Leasing becoming more attractive than selling for freehold pub owners

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Related tags: Renting, Real estate

Allwood: "If an option to buy is included in the lease there is a good chance the tenant will be in a position to exercise it
Allwood: "If an option to buy is included in the lease there is a good chance the tenant will be in a position to exercise it
I have noticed that the owners of freehold premises are starting to realise that they have a better option than ‘cutting their losses’ and selling up.

Instead of selling their freehold at a time when property values are at their lowest for many years, especially in our trade, they now welcome the idea of leasing their business to a prospective buyer.

This option brings benefits not only to the vendor, who will receive a leasehold premium sum as well as regular rent payments, but also to the purchaser, who may not be able to raise sufficient funds to consider the purchase of a freehold when banks and financial institutions are much less willing to part with their money than they were a few years back.

In taking this option the vendor is able to keep the freehold, while not having to pay for the upkeep of it, enabling them to wait for property values to increase before selling the property.

If an option to buy is included in the lease agreement then there is a good chance that the tenant, having been successful over a period of time, will be in a favourable position to exercise it.

With pub companies introducing more and more hoops to jump through for prospective tenants, the private lease of a free-of-tie business is looking very attractive indeed to buyers in the current market.

  • Martin Allwood is a valuer at UK Pub Sales

Related topics: Property law

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