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articles > What to do with a Pub with NO Beer!
Article > What to do with a Pub with NO Beer!


Article kindly provided by Graham Phelps


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.

 

However, if the pub was popular but not profitable, this is easier to fix. Clean the place up, define your market and rent or lease to a suitable ‘personality’ landlord with a low rent and profit share. A change of personality can really make a difference.

Ross, the new private owner-landlord of my favourite hostelry has found success in returning his new pub to more of an old-fashioned feel. Gone is the canned music and indifferent staff and back is friendly banter with regulars, dominos and darts nights.

 

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.

 

   
 


 

 

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