Advice zone

Fleurets pub prices report Nationwide property agent Fleurets has released its latest snapshot of the UK pubs market, based on the pubs sold by the company over the 12 months to 30 September.

On the freehold front, the highest prices were, unsurprisingly, in London and the South, at £500,357 and £613,571 respectively. The lowest prices were in the East and the Midlands, with an average of about £350,000.

The North and the Midlands offered the best value, with freehouse prices about 1.4-1.6 times turnover, whereas buyers in London and the Home Counties could expect to pay multiples of well above twice turnover, with multiples of more than 1.8 times in the West, South and East.

The average price of a freehold freehouse topped £500,000 for the first time, up 39% on the previous year's figure at just under £544,000. However, Fleurets believes the market may now have peaked.

Based on the current figures for price compared to turnover, the average multiple increased by 26% from 1.44 times turnover in 2003 to 1.82 times for 2004, which, the agent says, "gives cause for concern". "It is almost certainly supportable at current very low levels of bank interest rates but is susceptible to any further base rate increases," the agent concludes.

There was less regional price variation on the leaseholds front, which accounted for the bulk of the company's business (56.1%), with average prices of £58,000 and £61,000 in the North and the Midlands and £80,000-£84,000 for London, the West and the South. However, the figures mask a wide variation for individual businesses, ranging from "several" at £30,000 to those priced at more than £100,000.

Leasehold pub prices translated to between 21% and 26% of turnover for all regions except the southern counties, where the figure was 32%.

The overall average value for a leasehold pub business was £73,000, with the 26% year-on-year increase being similar to the 28% seen in 2003 and the 27% increase in 2002. The average turnover of a leasehold business sold by Fleurets was £280,000 in 2004, almost exactly the same figure as that for freehold businesses.

Fleurets concludes that "bargain hunters had a lean time of it in 2004," with very few disposals of "bottom-end businesses" - essentially, freehold pubs sold without the benefit of accounts, such as closed or vandalised properties.

"South Wales sticks out as the only place where a pub could be had for under £100,000," says Fleurets, the next cheapest areas being the North and the Midlands (£165,000 and £166,000). Meanwhile, prices in the South were more than £200,000.

All in all, the average selling price of just less than £148,000 for bottom-end businesses was slightly down on the previous two years.

Pub values 2002-04, based on properties sold by Fleurets