Barry Gillham - Chairman

If we believe that banks are reluctant to lend to the leisure sector, the obvious question to ask is where is the money coming from then, because deaIs are still clearly being done.

In an attempt to find the answer, Fleurets conducted a telephone survey of all the people who had bought a freehold through Fleurets in the past 12 months. 

They were asked:

How did you fund your purchase?
 
w 81% of purchasers had in excess of 50% of the purchase price in cash.

w 62% needed no mortgage whatsoever. What they were using the property for?

w 58% said that they did not intend to change the use to which the property was to be put i.e. if it was a pub, it would stay as a pub.

w Of those that underwent a change of use, 16% became residential properties, 12% became restaurants, 5% became offices, a further 5% changed to retail use and 4% into storage or builders yards.

Commenting, Barry Gillham, chairman at Fleurets said: “We also asked the mortgage brokers what they thought of the current state of the lending market. The key answer was that borrowing money wasn’t getting any easier. In general, buyers needed +/– 50% of the purchase price in cash and also needed to demonstrate their experience in the trade and/or good proven accounts for the business.”

Adding a different perspective, Paul Thompson, director at Acorn Finance, said: “In a recent development, we teamed up with a specialist lender to offer funding against ‘disposal’ pubs – those without accounts. This is a huge step that will have a positive impact on the trade. As has been well-reported, most high street banks have reviewed their criteria for lending in the past 24 months and as a rule, licensed businesses presented to them without accounts, have been very difficult to secure lending against. With most high street players shying away from this type of business, we can now look at breathing new life in to this type of deal, as well as reviewing some packages that will have failed to gain funding in the past. Of course, deals will still need to ‘stack-up’ to the lender, and applications must be strong.”

Chris Heard, co-founder of Marlborough, offered this comment on the funding situation: “There’s no doubt that things are better than they were, assisted by the fact that banks have, to a point, repaired their balance sheets. Subsequently, confidence is returning and there is business to be done.”