Increasing numbers of people are buying their own pub, according to a new report by the Abbey National. The bank has seen a 45 per cent leap in the number of people taking out mortgages to buy pubs over the last six months.
Its latest figures reveal that relatively few women are buying pubs on their own while purchasers of small/medium-sized pubs are usually male/female couples and to a lesser extent male/male business partners. Pubs in all parts of the country continue to be in demand but with prices increasing in the South East, buyers are looking elsewhere in areas such as East Anglia. According to the bank, East Anglia saw a 26 per cent rise in prices in 2001, with a nine per cent rise in 2002. Prices have fallen in the Midlands over the last two years and are static in the North.
The bank is advising potential licensees to consider the type of pub they would like to manage. It says that anyone considering buying a pub must attempt to understand the local market and make a decision on whether to open a themed pub, late-night venue or pub restaurant.
It says that all potential licensees must produce a business plan as research and planning are essential for the success of any business. With nine out of 10 pubs serving food, the licensees must consider fitting out the kitchen and ensuring that all equipment has adequate service cover. Financially the licensee must have a computer with accounts software and management systems to ensure the smooth running of the business. The bank says that the licensee must be stringent in monitoring their spending and outgoings. "Keeping a tight reign on cashflow is necessary as good money management is fundamental to the success of the business," the bank advises. Gary Hockey-Morley (pictured), director of Abbey National Business, said: "Running your own pub can be very rewarding, allowing you to take charge of your future. "However, we would encourage people to carefully plan before taking the plunge, as managing a business is a challenging prospect. The most successful pubs are those that have a robust business plan and a clear understanding of the market place."
Abbey National - Lending criteria for pubs
- Standard Scheme:
Suitable for a business with a modest turnover and profits, or where there is a start-up element with an experienced operator, or a stronger business but a less experienced operator. The bank will limit itself to 75 per cent of bricks or mortar or 75 per cent of the purchase price if lower against a freehold or leasehold property.
Special Scheme:
Available to those with relevant experience and the security of a medium to large pub showing good profits. The bank may offer up to 70 per cent of the value of the business including goodwill or 70 per cent of the purchase price, whichever is lower. The bank may require a specialist business report from its valuers. This loan must not exceed 90 per cent of the value of the business.