Newly leased pubs' turnover forecast up 14%

By Georgina Townshend

- Last updated on GMT

Projected turnover: forecasts for newly leased pubs have risen by 14%
Projected turnover: forecasts for newly leased pubs have risen by 14%

Related tags: Leasing, Renting, Leasehold estate

Turnover forecasts for newly leased pubs have risen by 14% for the next two years due to “improved business confidence”, according to the latest data from the Royal Institute of Chartered Surveyors (RICS).

The projected increase is based on figures from the final quarter of 2016, which are gathered by for the institute’s Pub Benchmarking survey.

RICS works with pub companies to collect the data as part of efforts to improve transparency around pub lettings.

A spokesman for RICS confirmed the increase in average turnovers “reflects improved business confidence in the sector”.

The survey found the average new lease length remained just over seven years and the average rent on a new lease was 9.5% of projected turnover.

South-east leads trends

A RICS spokesperson said: “The uptick in confidence is driving an increase in average rents, but the regional pattern shows that these trends are being led by London and the south-east.

“The mix of tie types is now veering more towards free-of-tie lease deals, particularly in London and the south-east.

“But, in total, fewer new deals are being done by survey contributors each quarter.”

Figures reveal that in the fourth quarter of 2015, a total of 248 leases were agreed. This had fallen to 177 in the same quarter in 2016.

RICS said that the average projected turnover of leased pubs had gone up and down throughout 2016, but it ended on £392,016 – a 14% rise from the same time last year.

Rent rises again

Average rent has risen for the fifth quarter in a row, and has gone up nationally by 28% in a year, from £29,253 to £37,487.

In London, rent continues to be almost double that of other regions. Average prices in the capital had risen by £14,750 to £75,750.

The north-west was the only region where average rent went down, dropping from £24,970 to £24,031.

On average, the wet share of turnover on new leases was 72%, at the end of 2016, compared to 73% a year before, while the share of dry-led turnover had risen to 25% in 2016 from 24% in 2015.

The report found, on average, 30% of new leases have a part tie, 57% have a full tie, and 13% were free of tie.

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