Colin Siebert, director of licensed and leisure at Colliers International, said the reduction in profits caused by operators having to pay a levy will result in “a modest fall in the value of the property”, but added that many operators will hike their prices in order to pass this cost on to customers.
A late-night levy was introduced in Newcastle last November and in Cheltenham in April. Pubs in Chelmsford, Islington, the City of London and Nottingham will all be subject to the fee before the end of the year, while Southampton is set to introduce one next April.
The cost of the levy depends on the rateable value of each premises and ranges from £299 to £4,440 per year.
'Pubs are unfairly penalised'
Siebert said despite the fact the levy was created to fund additional policing after midnight, pubs are “unfairly penalised” in comparison with nightclubs because pubs are rated on their fair maintainable turnover (currently as of 1 April 2008 when trade was at its peak), whereas nightclubs are assessed on a rate per square metre, which produces a much lower figure.
“As an example, in a major northern city, a 14,000sq ft nightclub with a capacity of 1,400 people, has a rateable value of £67,500 and thus a late night levy of £1,259 pa.
“Within less than 100m there is a late-night bar that is a third of the size, and presumably about a third of the capacity. This has a rateable value of £167,500 and will attract a levy of £4,440 pa. This scenario exists in most cities,” he said.
Simon Hall, head of pubs and director of Fleurets Leeds, said that while additional costs can affect the level of rent, profit and ultimately values, movement in value attributed to a levy is likely to be “overshadowed by other market forces”, such as minimum wage rises and economic recovery.
Fleurets Bristol director Stuart Parsons said cumulative impact zones are likely to have a more significant effect on values. He said: “In successful circuits, the artificial limitation of supply has the potential to distort market forces leading to an imbalance of supply and demand, which could lead to rent and value increases.”