THE COST OF “SAVING” YOUR LOCAL PUB
Disaster Capitalism: Part-funded by the taxpayer and possibly happening even now in your local community
Author: Jim Ryan
“Disaster capitalism” is an ugly phrase. I have heard it recently described (accurately) as “vulture culture”. For example, it conjures up images of predatory speculators making huge profits from betting against the value of a currency when the value falls because of some natural or economic disaster. But on a far smaller scale, vulture culture is merely an example of those people who profit from somebody else’s misfortune.
How is this relevant to a community trying to save its local pub from becoming yet another pub closure statistic?[1]
Well, it may not be relevant at all. Some pubs can and do transition successfully from independent ownership to community ownership, but in other cases the owners of small independent pubs who live on the premises, become the victims not only of diminishing trade and a lack of space to expand and improve the business, but also of the sense of entitlement of the community which now wants to buy it. There are examples where the community has not supported the pub with sufficient custom over the years, which of course depresses the value of the business as a going concern. And any costs of necessary improvements or renovations will further erode the value.
You may think the answer is simple. After all, if the premises are also the owners’ home, surely they can just close the doors, sell off any remaining stock and equipment, surrender the licence and, well, go on living there? Having served the local community as publicans, perhaps for many years, one might expect that the local community would accept their decision to retire and let them do so gracefully.
The community had even signified their support for their beloved local pub by having it listed a year or two ago as an “Asset of Community Value[2]” (“ACV”). But, after making enquiries to the local Council, it seems that the change of use of the property from a pub to a house is something called a “material change of use[3]” which needs planning permission.
Why is that a problem?
The local Council will surely understand the circumstances and grant planning permission for the pub’s owners to continue living in the home they have lived in for many years? The pub is not viable, and in fact the owners have been investing their own funds in keeping it open for quite a few years now. But some local Councils take the view that because the property is now an ACV, and as there is a community group which wants to buy it (albeit at a knockdown price because of the costs of renovations and improvements and the significantly reduced trade), the Council will refuse planning permission for the material change of use to a home.
The owners will have to be very lucky indeed to be able to sell the property (whether to a local community group or on the open market) at a price sufficient to be able to buy even a very modest flat or maisonette, let alone a house, as a replacement home. A shameful reward for years of service provided to the local community; the very same community which has now embraced vulture culture.
Bizarrely, the community values the asset, but not the owners, the principal people who created that very valued community asset.
In his Budget on 3rd March 2021, the Chancellor announced a new £150M Community Ownership Fund, to allow community groups to bid for up to £250k of matched funding to acquire ACVs. The interests of the owners are again ignored.
If you have been affected by any of the issues raised in this article, please contact Acuity Partner,
[1] Altus Group (www.altusgroup.com) an expert service organisation for the commercial real estate industry, reported in July 2019 that around 40 pubs a month (235 in total) closed their doors for good in the first half of 2019. The rate of closures was reported as slowing. Subsequently, the hospitality industry has been very hard hit by the pandemic in 2020 and beyond.
[2] ACVs were created under the Localism Act 2011 and mean that if the owners decide to sell the listed property, a 6-month moratorium will delay the sale to allow the community an opportunity to raise the funds to bid for the property. The owners have no obligation to sell to the community, even if the community successfully raises sufficient funds to make the highest bid.
[3] Under section 55 of the Town and Country Planning Act 1990, as amended.
