Pub property agents are continuing to see a strong demand for free-of-tie leases as an alternative to taking on a freehold site.
Chris Irving of Fleurets’ West & South Wales office said that the lack of bank funding available is not holding people back from taking on leases. He said: “If potential purchasers are not in a position to raise sufficient funds to acquire and refurbish freehold premises, they are often looking for alternative options and this has led to high demand for free-of-tie leases.”
Irving added: “With the opportunity to phase in rents, allow rent-free periods for refurbishment and negotiate rents based on 2013 levels, prospective lessees have every opportunity to make these free of tie leases successful.”
Nick Calfe of Christie + Co explained that the free-of-tie lease model is most popular with managers looking to take on their first pub. He said that the capital is a lot less than for a freehold site.
He told the Publican’s Morning Advertiser: “What’s happening is that freehold prices have become a bit beyond the means of a first time buyer so owners who can’t sell the freehold create a free-of-tie lease.”
He added: “Generally free-of-tie leases are the most popular as their leasehold terms are likely to be less rigid with a private landlord. It offers flexibility to an operator to trade in various styles because they are not tied into selling any particular product.”
Guy Simmonds managing director Stephen Taylor said that he has seen this trend around the country for many years.
“Free-of-tie leases have been sought after for around 10 years. The skill is in setting the rent at a sustainable level. They have pretty much the same rent as a pubco lease but it costs half the price - that’s why they are so desirable. We have a waiting list for them. It’s the main hub of activity for us.”
