While the demand for pubs is high and freehouses are being snapped up, not every licensee is able to sell their pub as quickly as they would like and at a premium.
Although pub companies are paying premium rates to get their hands on good properties there are several reasons why a potential buyer can be easily put off.
There are, of course, lots of sales successes. The reasons behind these could be high turnover and profits, suitable location, affluent area or simply that the pub site is immaculate throughout.
But do owners and their agents take enough notice of the reasons why a property doesn't sell and take action to address the various issues?
Nick Earee, sales manager at Fleurets, Brighton office, outlines the many reasons why a property does not sell.
- Proof of trade
Although purchasers will be drawn to a particular property by the style of the business or location, ultimately their ability to purchase is likely to depend on their bank and the bank's valuer.
Licensees will need to provide audited accounts or (at minimum) VAT returns for two years for a potential buyer.
Presentation
Is the property presented at its best in terms of cleanliness, ambiance and décor? We have all seen the TV makeover programmes to make private houses more appealing to buyers, but many pub sales are also frustrated by purchasers being put off by fairly minor problems which could be easily remedied. Staff awareness
If the property is going to be openly marketed then don't ignore your staff.
Speak to the staff about the impending sale and be honest. Their jobs are normally protected by legislation and this should be explained to them.
Lease information
Licensees must provide their agent with the lease and other legal information, such as licences for alteration or assignment.
The agent will pass this information to likely purchasers and their advisers together with any rent review information.
If the pub is due for a rent review with its pub company it is unlikely the purchaser will sign the deal until that is settled.
Your landlord
You will need to discuss the sale with your area manager or managing agent as he/she will need to be on your side with regard to an assignment.
They will wish to meet the prospective purchasers to discuss the profit and loss accounts, business plans, cash flow forecast etc.
Solicitors
You should instruct a solicitor who deals extensively with licensed property.
If the original lease of the pub is in the bank vaults then ask for it now, not when terms have been agreed. All this will cause is unnecessary delays.
Your solicitor should check whether the landlord can insist upon a particular type of new lessee or refuse to accept certain categories of potential lessees.
Dilapidations
A landlord will generally serve a schedule of dilapidations, which will be done before he will give consent to an assignment of a lease.
Ideally when terms have been agreed it should be clear to all parties involved that the property is purchased on an "as seen" basis with the purchaser dealing with dilapidations as part of their proposed changes and renovations.
Is the asking price correct?
Some agencies encourage owners to ask too high an asking price in order to get properties onto their books.
Some owners insist on asking prices that will fund their retirement cottage.
It is important to ask the right price, which will mean that the best price will be achieved in the best time frame.
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