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Whether the pub that you own is freehold or leasehold, trying to find a buyer for it can require overcoming a few extra hurdles compared to selling other types of property. This guide explains the process of attempting to sell a pub, and it also offers important information on how you increase your prospects of getting a streamlined, speedy and no-fee sale at a fair price.
- Making the decision to find a buyer for your pub
- Factors that might make it harder to sell a pub
- Reasons why buyers may be more interested in your pub
- Preparing your financial documents for selling a pub
- Getting your pub ready before looking for a buyer
- Paying Capital Gains Tax on the sale of your pub
- Deciding on the method to use for selling a pub
- Frequently asked questions about selling a pub
Making the decision to find a buyer for your pub
Pubs in the UK are commercial properties, which means that they provide a service to the public in exchange for money – in the case of pubs, this is food, drink and sometimes a room to sleep for the night, although the vast majority of pubs don’t provide overnight accommodation.
The government defined pubs and most other types of commercial properties in The Town and Country Planning (Use Classes) Order 1987, a law that categorised pubs in the “use class” of leisure, which also including hotels, restaurants, cafes, bed and breakfast venues, and gyms.
Pubs can be either freehold or leasehold properties, which important distinctions for sellers and buyers on the extent of the ownership rights. Freehold pubs are those where you own the building itself, the pub business, and the land on which the pub is located. Leasehold pubs are those where you have ownership of the pub building and business for a limited period, usually many years, in exchange for paying the freeholder a set ground rent until such time as the lease agreement expires.
Whichever type of pub you might own, there are various factors that can increase or decrease your ability to get a fast and stress-free sale, as well as some actions that you’ll have to take which include collecting all of the relevant financial data about how your pub operates, and how to select the method of selling that works best for your required schedule and budget.
Factors that might make it harder to sell a pub
If you’re the owner of a pub, there are many reasons why you could be thinking about selling it.
Perhaps you or a family member are selling due to illness and no longer have the time or energy to devote to the often long hours involved in running a pub. Maybe you are looking to move overseas or elsewhere in the UK and need to raise funds to do so. Or it might be time to retire and you no longer want to operate a business. Whatever your reason, when you’re ready to sell it’s crucial to know about things that might discourage potential buyers.
Some of the drawbacks below can be enough to make an individual buyer lose interest in your pub immediately, whereas others could possibly be addressed depending on the scope of the problem. It can be useful to understand what these various factors are before you try to sell your property, because you will be more prepared in the event that a buyer raises any of them.
Business is suffering: Regardless of where the pub is located, one of your top priorities should be making it profitable by keeping your costs low and regular sales high. This is perhaps the biggest item that buyers will want to review when thinking about purchasing a commercial property like a pub, and they are unlikely to have interest in a pub that loses lots of money.
Undesirable location: There’s very little you can do to fix the location of your pub, but the location of the property can sometimes be a dealbreaker for some potential buyers. For example, if the pub is located in a city area where there is a lot of competition from similar establishments, a buyer might think that it will be harder to make the business worthwhile. Or a location in a remote area with few homes nearby could also be hard to make profitable.
Property has problems: Beyond financial issues, there are other problems that can deter interest from buyers in your pub – primarily physical flaws that the property might have, such as dry rot, subsidence, damp and many other issues. Should your pub have a negative aspect like this, it can make buyers see the property as less valuable and therefore they’ll make a reduced offer for it. One option is to invest effort, money and time into fixing the issue before selling, but this is not required, and for many buyers it might simply not be feasible to do this work.
Reasons why buyers may be more interested in your pub
Although there can be a number of reasons for why someone might lose interest in making an offer to buy your pub, as outlined in the previous section of this guide, there are also a few elements that may have the potential of making your property more attractive to buyers.
Knowing what these factors are can possibly help make selling easier, because you will be able to talk up these issues to any people who show an interest in making an offer. And some of the positive elements might be strong enough to offset any flaws that your pub may have.
Strong sales: Just as having poor sales can deter buyers from making an offer on your pub, you may find it easier to generate interest if you can prove that the business has a history of reliable strong sales, with revenue that far outpaces expenses so that you have a good net profit. A viable pub is always going to have more appeal to buyers than one that loses money.
Large living area: Some pubs are operated as businesses that the owner will arrive at in the morning and leave late at night to return to their own home. Others have a second floor that has a private residential living area for the owner. If your pub has a large, well-maintained living section then this could help attract an offer from someone looking to live above the pub.
Great location: Although you can’t change your pub’s location, you could have an immediate advantage with trying to sell it if the property is situated in a high-demand area. For buyers that want to keep operating your pub as a business, this could include locations where there are few other pubs providing competition. Or for buyers that are thinking about turning the pub into a different type of property, they will be looking for areas where homes are selling at a good price.
Preparing your financial documents for selling a pub
As outlined in the previous section of this guide, buyers that are looking to keep running your pub as a business will be more interested in the property if you can show it makes a profit. That’s why it’s so important to provide up-to-date financial data to any potential buyers.
As discussed in the Selling My Business website article, the requirement to get all of the financial records about your pub in order before trying to sell it apply regardless of whether you’re making a lot of money with the business, or only just breaking even or making a regular loss. Buyers, or their solicitors or other legal representatives, will want to see every possible piece of information about costs, revenue, tax and more. This will help them in calculating whether it makes financial sense to buy your pub and run it.
Include as much detail as you possibly can, because the more information that you can offer to buyers, the more they will appreciate all of the upfront data and it could also answer some of their questions about your property. They’ll want to know specifics such as your outgoing expenses, your annual revenue and net profit, utility bill costs, staff salaries, and more.
You must be honest with prospective buyers about your pub, including whether you’re looking to sell with financial difficulties because of the costs of operating it. In the event you hide information from the buyer that could have prevented their decision to purchase the property, they might attempt to sue you for penalties after buying your pub, should they ultimately discover that you hid the truth.
Getting your pub ready before looking for a buyer
In addition to generating all the necessary financial documents in order for the sale of your pub, there are some practical steps you can consider for getting your property ready for sale.
You should start spending some time to do basic upkeep of the exterior and interior of the property, because pubs that look rundown and badly maintained will seem less valuable to potential buyers. Outside, consider applying a fresh coat of paint to the doors and window ledges, and tidy any green space that you might have. Inside, try to remove clutter from the pub’s main rooms and make them look as appealing to visitors as you possibly can.
If your property has a larger-scale problem, such as extensive structural damage, you will have to think about whether to invest in fixing the flaw or instead trying to sell the pub "as is" without taking steps to remediate the issue. Deciding on doing this work is a highly individual choice, as it will hinge on whether you have the resources available for pursuing the effort.
Don’t feel that you are obliged to spend a lot of time and money on fixing problems with your pub, because you can still get a fair and fast offer for the property in its current state if you get in touch with a no-fee quick buyer like LDN Properties, which buys properties in any condition.
Paying Capital Gains Tax on the sale of your pub
Whenever you sell a property, particularly a commercial business, you might be required to pay the government Capital Gains Tax as detailed on Wikipedia. This is a fee charged on the profit, also referred to as the gain, that someone makes when they sell a physical asset such as a house or car, and the tax will be due after the sale has been completed.
You should speak with a financial expert, like an accountant, to ask whether you might be able to reduce the amount of Capital Gains Tax that you could have to pay. And in the event you either break even on the sale, or sell your pub at a loss, you may not have to pay this tax.
Deciding on the method to use for selling a pub
When you’re getting ready to sell your pub, you will need to choose among four typical methods for finding a buyer: selling via an estate agent, selling to a quick buyer, selling at an auction, or selling on your own, and you’ll find there are pros and cons to each of these approaches.
Before making a decision, you should write down a budget for the sale of your pub that include vital information like how long you can wait to make a sale, whether you can accept paying any fees to find a buyer, and your goal sale price. Compare all of this information against the details of the four choices below and this should help you in making the best selection for your needs.
Selling via an estate agent
A traditional way of selling a home is using an estate agent, who will take care of preparing a listing that describes your pub, the business, the building and more, and include photographs of the interior and exterior. The estate agent will advertise this listing online, in their office and in local newspapers, as well as schedule and typically lead viewings for potential buyers to see the pub in person. Finally, they’ll field offers from buyers, hopefully seeing one to completion.
Although all of this work will dramatically reduce the effort that you’ll have to put into finding a buyer, the drawback is that estate agents will charge for the effort they put into selling your pub.
Estate agents can also take quite a long time to sell properties, and you shouldn’t be surprised if your pub remains on the market for many months or even more than an entire year.
Beware that some estate agents might also try to secure your business by claiming they can achieve a very high sale price for your property, despite knowing secretly that it will only sell for less. They do this to try and guarantee the commission from selling your property, but it’s a trick that is easy to overcome. To do so, ask several estate agents to give you a free sale price quote for you pub. Then look on Rightmove, Zoopla and other property sales websites to compare past and present sale prices of pubs that are similar to yours. Calculate the average these values and you’ll get a better estimate of your pub’s sale price.
Selling to a quick buyer
You might also want to think about contacting a We Buy Any Property company for selling your pub.
These businesses are called quick buyers because they have the financial ability to purchase properties right away, without having to wait weeks or months to get approved for a mortgage to fund the transaction. This can significantly speeds up the selling process to an average of just a few short weeks, and that includes paying you the proceeds and exchanging contracts.
A further benefit of selling this way is that legitimate quick buyers never make property sellers pay any commission, which will help to lower your overall costs when selling a pub. By comparison, estate agents and auctioneers charge fees that will add to your expenses.
Another advantage of selling to a quick buyer is that they can purchase almost any property, and the age, condition, shape, size or type doesn’t matter. LDN Properties, for example, can buy a huge variety of properties throughout the UK since 2003 that includes pubs, as well as properties with low Energy Performance Certificate rankings, lock-up garages, hotels, houses located in high risk flood zones, penthouse flats, selling with an absent freeholder, vandalised properties, and more.
Selling at an auction
Auctions will also require minimal effort on your behalf, because the auctioneer will handle all of the work in making and marketing a listing for the pub, and hosting the auction.
For this effort, auctioneers will usually make sellers pay commission, and this charge is taken out of the sale proceeds right away, adding to your costs. You could be able to persuade individual auctioneers to either lower their commission or make the buyer pay some of your costs, so always ask if this is possible.
Selling through an auction can be a very long process, because there’s a waif of several weeks or longer between when you list a property for sale and when the auction happens. And if you do manage to sell your home at an auction, the buyer will have an average of 28 days to sign all of their paperwork and complete the other steps required to finalise the transaction.
And it can also be a gamble when you sell at an auction, because you never know what the final sale price might be, or you might get no bids, which means that your pub will remain unsold.
Selling on your own
A fourth option is to sell without any assistance, which will put the burden on you to do every aspect of selling such as crafting and advertising the listing, and hosting viewings.
This is a lot of work, and you won’t be able to handle it in your spare time, so it is not required to pursue selling on your own unless you’ve got experience with selling a pub before, or have a family member or friend with that knowledge who may be happy to help you sell the property.
Selling this way is also one of the slowest choices available, and you shouldn’t be shocked if it takes more than an entire year before you are able to attract any serious offers from buyers.
The obvious advantage of selling via this method is that you won’t have to pay any fees to an estate agent or auctioneer. However, the stress, time and potential costs involved are major disadvantages. Instead, consider selling your pub to a no-fee quick buyer, because this will not only help you avoid paying any fees but also give you a streamlined and stress-free sale.
Top queries and answers about selling a pub
Property owners considering selling any of their properties sometimes have questions they need answering, ranging from selling with tenants in situ through to selling property when in need of repair. Take a look at the key questions we’re asked about selling a pub:
