We speak to David Rawlinson, Director of Restaurant Property, about what makes a property harder to sell, including how to handle a problematic landlord or an outstanding rent review.
Q: Will my site sell if I have outstanding rent review?
A: Needless to say, all buyers would prefer to know what their rent is going to be once they take the property over. In some cases, buyers would be prepared to pay fractionally over what could have been agreed at review for this peace of mind. Even if the review is not due yet, it’s always worth taking professional advice in advance to see where the settlement is likely to be, so that a degree of comfort can be provided to any potential buyers. Whilst some experienced buyers might take a view on the forthcoming review, they would expect a discount on the premium to reflect the element of risk involved.
Q: My lease has less than 10 years left, will this affect its value?
A: If your lease is outside the Landlord and Tenant Act (1954 part 2) then having less than 10 years left will affect the value. If it has less than five years, many would consider the lease unsaleable. If your lease is inside the Act with over seven years left, there is more reassurance for a buyer that their lease will be renewed.
It should also be noted that, for leases inside the act, landlords need to “prove” they plan to redevelop the building or “owner occupy” in order not to renew your lease at the end of your term. It’s always worth asking your landlord before you commence marketing your site if an extension can be obtained, as this is a question you will inevitably be asked.
Q: Can I sell my site without openly marketing it, as confidentiality is key to me?
A: There are a lot more sites available now than there were this time last year, and despite premiums coming down, there is still a lack of prime sites available. It’s these rare prime sites that continue to achieve significant premiums without being marketed openly. Fewer prime sites, however, do need to be priced competitively and often need to be marketed suitably.
Q: Will my landlord give consent to a start-up company or delay matters?
A: While most leases will contain a clause stating that the landlord can’t unreasonably “withhold or delay consent”, the issue you still could face is one of timing. Even if you have a strong case against a landlord, securing a court date to pursue them for acting unreasonably can take up to six months, by which time the buyer might have gone cold.
We always advise a buyer to budget for up to 12 months’ deposit and prepare all their references and drawings – this helps the landlord make their decision. Until the law changes on this point sellers need to think carefully before pursuing landlords acting unreasonably.
Q: How is the market right now?
A: Despite rising costs for operators, we are still seeing both experienced operators expanding and new start-ups entering the market. Funding has become harder to attain but lower premiums have helped. There is still a lack of good quality stock which drives the premium market, but as long as sites are priced correctly, they are selling well. Good quality operators who are trading well are seeing this market as a fantastic opportunity to buy sites they would not normally see become available.
Q: Which agent should I use?
A: Well, of course, I am biased, but I do believe we have the best reputation in London. We pride ourselves on being a friendly and professional team that are here to help and put our clients’ interests first. We also have the largest selection of sites available in London, which is key to driving traffic to the website and customers in the door.
About David Rawlinson
David has owned Restaurant Property for 20 years and they have overseen many of London’s highest-profile transactions including Sexyfish, Roka, Roganic, The Frog by Adam Handling, Petrus by Gordon Ramsay, Core by Clare Smyth, Meraki, Inko Nito, Clove Club, Heddon and Bread Street Kitchen, Hibiscus and Gymkhana.
If you would like further advice or to speak to an expert, call us on +44 (0)20 7935 2222 or email us at firstname.lastname@example.org
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