For a complete overview of the process, read our complete guide to taking on a UK pub in 2026.

Tied Lease vs Freehold: What the Numbers Really Show

Last updated: 24 April 2026

Most people considering a pub tenancy assume the pubco is the enemy and freehold ownership is the dream. The truth is messier, more expensive, and far less certain than either narrative suggests. When I took on Teal Farm Pub in Washington NE38 three years ago on a Marston’s CRP agreement, I knew I didn’t own the building—but I also knew exactly what support I’d get, what my overheads would be, and that my BDM had a vested interest in my success. That financial certainty matters more than people realise. This article cuts through the sales pitch from both sides and shows you what a pubco tied lease and independent freehold actually cost, what you genuinely control, and which one makes financial sense for your situation. You’ll see real numbers, real trade-offs, and the decisions that separate operators who make money from those who don’t.

The Core Difference: What You Own vs What You Manage

In a pubco tied lease, you operate the business but the pubco owns the property. In a freehold, you own both the property and the business. This single difference cascades into everything else: your cash requirements, your ongoing costs, your control, and your exit options.

When you take on a pubco tied lease—whether Marston’s CRP, Greene King, Star Pubs, or Admiral—you’re leasing the building and fixtures from them for a fixed term, usually 5 to 20 years. They set the rent. They control which suppliers you must use for certain product lines. They manage major structural repairs. Your job is to run the business within those boundaries and pay them rent plus a percentage of certain sales (tied lines, often cask ales or soft drinks).

With a freehold, you own the building outright or with a traditional mortgage. There is no landlord. There is no tie. You buy from whoever offers the best price and quality. You also own all the repair bills, the roof, the electrics, the plumbing, the subsidence risk.

Most people see this and think: freehold is freedom. It is. It’s also exposure. Most people considering a pub ask whether they should take one on at all, and the property ownership question often decides it.

Money In: Revenue, Tie Obligations, and Hidden Margins

Here’s what people don’t talk about: tied leases and freeholds generate the same top-line revenue, but they don’t generate the same profit.

Tied Lease Revenue and Margin

As a tied tenant, you sell the same drinks, the same food, the same quiz night tickets. Your revenue looks identical to a freehold operator next door. The margin difference comes in what you pay for those products.

On tied lines—typically cask ales, lager, spirits, or soft drinks—you pay a price set by the pubco. This price is usually 2–5% higher than the best cash-and-carry wholesale rate. It’s not exploitative; it’s how pubcos recoup their brewery costs, logistics, and credit terms. But it is real money leaving your P&L every month.

On free lines—products you can source independently—you might save 1–3% by shopping around or negotiating better rates with an alternative supplier. A 180-cover pub like Teal Farm might lose £80–£300 per month in margin on tied lines alone, depending on mix. Over a year, that’s £960–£3,600 in lost profit.

The crucial insight: a pubco tie removes 1–5% of your gross profit margin on specific product lines, and you cannot negotiate this away—it’s part of the contract.

Freeholders have zero tie restrictions. You buy from the cheapest, best-quality supplier for every single line. This sounds liberating. It is, until you’re dealing with six different delivery routes, managing payment terms with multiple suppliers, and discovering that your chosen cider distributor is unreliable and you’re scrambling on a Saturday night.

Freehold Revenue Reality

Freeholders also carry full product cost volatility. When oil prices spike and beer distribution costs rise, you feel it immediately. When pubcos negotiate national contracts with breweries, they absorb some of that rise. You don’t. Over a year with commodity inflation, a freehold operator might pay £2,000–£5,000 more for the same mix of products than a tied tenant would.

You use pub profit margin calculator tools to model this, but they can’t predict what your actual product costs will be. A pubco can—because they’re already negotiating them nationally.

Money Out: Rent, Rates, Repairs and the Real Cost Comparison

This is where the financial comparison gets real, and where most people get surprised.

Tied Lease Costs

Rent on a tied CRP pub is calculated as a percentage of Fair Maintainable Trade (FMT)—typically 50–60% of estimated profit. At Teal Farm, my rent is around 35% of my revenue on a 180-cover operation. For a £450,000 annual revenue pub, that’s roughly £157,500 per year, or about £3,030 per week.

You also pay:

• Business rates (non-negotiable; varies by location and rateable value)
• Utilities (gas, electric, water—your responsibility)
• Insurance (public liability, contents, employers’ liability)
• Staff wages and on-costs
• Food and beverage at tied prices plus free-source alternatives

The pubco covers major fabric repairs—roof, foundations, plumbing, electrics if it’s a structural or safety issue. You cover internal redecoration, furniture, small repairs under a threshold (usually £500–£1,000 depending on the contract).

Total annual operating cost for a tied 180-cover pub: roughly £400,000–£420,000 to generate £450,000 revenue, leaving £30,000–£50,000 available profit before tax, loan repayments, or reinvestment.

Freehold Costs

Rent: £0. That’s the headline win. But you’re now carrying a mortgage.

If you buy a freehold pub for £350,000 (a realistic mid-market purchase price in 2026), you’ll typically put down 20–30% equity (£70,000–£105,000) and borrow £245,000–£280,000 at around 5.5–6.5% interest. That’s a monthly mortgage payment of £1,400–£1,700, or roughly £16,800–£20,400 per year.

You also pay:

• Business rates (same as tied tenancy)
• Utilities (same as tied tenancy)
• Insurance (same, but now contents insurance is your responsibility)
• Staff wages (same)
• Food and beverage at cash-and-carry or negotiated wholesale rates—typically 1–4% cheaper than pubco tie pricing
• All repairs and maintenance—no threshold, 100% your cost
• Building insurance, roof repairs, boiler servicing, electrical rewiring when required

Real example: In 2025, my Teal Farm roof had a small leak. The pubco’s surveyor inspected it, approved the repair, and Marston’s paid the £1,400 invoice. As a freeholder, that £1,400 comes from your cash position. If it’s a major roof replacement, you’re looking at £5,000–£15,000.

Total annual operating cost for a 180-cover freehold: £400,000–£430,000 in variable costs (wages, utilities, products, small repairs) plus £16,800–£20,400 mortgage plus £2,000–£8,000 in unexpected or planned major repairs. You’re spending £418,800–£458,400 per year to generate the same £450,000 revenue.

At freehold cost structure, you’re making £0–£31,000 in available profit, before tax.

The tighter margins on a freehold are real. The liberation from paying rent is offset by carrying the full repair and mortgage cost burden.

The Rent vs Mortgage Standoff

Rent on a tied lease (roughly £16,000–£20,000 per year) is often lower than a freehold mortgage on the same property (£16,800–£20,400). But rent rises with FMT revaluations (typically every 5 years); a mortgage stays fixed. After 15 years, the tied tenant has paid £240,000–£300,000 in cumulative rent for a building they don’t own. The freeholder has paid £252,000–£306,000 in mortgage but owns a property worth potentially £400,000–£500,000.

The math favours freehold in the long game. The cash flow favours tied in the short game.

Control, Support and the Operational Reality

This is where the conversation usually turns emotional, and I want to be clear: control and support are not the same thing.

What You Control in a Tied Lease

You control:

• Your staffing model, wages, and scheduling
• Your menu and pricing (within reason—some pubcos have guidelines, but you aren’t micro-managed)
• Your events, quiz nights, live music, sports coverage
• Your opening hours
• Your daily operational decisions

You don’t control:

• Which suppliers you buy certain products from
• Major renovation or decoration (needs pubco approval)
• Subletting or assignment (needs pubco consent)
• How rent is calculated (it’s formula-based)

This sounds restrictive. In practice, it’s less restrictive than most people expect. At Teal Farm, I’ve never had a pubco decision overrule me on something that mattered to the business. I have had to use approved suppliers and get approval for a £2,000 kitchen upgrade. That’s a trade-off, not oppression.

What You Control in a Freehold

You control everything. Every penny you spend, every product you buy, every change you make is yours to decide. This is genuine freedom.

The hidden cost of freedom is decision fatigue. A typical week running a UK pub is already stretched thin. In a freehold, you’re not just running the pub—you’re also managing six supplier relationships, negotiating rates, dealing with an electrician, coordinating plumbing emergencies, and deciding whether the roof needs replacing now or in two years.

A pubco-tied operator calls their BDM when the cellar is flooded. A freehold operator gets three quotes, manages the repair, and loses £3,000.

Support: Pubco vs Freehold

A pubco Business Development Manager (BDM) is an embedded support structure; a freehold operator is entirely self-reliant. This is the advantage of the tie that never gets mentioned in freehold marketing materials.

My Marston’s BDM visits quarterly. We review sales figures, discuss seasonal planning, troubleshoot staffing issues, and talk about menu optimization. When my NSF audit comes up, Marston’s arranges it and I know exactly what’s expected. My 5-star EHO rating in 2026 was achieved because I had consistent support from someone who’s seen a hundred pubs and knows what works.

As a freehold operator, you hire consultants for that advice. A good food safety consultant costs £300–£800 per visit. A menu optimization consultant charges £150–£300 per hour. A business coach runs £100–£300 per hour. If you’re running a tight-margin freehold, you probably don’t hire any of them.

Your Marston’s BDM role exists because Marston’s has skin in the game—if you fail, their rent stream fails. They have an incentive to help you succeed. A freehold operator has nobody with that incentive except themselves.

The Entry Cost and Exit Reality

Getting In: Tied Lease

Pub tenancy ingoing costs on a tied lease typically run £25,000–£60,000: deposit (usually 1–2 months’ rent), legal fees, surveyor, initial stock, small furniture or equipment replacements, and working capital buffer.

For someone with limited capital, a tied lease is accessible. I know operators who started with £35,000 and built from there.

Getting In: Freehold

Freehold pubs are typically purchased for £250,000–£600,000, depending on location, size, and trading history. You’ll need 20–30% down payment (£50,000–£180,000), plus £15,000–£30,000 in legal, survey, and mortgage arrangement fees, plus stock and working capital. Total entry cost: £65,000–£210,000.

If you don’t have £65,000+ liquid cash, a freehold is not your entry point. This excludes most first-time operators.

Getting Out: Tied Lease

At the end of your lease term (5, 10, or 15 years), you assign your tenancy to the next operator, or you hand it back. You walk away with whatever profit you accumulated. If the business is successful, you might sell your goodwill to the incoming licensee for £10,000–£50,000, depending on how well you’ve run it. You own nothing physical, so there’s no asset sale—just the business reputation.

When you’re taking on your first pub, the ability to exit without liquidating property is a genuine advantage. If the pub doesn’t work, or life circumstances change, you’re not stuck trying to sell a struggling business property.

Getting Out: Freehold

You sell the building and business together. In a healthy market, this is straightforward—you should recoup your equity and any capital improvements. In a struggling market (like pubs faced during 2023–2024), you might sell the property at a loss or struggle to find a buyer at any price.

The property also ties up cash that could be working elsewhere. A freeholder with £150,000 equity is carrying £150,000 of illiquid capital. That’s retirement savings, opportunity cost, and exposure to property market downturns.

Which Model Actually Works for You

The honest answer: neither model is objectively better. Both can be profitable or disastrous depending on operator capability, location, and financial discipline.

My labour cost at Teal Farm averages 15% of revenue against a UK benchmark of 25–30%. This is the same operator outcome whether the pub was tied or freehold. The model doesn’t make you successful—your decisions do.

Choose Tied Lease If

• You have £30,000–£60,000 in capital but not £100,000+
• You want predictable rent and major repair costs managed by someone else
• You value support, BDM relationships, and a structured audit process (NSF)
• You want the option to exit cleanly without property liquidation
• You’re a first-time operator learning how to run a pub successfully

Choose Freehold If

• You have £80,000–£200,000 in capital and mortgage approval
• You want to build equity and own a tangible asset
• You value supplier freedom and margin optimization
• You’re experienced in pub operations and self-reliant on decisions
• You’re planning a 15+ year horizon and see real estate appreciation potential

The Decision Framework

Before you sign anything, you need real financial visibility. Your EPOS tells you what sold. Pub Command Centre tells you whether you made money—real-time labour %, VAT liability and cash position.

Use Pub Command Centre from day one to understand your actual P&L structure. This matters whether you choose tied or freehold. Most failed operators never actually knew their numbers until it was too late. The operating model (tied or freehold) is less important than financial discipline.

How much it costs to take on a pub varies dramatically by model, but the fundamental rule is the same: know your entry cost, know your annual overheads, model your revenue against your costs, and have a cash buffer for the inevitable surprises. Whether the building is owned by Marston’s or by you changes the details but not the principle.