Buyers for Hospitality.......

se2020

It's hard work for anybody to buy a pub I think, not just young couples..

I have looked into buying a pub mainly,  because as you suggest, it is about the only way to get a sizeable house in an attractive rural location on my budget!!

However, finance is a major issue. 
I thought I would be comfortably able to cover the mortgage payments with my monday-friday job even if I reduced my hours to enable me to get back in time to serve drinks to the locals during the week and then just offer food from the pub on weekends for some extra income.

But, as pubs are commercial premises no normal mortgages are available. 
The only options are commercial finance and, like you say, generally needs 40%+ deposit.

Even if I could find the deposit the lenders still needed to see affordability. They based this on the current (and previous) profits of the existing business and none of the ones i was presented with were anything like the amount required.
A couple of the agents were upfront about this and said i would need a 60% or 70% deposit!
There were also a couple of landlords who mentioned that most of the takings were cash and I'd not have a problem making the repayments but that's not much use to the bank either!

Some (very few) lenders would take my existing income into account and also accept that my affordability would be better as I could actually live in the pub rent-free but the interest rates were 5-6x normal residential lending.

Other lenders wanted to see that I had direct industry experience. I have been doing outside catering and mobile bars for years as well as working many shifts in pubs/bars covering everything from opening/closing up, stock runs, invoicing, events management etc. etc. but practical experience does not count for much as they want to see a year's worth of payslips or some sort of formal qualification.

One advisor told me to get a job in weatherspoons as, with my obvious experience,  I could do the in-house training and easily make house manager within 3-4 years and to come back to them then.
That's fair enough but if that's the sort of life I wanted I could just stay at spoons and probably make area manager in 5-6 years and get the car & pension without all the worries and hassle of running my own place!


Best i can suggest to a seller as a potential buyer is to get the paperwork in order.
The lenders want to see profits for the last 3yrs that cover about 4-5x the repayments. No idea if they will make allowances for covid but if they do I expect they will still want to see the equivalent years before covid

theoretica

Who were you consulting who was so negative about potential buyers?  Was it a normal estate agent, or somewhere that has experience and form in selling pubs?  Were they just trying to get you to reduce your price expectations?  Because going straight to the problems of one sort of potential buyer seems odd to me.

GDB2222

There are firms that specialise in selling businesses as a going concern. Christie and Fleurets spring to mind, but I have no idea whether they are any good. However, that sort of firm is likely to be a better bet than the local residential estate agent.

TBagpuss

I'd agree that talking to a specilist agent is the best place to start. 

You could think about whether looking to get tenants in would be an option - a lease with an option to buy might be possible, and the new operators might be in a stronger position to buy onve they were actually running the buisness and could supply detsiled business plans, proof of experience etc.

deepnding on location and profitability you might find that lrger compnaies might be interested.

GDB2222

TBagpuss said:

I'd agree that talking to a specilist agent is the best place to start. 

You could think about whether looking to get tenants in would be an option - a lease with an option to buy might be possible, and the new operators might be in a stronger position to buy onve they were actually running the buisness and could supply detsiled business plans, proof of experience etc.

deepnding on location and profitability you might find that lrger compnaies might be interested.

The trouble with a lease is that the new tenant might be lousy at running a pub, and run it into the ground, then go bankrupt. The result is that the OP gets the pub back in a few years time in far less good condition and with less goodwill, too. I can understand why he'd prefer simply to sell. I can also see why so many are being converted into flats! 

lincroft1710

GDB2222 said:

TBagpuss said:

I'd agree that talking to a specilist agent is the best place to start. 

You could think about whether looking to get tenants in would be an option - a lease with an option to buy might be possible, and the new operators might be in a stronger position to buy onve they were actually running the buisness and could supply detsiled business plans, proof of experience etc.

deepnding on location and profitability you might find that lrger compnaies might be interested.

The trouble with a lease is that the new tenant might be lousy at running a pub, and run it into the ground, then go bankrupt. The result is that the OP gets the pub back in a few years time in far less good condition and with less goodwill, too. I can understand why he'd prefer simply to sell. I can also see why so many are being converted into flats! 

In my home town in the late 2010s 2 edge of town 18th/19th century pubs with car parks were both sold and subsequently  demolished. Each had 4 houses built on the site and what had been the less attractive pub, had 2 pairs of 4 bed semis priced at £500K each.


Perhaps selling for redevelopment may be the answer!

eddddy

lincroft1710 said:

In my home town in the late 2010s 2 edge of town 18th/19th century pubs with car parks were both sold and subsequently  demolished. Each had 4 houses built on the site and what had been the less attractive pub, had 2 pairs of 4 bed semis priced at £500K each.

Perhaps selling for redevelopment may be the answer!

Going a bit off topic...

That's a bit of a contentious area I believe. Councils often see pubs as community assets, so Planning Authorities often don't like giving consent for them to be demolished and replaced by something else.

In May 2017, the Town and Country Planning (General Permitted Development) (England) (Amendment) (No.2) Order 2017 came into force.  This removed all permitted development rights including demolition from pubs, meaning that planning consent is required in all cases in England before a pub can be demolished.

Link: http://protectpubs.org.uk/planning-system/demolition/

I've heard rumours of pub owners deliberately trying to make their pubs unpleasant and unprofitable, so that they can argue with the planners that the pub is not viable and the community doesn't want a pub.


And then there are examples of people who demolish pubs anyway, without consent. They're happy to pay the fine, because they can still make a huge profit from redeveloping the site. Here are some examples:   

https://www.standard.co.uk/news/uk/carlton-tavern-westminster-city-council-london-maida-vale-blitz-b935758.html
https://www.lancs.live/news/lancashire-news/ribble-valley-pub-demolished-without-23671583
https://www.liverpoolecho.co.uk/news/liverpool-news/fury-historic-former-pub-demolished-23910269

lincroft1710

eddddy said:

lincroft1710 said:

In my home town in the late 2010s 2 edge of town 18th/19th century pubs with car parks were both sold and subsequently  demolished. Each had 4 houses built on the site and what had been the less attractive pub, had 2 pairs of 4 bed semis priced at £500K each.

Perhaps selling for redevelopment may be the answer!

Going a bit off topic...

That's a bit of a contentious area I believe. Councils often see pubs as community assets, so Planning Authorities often don't like giving consent for them to be demolished and replaced by something else.

In May 2017, the Town and Country Planning (General Permitted Development) (England) (Amendment) (No.2) Order 2017 came into force.  This removed all permitted development rights including demolition from pubs, meaning that planning consent is required in all cases in England before a pub can be demolished.

Link: http://protectpubs.org.uk/planning-system/demolition/

I've heard rumours of pub owners deliberately trying to make their pubs unpleasant and unprofitable, so that they can argue with the planners that the pub is not viable and the community doesn't want a pub.


And then there are examples of people who demolish pubs anyway, without consent. They're happy to pay the fine, because they can still make a huge profit from redeveloping the site. Here are some examples:   

https://www.standard.co.uk/news/uk/carlton-tavern-westminster-city-council-london-maida-vale-blitz-b935758.html
https://www.lancs.live/news/lancashire-news/ribble-valley-pub-demolished-without-23671583
https://www.liverpoolecho.co.uk/news/liverpool-news/fury-historic-former-pub-demolished-23910269

In my hometown, although there have been 4 "new" pubs opened in the past 50 plus years, I can think of at least 26 that have closed, most repurposed as either alternative businesses or wholly residential with only 5 being demolished (3 for residential purposes). Where I now live most of the residential estate pubs built in the 1950s/60s are now either demolished or Tesco/Co-op or similar. Most villages had 2, maybe 3 pubs, now one if you're lucky.


A few weeks ago looking on Google Streetview I found what used to be a popular village pub, which had a good reputation for lunchtime bar meals (and I used myself on a few occasions) was now a house.


Whoever runs a pub, be it big business or individual owner are in it to make money. If it becomes unprofitable or a different income stream is more profitable, then it is not surprising if the owner wants to close it.

GDB2222

eddddy said:

I've heard rumours of pub owners deliberately trying to make their pubs unpleasant and unprofitable, so that they can argue with the planners that the pub is not viable and the community doesn't want a pub.


And then there are examples of people who demolish pubs anyway, without consent. They're happy to pay the fine, because they can still make a huge profit from redeveloping the site. Here are some examples:   

https://www.standard.co.uk/news/uk/carlton-tavern-westminster-city-council-london-maida-vale-blitz-b935758.html
https://www.lancs.live/news/lancashire-news/ribble-valley-pub-demolished-without-23671583
https://www.liverpoolecho.co.uk/news/liverpool-news/fury-historic-former-pub-demolished-23910269

There's a pub near here where the owners applied for permission to redevelop on the basis that the business was not viable. Unfortunately, at the same time, they were advertising the business for sale and saying how well it was doing. They withdrew the planning application in the face of fierce local opposition.

The Carlton Tavern is interesting, because the owners were made to rebuild it! Increasingly, local authorities are using the Proceeds of Crime Act to extract the profits from such activities. 

https://ihbc.org.uk/prosecutionsDB/Prosecution Table 1 Size of Fines.pdf

Woolsery

Pubs, especially country ones, have been pulverised by Covid restrictions and now food & fuel prices come into it too. One of our village pubs is just a hobby for the owner who runs another business there and has no facilities for making/selling food.The other pub was thought lost when the local people failed to raise enough to have it as a community pub, but luckily people with other pubs and experience took it on and did a refurb, without which it would have failed. I'm still not convinced it will succeed, given the economic climate.

The difficulties were brought home to me recently when we went for a meal at  local pub highly commended and with all kinds of previous awards. The main meals were no longer augmented with 'specials' created on the day for variety and the choice of sweets was sparse to say the least. I can understand why this is, but to find such a long established, successful hostelry running on the basics was a shock.

Sorry, but I don't think there is any sign we are 'going back to normal.' However, out of every crisis comes opportunity. Those who can see it will make it work.