More pubs going free of tie to attract tenants

02-Sep-2014 - Last updated on 25-Jun-2024 at 12:19 GMT

Kevin Marsh: 'The balance of power has certainly been moving away from pub companies and going to tenants'

An increasing number of landlords are being forced to sell pubs free of tie in order to secure a tenant, according to a property agent.

Savills director of trading and leisure Kevin Marsh also says there is a continuing demand for managed houses, as disposals from tenanted houses begin to slow down.

In an exclusive interview with the Publican’s Morning Advertiser, Marsh said he was seeing “a lot more” free-of-tie options as pub companies realise that they must become more flexible in order to attract tenants.

“It started with food-led pubs, when tenants wanted a wider range of wine than the portfolio offered by their pub company. Now we’re seeing the same with craft beer places,” he said.

“I’m also seeing more and more cases where country pubs — which don’t have a particularly high turnover — have had to be sold free-of-tie in order for the landlord to find a tenant. The balance of power has certainly been moving away from pub companies and going to tenants of late. There are more opportunities to have negotiations.”

Managed estates

He added that he thinks the growing demand for managed houses is a trend that will continue over the next few years.

“The demand is coming from existing managed operators, but also from emerging companies like Upham Pub Company and City Pub Company,” he said.

“We are also seeing some private freeholders — who took the opportunity of buying their pub off their landlord in the recession — now selling those pubs to managed operators.”

Marsh said there was a possibility that more of the tenanted pub companies will create managed arms.

“Tenanted houses are fragile. Managed sites have so much more in terms of performance value and profit and turnover. It would make sense for tenanted companies to have an element of managed business,” he said.

Speaking of the latest figures from CGA-CAMRA Pub Tracker, which reveal that 31 pubs are closing every week across the UK, Marsh said he would like to know how many “permanently close”.

“We need to do a review of what closed five years ago and what’s there now.

“I would also prefer to know the number of premises licences there are now compared to last year, not just pubs.”