Is the Local Pub Becoming a More Attractive Commercial Option?

The slow decline of the local has been well publicised in recent years; exacerbated by the price of your pint in the pub remaining high compared with supermarket beer and food sold in pubs being subject to VAT, while food sold in supermarkets is not.

At the height of the recession in the late 2000s, 52 pubs closed every week; this slowed to 31 closures in 2014 and the current statistics show 21 pubs per week are currently shutting their doors. This gradual stem in closures may well represent a glimmer of hope for the beleaguered boozer and the pill has been “extra-sugared” in the recent Autumn budget by the Chancellor, Philip Hammond, when he provided that the specific Business rates relief will ensure that the £1000 rates relief, for pubs with a rateable value of under £100,000, will be continued until March 2019.

However, there remains numerous considerations of the challenges for any budding publican who is contemplating purchasing a pub lease from a brewery or, indeed, a freehold and therefore, you should obtain specialist legal advice. There are many issues to consider including, if you are purchasing as a going concern, if there will be a premium for the fittings & fixtures, goodwill, stock and from where the business if run. There may also be Stamp Duty Land Tax payable on the transaction, which will be assessed on the purchase price of the property, if it is freehold or the rent, if it is leasehold. There is also fire safety, asbestos, energy performance certificate and environmental health issues to consider and, of course, whether you are purchasing as a leasehold or a freehold needs to be considered. A freehold may initially appear more expensive but you should also take in account that, if you purchase a leasehold, rent will be payable to the brewery/freeholder.

Taking on a new pub is a huge task, especially in consideration of the rates of closures in recent years, but the gradual slow in pubs shutting their doors, and the business rate relief, is making it a more attractive proposition.