‘Less attractive’ tied leases slow leasehold demand

Positive image: 71% of agents surveyed said they felt the pub property market was buoyant

Demand for leaseholds has slowed significantly in the past three years, according to a survey from the Association of Valuers of Licensed Property (AVLP).

The survey, conducted with pub property agents, found 46% said fewer people had contacted them about leasehold sales than three years ago. Only 24% of agents had experienced more interest and 30% had seen little change.

Responding to the survey, Tom Nichols, the founder of pub property agents Everard Cole, said that he felt this figure was due to tied leases being viewed as “less attractive” .

“Demand is still very strong for free-of-tie leases, which is because they are much more attractive to a wider audience of people. However, there is some uncertainty over the nature of the tie and the market-rent-only (MRO) option and I think they (tied leases) are, therefore, perhaps less attractive,” he said.

Freehold demand creating a buoyant market

In spite of the perceived slowdown in demand for leaseholds, the survey did find a marginal increase in freehold demand compared to three years ago.

More than a third, 38%, of agents said there was more interest in freehold pubs now than three years ago, while less than a quarter, 24%, said they were seeing less demand. And 38% said freehold demand was about the same.

Nichols said that demand for freeholds was most pronounced in the £200,000-£400,000 freehold price range.

Overall agents said they felt the market was more buoyant than it was at this time last year. More than two-thirds, 71%, said the pub property market was more buoyant, 21% said the market was less buoyant and 8% reported that the market as being in a similar state.

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