Property developers head to the pub looking for a bargain

The number of pubs closing down in the UK is currently running at 25 per week, according to figures from closedpubs.co.uk. The high numbers mean many of these pubs are being sold to buyers and property developers for alternative use.

The majority of the pubs closing down are being bought by developers who want to turn them into private residences. Many can be converted into several flats, with a few making ideal, large individual residences.

Many of the pubs for sale will be bought as bargain alternatives to houses. It can take around two months to gain planning permission for a complete change of use, so great deals are still available for those with the ready cash and the patience to develop a pub into a residential property.

There are a staggering18,000 pubs for sale at the moment across the UK, so it’s clear there are plenty of opportunities out there for developers.

Several pub chains have been struggling in recent years and some have put their pubs up for sale individually as a result. Castle Inns, the Scotland-based chain, has been put up for sale recently and is looking for buyers for 12 pubs and clubs in the Stirling area.

The trend for buying up pubs for residential conversion has been partly prompted by the fact that they can offer a good deal compared with buying a house of the same size in the same location. The eight pubs recently put on the market by Admiral Taverns in Staffordshire represented extremely good value, for example. A freehold deal to buy the Masons Arms in Northwood, was valued at just £175,000, and included the pub’s entire contents.

Pubs that have been struggling for years and have been put up for sale by chains are often unlikely to make a profit if run as a pub in the future. The recession means people are staying in more and pubs are becoming more popular for food, rather than drinks, which means some are losing money fast. Therefore, it often makes sense to buy them up and develop them as properties. Admiral explained, “From time to time Admiral Taverns reviews its pubs and these properties no longer fit its criteria for ownership,”

One property developer from Luton, Sam Bains, spoke to the Daily Mail about her success working with former pubs. She said, "Right now, old pubs are probably the best property investments you can make. In Bedfordshire, councils are very wary about leaving pubs empty for a long time because they become derelict and then squatters move in.”

Ms Bains explained how she typically pays between £225,000 and £275,000 for a closed pub, which she can convert to flats for the rental market within a matter of months.

Buying a pub for development into a residence is easier than it used to be, but a conventional mortgage will still not be an option for most. For developers however, there are many opportunities all over the UK to turn a struggling business into a thriving one simply by changing a building’s purpose.

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