, freehold prices have increased by 27% to £545,000, and a low volume of transactions has continued. However, Hall explained that this is “more about the quality of property being sold than the movement in prices”.

He added: “It is difficult to see any significant change in the market activity in the next 12 months. Until there is greater stimulus in the economy, increases of value in the housing market and a greater willingness of banks to lend money the freehouse market will remain relatively quiet.”