Government's statutory code pub closure figures disputed
The Government said its proposals for a statutory code to govern the pubco-tenant relationship would reduce the number of pub closures, adding that the “best estimate” is that 52 pubs will close as a result of the code being implemented.
It said it arrived at the figure of 52 by estimating the number of pubs that would be sold on by pubcos to recoup lost revenue from complying with the code, plus the percentage of those that were then likely to close. This produced a lowest estimate of zero closures, a top end of 536 and the best estimate (which took the medium estimate of sales and applied the medium estimate percentage for closures after sale) of 52.
However, property agents said they are sceptical of the validity of the figures.
'Not affected'
Tom Nichols, managing director at Everard Cole, told the Publican’s Morning Advertiser: “I don’t know how anyone’s arrived at that figure of 52. I don’t think [pub closure rates] would be affected.
“The pubcos have been undertaking reviews of their pub estates for the past three to five years. Borderline ones are being disposed of, with most being kept as pubs.”
Fleurets head of pubs Simon Hall added: “I don’t believe that [the code] will have any material effect on pub closures.” He said this is because the parallel tied and free-of-tie rent assessments offered under the new code are often already offered to “marginal pubs”.
Stephen Owens, Christie + Co’s director of valuations for pubs and restaurants, said he would “err on the side of Government’s best estimate” and anticipates a “fairly neutral” effect on the rate of closures, which over the past two or three years has continued to slow.
Some agents also commented that the new code could provide a confidence boost for those contemplating joining the industry.
Guy Simmonds managing director Stephen Taylor said: “The implementation of a statutory code of conduct may give newcomers to the trade more confidence to take a tied lease.
He continued: “This code should increase our already buoyant sales in the tied sector. A profitable pub, in an attractive location, at a reasonable rent and premium, should be even more appealing to our purchasing clients entering the licensed trade.”
