In the last few weeks I have probably had over 500
pubs pass through my email box, with ever increasing
price reductions and tinted with a whiff of desperation.
This has prompted some active discussion in the office
and yes, down the pub, if this glut in the market
offers any opportunity for residential rental investors.
I know a couple of colleagues who have looked at
buying a pub with a view to conversion to another
use – mainly residential or office use. However,
feedback so far is that the planning authorities are
reluctant to pass change of use as it means ‘losing
an amenity’. Quite what sort of amenity a boarded-up,
non-trading pub is, who knows!
However, if you have the vision, can find the pub
and fancy a challenge, here are some ideas that we
came up with.
Firstly, the fact the pub is up for sale is a likely
indication that it is not profitable. However, it
is worth finding out why a particular pub is up for
sale or ceased trading. It could be that the brewery
has forced the landlord out with high rents, or it
might be the property needs repairs that cannot be
economically justified. On the grapevine I have heard
that breweries are finding it hard to find good landlords
to take up leases, often because of contracts weighted
in their favour or them pulling out of that side of
the market.
Changing the pub to a café or restaurant would
need no planning consent (so far as I understand –
please check to be sure) and with the right commercial
tenant, low rents and a profit share you might make
a going concern out of a big-brewery failure. Popular
local restaurants are essentially about personality
– not bland uniformity.
|
Next,
we considered keeping the pub but using part of the
space differently or converting upstairs rooms to
flats or week-long lets for displaced workers or business
types. A lot of the pubs on the market are quite large
without the footfall to support it. Maybe using part
of the existing pub space for an antique shop or financial
services office might also be easier to get through
planning. We liked the idea of doing mortgage deals
literally down the pub!
A
pub property in very bad condition, left to rot a little
longer, might also favour site redevelopment if it could
be demolished and a brand new use proposed. Many non
city-centre pubs have excellent locations and plenty
of space for a few house or flats.
We
discussed the B&B conversion route, but most pubs
currently are a little too small to be viable given
the amount of work in both converting, running and marketing
a guest house. The most profitable route here would
be what is known as a boutique B&B or designer guest
house – all flat screens, modern art prints, white
walls and luxury duvets.
A
more off-the-wall suggestion for a rather tatty looking
city pub with a large car park was to forget the property
and rent out the parking spaces to local businesses
on an annual contract. Even at a modest £3,000
a year this is £40,000 a year income. A couple
of quick phone calls found a clamping company that would
enforce parking rights on commission only! Even more
crazy ideas were more unusual changes of use were we
could prove a local need. Suggestions here included
a brothel (well they might change the law given the
liberal influence in government!), children’s
nursery, residential home, serviced offices, training
centre, art gallery, comedy or live music venue, computer
or vocational training centre, quasar centre, craft
centre or even an estate agents.
However,
some pubs on the market are just crying out for conversion
– and probably worth fighting a few planning battles
for. For example, a pub we have just sold for not far
off £150,000, around 22% below initial listing
price has over 15 good-sized rooms and would easily
convert into four or five flats, each with a selling
price of £90,000 or more. Cost of conversion is
estimated at around £30,000.
These
are just a few ideas. If you have any comments or indeed
have bought and turned around one of these properties,
please get in touch.
|
