It’s not often that George Davies, fashion tycoon, gets it wrong. You don’t revolutionise supermarket clothing and amass an estimated £115m fortune without a nose for a good thing. But last summer Davies tasted failure when his wife, Fiona, was forced to abandon the couple’s plan to turn a Georgian pub in the Gloucestershire village of Bourton-on-the-Hill into a house.

The Cotswolds pub would have made a beautiful home. But it is also a beautiful hostelry — the only one in a village that has already lost its school, post office and shop. Fiona’s application to change the use of the Horse and Groom, which she and her husband had owned for nine years, led to vociferous protests from villagers. The couple withdrew it — the adverse publicity had been “very unpleasant” — and have now sold up for £720,000.

Jasper Feilding, of Strutt & Parker’s Moreton-in-Marsh office, says that is about what it would have been worth as a house. Although it’s a handsome building of Cotswold stone, it stands right on the road: “Good news for a pub, not such good news for a home.”

The Davieses’ experience illustrates some of the drawbacks of pub conversion. The market peaked in the early 1990s, when big brewers had to sell off many pubs after a monopolies and mergers inquiry. Now, anybody who thinks they can pick up a cheap pub in a pretty village to convert into a home can dream on: the price will almost certainly be too high for the move to be worthwhile.

“We sell 500-600 licensed premises a year, mostly leasehold,” says Yaser Martini, of Fleurets, a firm of chartered surveyors that specialises in pubs and hotels. “If you own a freehold public house, you have a very rare and real asset. The average price for a UK freehold pub has risen from £393,000 in 2003 to £612,000 in 2005.”

He believes 1,500-2,000 pubs a year are sold to private buyers, mostly to people who have converted pubs before, or to speculators willing to buy in a run-down neighbourhood, let the building as a going concern, then turn it to residential use if the area picks up.

But antagonistic locals, as the Davieses discovered, are another hurdle. The Campaign for Real Ale (Camra) helped Bourton-on-the-Hill’s residents to defeat the couple’s application, and in August Camra launched the Community Pubs Foundation to help other communities fight off similar threats. Local authorities, too, are on the side of the public house: more than 60% have planning policies aimed at protecting local amenities.

Generally, if a pub is the only one in the area, it will be hard to get conversion permission, but if you succeed there are potentially rich rewards. “One client recently got planning consent for the car park and the garden, but he was a professional and knew what he was doing,” says John Graham, of AW Gore, licensed- property agents based in Sussex.

The planning process can take up to two years. If you fail, you could have an unwanted pub on your hands. You could just close the doors and live upstairs, but not everybody wants to. Developers will often convert one into flats rather than a single residence, transforming the ground floor into a gastropub — another draw for buyers.

In 1996, Jon and Danya Miller bought the Gondolier in Little Venice, in west London. “The upper two floors were supported on six concrete pillars,” says Jon, “so all the ground floor walls could come out.”

The pub served its last pint on a Thursday; on the Friday the Millers moved in. They lived upstairs while they sought permission to change the use of the ground floor and basement. It took about six months.

The couple, who bought the pub for less than £500,000, are in the music and theatre businesses. Veteran renovators, they have had fun with this project, installing dramatic lighting and furniture in the 4,500sq ft, four-storey 1960s building. Now they are selling — contracts have been exchanged, for “close to” the asking price of £1.15m — to move to Warwickshire and renovate a 16th-century farmhouse.

If you must have your own pub, it’s cheaper and easier to rent one — and keep it as a going concern. For two years, Tim Heape watched as his local, the Old Inn, in the village of Malborough, near Salcombe in Devon, failed to prosper. In 2004 the 20-year lease, owned by Punch Taverns, came up for grabs. He got it for nothing because there was no trade. For £100 a week for premises rental, for the first three months, he got a business — admittedly not much of one — and a five-bed flat. The only snag was that he had never pulled a pint.

“I hadn’t a clue what I was doing and it was unbelievably hard work,” he says. “I didn’t know how to clean the pipes or change a barrel. It’s all basic stuff, but you still have to learn.”

First he had to do it up. “It was really dismal; ghastly carpets, and was painted oxblood up to the dado rail. And covered in horse brasses.”

He ripped everything out, changed the name to the New Inn and started again, with sofas, pine tables and art. He has spent just £17,000 doing the pub up, and his rent for the premises will rise incrementally to about £36,000 a year, depending on the takings of the business, but he has the right to sell the lease, and make a tidy profit, if things go well. He’s just refused an offer of £90,000 for it. And if he had to buy a flat like the one that comes with the pub, it would cost about £350,000. Harriet Cundy, of Marchand Petit estate agency, says Malborough is a popular village even by the standards of the South Hams, one of England’s most beautiful spots.

So if you must live in a pub, perhaps an entire career change is what’s really best, not a building conversion. But be prepared for hard work — Heape says it’s exhausting. “I get up at six every morning for a swim, just to get the stamina to keep going. Then I do my banking, buy beer, wine, crisps. Then there’s lunch and dinner. It just goes on and on.”

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