Pandemic more than halves number of freehold and leasehold pub transactions

By Stuart Stone contact

- Last updated on GMT

Pub price drop: the average price of a trading freehold pub fell by 34.7% during the Covid-19 pandemic while the average leasehold pub price plummeted by 46% Fleurets’ Survey of Pub Prices 2020
Pub price drop: the average price of a trading freehold pub fell by 34.7% during the Covid-19 pandemic while the average leasehold pub price plummeted by 46% Fleurets’ Survey of Pub Prices 2020

Related tags: Property, Freehold, Leasehold pubs, Finance, Fleurets, coronavirus

The pub property market’s Covid symptoms include plummeting sales values and volume according to Fleurets’ Survey of Pub Prices 2020.

According to the leisure property specialist’s annual report, the average price of a trading freehold pub fell by a third (34.7%) to £567,500 during the Covid-19 pandemic while the average leasehold pub price plummeted by 46% to £30,769.

These figures come after the average trading freehold price and leasehold prices respectively rose by 8.3% and 10.2% during the six months to March 2020.  

In the freehold market, Fleurets’ survey found that transaction volumes fell by 54% following the coronavirus outbreak versus the previous six months and that quality of assets purchased slipped as demonstrated by a 25% decrease in average fair maintainable trade (FMT) of pubs sold.

The story was similar in the leasehold market, which saw a 25% drop in FMT and post-Covid activity dropping by a massive 82% versus 2019 volume. “A higher proportion of leasehold units are wet led and in town and city centres and these areas have been most adversely affected by the pandemic,” the report explained.

Additionally, the report found that average leasehold prices in the south fell more than the north – respective 51% and 38% reductions – primarily as a result of a larger reduction in FMT, 32% in the south and 12% in the north.

Fleuret’s report also found that the average price of non-trading sites fell by just 1.4% during the pandemic though the south was again disproportionally affected with regional transaction volumes falling sharply by 49% and the average price declining by 11%. 

Operators ‘hanging on’

While Fleurets forecasts that “2021 will be a difficult year and trading conditions will be tough, particularly in Q1 leading into Q2” the firm hopes that the ongoing vaccine rollout and any subsequent easing of restrictions will herald a gradual recovery for the hospitality sector.

However, the leisure property specialist adds the pub sector’s short-term outlook is unclear as long as restrictions remain in place.

“Government support is critical in determining what happens to our sector in 2021,” the report states. “Without financial support, many operators will be unable to meet their overheads while social distancing measures are in place.  

“In tier one continued Government support may enable many businesses to begin to repair the damage of the last nine months (and counting) however, without substantive support until all social distancing is removed there will be the inevitable consequence of previously unseen levels of distress and business failures.  

“At present, many operators are hanging on, using their last reserves, relying on Government support, deferring payments and building up a mountain of debt in the hope that they can survive long enough to experience a return to trade once again.” 

What’s more, Fleurets also predicts that an increased number of disposal opportunities hitting the market is “seemingly inevitable”, as measures to protect employment and prevent business failure are wound up as pandemic restrictions ease. 

“This will create acquisition opportunities for well- funded expanding operators,” it states.

Read Fleurets’ full report here​.

Related topics: Property law

Related news

Show more

Spotlight

Follow us

Pub Trade Guides

View more

FREE EMAIL NEWSLETTER

Subscribe to The Morning Advertiser

The definitive voice for the pub trade

Get the latest news, analysis and insights from the uk pub sector straight to your inbox!