Michelle Perrett meets David Gooderham, a director of AG&G - licensed leisure property consultants.
Do you think pubs are overpriced in the market at the moment?
Pub values have traditionally mirrored the residential property market and the public's perception is that property values are high at the moment. The prices that pubs change hands at, whether freehold or leasehold, is reflective of the present buoyant market and buyers' view on future interest rate rises and affordability. While interest rates remain low, the actual repayment cost will be reduced, making pubs more easily affordable at higher prices.
What effect do you think the Disability Discrimination Act will have on the property sector?
Most corporate operators have anticipated this legislation and have provided for it when undertaking fit-out work. At a practical level, this legislation will certainly increase costs. It is also likely to have greater impact on those units with a small floor size of under 1,500sq ft and actually may render some listed buildings unconvertible.
Do you think that pub company policies of upward only rent reviews have had their day?
Since adequate records have been kept for the past 25 years or more, rents have shown continued upward growth. Even if there is a change in lease rent review provisions, so long as the market continues to perform as it has done historically, then rental values will continue to rise. Tenants may be placing too much hope on possible new legislation hoping for a rent reduction when history would suggest rental values will continue to rise anyway.
What effect do you think licensing reform will have on the property market?
As with all new legislation, the market will sooner or later reach a new equilibrium. If licences become harder to obtain, this will upset supply and demand and scarcity will lead to an increase in values. On balance, giving local authorities control of the licensing process, as well as the planning process, cannot be healthy.