Ask Timpo: should I lease or buy?

A: In 1983 I sold and leased back most of the original Timpson property portfolio to raise ?30m which provided most of the finance for our management buyout. 

Since then we have leased all of our new branches.

Although we have bought the freehold of a few of the shops we occupy over the last few years, we are primarily retailers not property people. Our skill is making money out of the services we provide in our shop rather than creating a capital gain out of the shop itself. 

Anyway, it takes a lot of money to buy freeholds. With 900 shops the total value of the shops we occupy is about ?500m.

There is no sophisticated short cut to shop selection. I have never found any value in research showing a socio-economic breakdown of the local catchment area. The only way is to go there, walk the streets, watch the potential customers, weigh up the possible sites and make your mind up. 

Even after picking shops for nearly 40 years I still get some surprises. Some are better and some much worse than expected. Every new branch is a risk so take plenty of time and trouble before coming to a decision. It only takes a minute to sign a lease but once done you will be paying rent for five years or maybe even longer.

John Timpson runs high-street cobbler Timpson, which has 800 branches nationwide and sales of ?150m. Got a question for him? Post it in the comments box below.

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