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The purpose of this paper is to explain the rationale and methodology applied to the rental valuation of wet led (i.e. pub or bar) retail leisure outlets. The paper does not cover the valuation of other leisure property (e.g. restaurants, hotels).

The paper opens with a brief outline of the factors and legislative changes which have shaped the public house market over the past 15 years. This is followed by a explanation of the rental valuation methods in use in the pub and bar sector and examination of the impact of some current issues – in particular the impact of the full implementation of the Licensing Act 2003 along with other legislative and regulatory changes. Finally the paper comments on some of the issues relevant to freehold investment purchases of public houses and bars.

As a consequence of the nature of the industry, profits based valuations continue to dominate the market and this raises difficult questions of method and interpretation particularly, as the market is further complicated by legislative and regulatory changes introducing greater uncertainty. With regard to public house and bar freehold investment changes in the structure of the market have had a significant impact on perceptions of the investment quality of the leisure sector with consequences both for flows of capital and the structure of yields in the market place.

Valuers need to be aware that freehold investment values in this sector have potentially peaked and that investment decisions in the sector should be based upon sustainable rent.

The paper is of use to all valuers in this niche market and provides a practical understanding of the profits test method of valuation from which a sustainable rent may be derived.

ANYBODY whoses daily work involves the planning and spending of money must at all times be concerned by efforts to ensure that value is being obtained for the money spent. Those of us who, as librarians, are spending the money of fellow tax‐payers, are naturally doubly concerned about this problem. In addition, the very phrase “value for money” to a Yorkshireman is a continual challenge, and a point on which he instinctively feels, rightly or wrongly, that he has some secret inborn knowledge.