Facets of Community Value

That’s not because I don’t think that pubs play a special role in their communities — patently they do.

But my concerns are that such protections risk creating a distortion in the market that might prevent the optimal use of a property.

On a macro level, there are supply and demand dynamics at play. Supply of pubs has outstripped demand for some time now — meaning the sector needs to do one of two things: either increase demand to meet or exceed current levels of supply; or reduce supply to meet current levels of demand.

On a micro level, there is a risk that viable pubs might be lost to alternative uses if their owners can achieve a better return through a sale to supermarkets, care home operators, housing developers and the like.

So one can understand the motives behind well-intentioned initiatives like Assets of Community Value (ACV) and Community Rights to Bid (CRB) — which place a six-month moratorium on the sale of an asset listed by local authorities to allow community groups time to raise money to buy it.

Heritage​

Those who are concerned that some big pub companies run their businesses with a purely financial conception of control — fixated on maximising value for shareholders rather than considering a more balanced approach for the benefit of their wider stakeholders — would argue that these simple measures provide at least some level of protection for Britain’s pub heritage.

But as one freehold pub owner has found to her cost, an ACV order can — perversely — affect the very viability of the pub it is supposed to safeguard. In this case locals applied for an ACV, which was granted, but then failed to raise the money or generate sufficient interest to go through with the purchase, leaving the owner in limbo — unable either to sell the pub as a whole (buyers say they don’t want a pub with an ACV order on it), or part of its land to invest back in the business.

And that defies the very definition of an asset.

Restrictions​

Is it right to place restrictions on the sale and use of pubs? Maybe it is for viable pubs — which are used and loved by their communities, or at least which have that potential. But if these rules condemn a perfectly good building to closure and disuse, and prevent its conversion into something more badly needed — for example housing for young families — can we really call that progress?

No one in the pub trade can celebrate its current net closure rate of 28 pubs per week. But imposing onerous conditions on their ownership (and there are those who want these to be stronger still — including tenants’ right to buy at ‘fair market prices’ and restrictions on changes of use) risks discouraging investment from the very people who can help turn around struggling pubs and stimulate custom.