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Covid in Scotland: Pub valuations hit by restrictions

By Angie Brown
BBC Scotland News

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image copyrightIain Ponton
image captionIain Ponton, owner of Oz Bar in Edinburgh's Grassmarket, said he was concerned the restrictions were lowering the value of his pub.

Pubs are now being given lower valuations when they go on the market because the calculations are based on profits affected this year by the coronavirus restrictions.

It means bars and pubs are being put on the market at up to 20% less than they would have done 12 months ago.

Christie and Co, the main agent for buying and selling pubs, said it was "a distressing" situation.

It also said the bulk of casualties would be seen next March/April.

The valuation of a pub is calculated by multiplying its net profit by an amount depending on where it is located. A city centre pub will have a higher multiple than a pub in the suburbs.

Brian Sheldon, Christie and Co's regional director for hospitality in Scotland and north west England, said most pubs were currently propped up by loans.

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He said: "The loans were taken out around March, April this year but start being paid back after 12 months so we won't start seeing any real distress in the market until the first quarter of next year.

"Undoubtedly pub values have been negatively impacted by the Covid restrictions.

"The closures and restricted trading means income is down in pubs and that affects the valuation. They will be valued at less because their profit is down.

"It is distressing."

image copyrightGetty Images
image captionPubs in the central belt of Scotland were forced to close on Friday for at least two weeks

There are currently about 2,845 pubs in Scotland.

The Scottish Licensed Trade Association estimates that up to two-thirds of them will have to close in the next few months with the loss of 25,000 jobs.

Pubs were forced to close in the central belt on Friday by the Scottish government. They are not allowed to reopen until at least 25 October.

Tighter restrictions also came into force in the rest of the country on Friday.

Licensed premises are now not allowed to serve alcohol indoors and opening hours will be limited across Scotland.

Saturated market

Iain Ponton, owner of Oz Bar in Edinburgh's Grassmarket, said he was concerned the restrictions were lowering the value of his pub.

He said: "I'm not planning to sell my pub but my sympathies are with those owners who will be forced to sell next year when the value of their pub is down through no fault of their own.

"Some have put 50 years into their pubs and its their pension and others have sold their houses to keep their pubs going.

"The 10pm curfew saw us drop our income by half and we were shut down for three months and now for a further two weeks so this will really affect valuations."

Mr Sheldon said there was also the added problem that a saturated market could lower prices further.

He said: "The licensed trade association is saying two-thirds of pubs won't reopen.

"If there are so many pubs on the market at once there will be over-supply and the prices will reduce.

"It's a buyer's market. There are still people with money out there who can pick up businesses now for a fraction of what they were worth 12 months ago.

"A win for someone is a severe loss for someone else through no fault of their own."

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  • Covid in Scotland: Shutters come down on pubs and restaurants in central belt