How to buy a pub: freehold, leasehold or tied, and how to fund it
Buying a pub means choosing a route, freehold, leasehold or tied, then buying a trade that is valued on what a competent operator could earn. This guide covers the options, the valuation, the licensing and the funding.
Buying a pub starts with the route: buy the freehold and own the building and the business, take a leasehold and run the trade under a lease, or take a tied tenancy from a brewery or pub company. A freehold is the most financeable and is bought with a commercial mortgage against the going-concern value, usually with a 30 to 40 percent deposit; a leasehold is funded more on the trade and the lease terms. The pub is valued on its fair maintainable trade, so a wet-led or food-led split, the premises licence and the accounts all matter. The buying process runs through research, offer, due diligence, licensing transfer and completion. We arrange the finance; we do not lend.
At a glance
- FreeholdOwn building and business, most financeable
- LeaseholdRun the trade under a lease
- TiedTenancy from a brewery or pub company
- Valued onFair maintainable trade
- Freehold depositUsually 30 to 40 percent
- MarketPub prices broadly flat in 2025 (Christie & Co)
Choose the route: freehold, leasehold or tied
The first decision is what you actually buy. A freehold pub means you own the building and the business outright, which gives the most control and the most financeable asset. A leasehold means you buy the right to run the trade under a lease, paying rent, with the value in the business rather than the property. A tied tenancy from a brewery or pub company is cheaper to enter but ties you to buy beer and often to share the upside, so it is closer to running a business than owning an asset.
The route decides the finance. A freehold is bought with a commercial mortgage; a leasehold is funded more on the trade and the strength of the lease; a tied tenancy usually needs working capital rather than a mortgage. How ownership type affects value and financeability is set out at /guides/freehold-vs-leasehold-hospitality/, with pub-specific detail at /asset-classes/pub-finance/.
Understand what you are buying: wet-led or food-led
A pub is a trading business, and how it earns changes how it is valued and funded. A wet-led pub earns most of its money from drink; a food-led pub earns more from meals and behaves more like a restaurant with rooms sometimes attached. Drink-led venues held up better in 2025, with Christie & Co recording drink-led pub values up 1.0 percent over the year against a broadly flat wider market where average pub prices moved by about minus 0.4 percent. Christie & Co also describes a polarised market, strong at the top and bottom ends, with around a third of pubs reporting profitability pressure, so the quality of the individual trade matters more than the sector average.
| Type | Earns mainly from | Financing angle |
|---|---|---|
| Wet-led | Drink sales | Valued on drink volumes and margin |
| Food-led | Meals and dining | Closer to a restaurant, covers and spend |
| Pub with rooms | Drink, food and letting | Trade plus accommodation income |
| Community or destination | Local trade or a draw | Location and catchment drive the value |
The valuation and the licence
A pub is a trade-related property, valued as a going concern on its fair maintainable trade, the level a reasonably efficient operator could sustain, not the current licensee's actual takings. That is why the accounts, the barrelage, the food covers and the location all feed the valuation, and why a tired pub with upside can be worth more to a good operator than its current trade suggests. The method is explained at /guides/fair-maintainable-trade-explained/ and /guides/going-concern-valuation/.
A pub trades on its premises licence under the Licensing Act, covering permitted hours and activities, and it transfers with the business rather than automatically. Confirm the licence, its conditions and hours in due diligence, because a restricted or contested licence directly affects the fair maintainable trade and therefore the value and the loan. Business rates, not council tax, apply to the trading premises, though a residential flat above may attract council tax separately.
The buying process
- Research the market and the specific site: trade, catchment, competition and any tie.
- Agree a price and heads of terms, and decide freehold, leasehold or tied.
- Instruct solicitors and begin due diligence on title, the lease or tie, and the licence.
- Verify the trade through accounts, VAT returns and supplier data, and commission the valuation.
- Arrange the premises licence transfer, confirm the funding, and complete.
Licensing runs alongside the legal work: the premises licence usually needs a transfer application, and a new operator may need a personal licence and a designated premises supervisor in place. Building this into the timetable early avoids a completion that outruns the licence.
How the purchase is funded
A freehold pub is funded with a commercial mortgage against the going-concern value, usually with a deposit of 30 to 40 percent because part of the value is goodwill. A leasehold is funded more on the trade, often with a business loan and asset finance rather than a mortgage. Around either, a VAT loan can cover the VAT on a chargeable purchase, and asset finance funds the fixtures and equipment. A closed or run-down pub is often bought with bridging first, then refinanced once the trade is re-established.
- Freehold: commercial mortgage against the going-concern value at /services/commercial-mortgages/
- Leasehold: business loan and working capital at /services/business-loans/
- Fixtures, kitchen and cellar equipment: asset finance at /services/asset-finance/
- VAT on a chargeable purchase: a short-term VAT loan at /services/vat-loans/
- A closed or unmortgageable pub: bridging first, refinance later, at /guides/bridging-loans-for-hospitality/
We read the trade and the tenure, size the finance against the going-concern valuation, and place it with a lender who understands pubs. We are an arranger, not a lender, and Matt Lenzie takes every case to market personally.
How to buy a pub: freehold, leasehold or tied, and how to fund it: common questions
How much does it cost to own a pub?
The purchase depends on the route: a freehold is bought with a commercial mortgage and a deposit of usually 30 to 40 percent, a leasehold needs a lease premium and working capital, and a tied tenancy is the cheapest to enter but ties your buying and margin. On top of the price, budget for stamp duty, VAT where it applies, legal and licensing fees, and enough working capital to trade through the quiet months.
Is it profitable to own a pub?
It can be, but the market is polarised. Christie & Co reports drink-led pub values up 1.0 percent over the year and a strong buyer pipeline into 2026, but also around a third of pubs reporting profitability pressure. Profit depends on the individual trade, the cost base and how well the pub is run, far more than on the sector average.
How much deposit do you need to buy a pub?
For a freehold pub, usually 30 to 40 percent of the going-concern value, higher than a let investment because part of the value is goodwill. A strong trading record or additional security can reduce it. A leasehold or tied route needs less mortgage deposit but more working capital. Figures vary by lender and trading history.
Should I buy a freehold or leasehold pub?
A freehold gives you the building and the business, is the most financeable and builds equity, but needs the most capital. A leasehold is cheaper to enter and puts the value in the trade, but you pay rent and the lease length limits its value. The right answer depends on your capital and plans; the trade-offs are at /guides/freehold-vs-leasehold-hospitality/.
What is the 2 hour pub rule?
It is not a finance or valuation term and does not affect how a pub is bought or funded. The concept that matters when buying a pub is fair maintainable trade, the level of business a competent operator could sustain, which drives the going-concern valuation and the loan. See /guides/fair-maintainable-trade-explained/.
Do pubs pay council tax?
The trading premises pay business rates, not council tax, assessed by the Valuation Office on the pub's fair maintainable trade. A residential flat above the pub can attract council tax separately. Rates are a real running cost to factor into the trade, and reliefs sometimes apply to licensed premises, so check the current position before you buy.
Can I buy a closed pub and reopen it?
Yes, and it is a common route to a keener price, but a closed pub with no current trade is hard to mortgage because there is no going concern to value. It is often bought with bridging finance, reopened and traded up, then refinanced onto a commercial mortgage once the accounts prove the trade. The bridging route is at /guides/bridging-loans-for-hospitality/.
Ready to take a deal to market?
Send us the scheme and the numbers and we will come back with a view on fundability and likely terms within one working day.