Why you need to know about it
The Bill is significant because it is going to alter the permitted development rights associated with pubs, so that in future those permitted development rights cannot be exercised without having to make an application for planning permission and instead:
- demolition of a pub will always require planning permission;
- change of use to a shop or supermarket will always require planning permission;
- change of use to a restaurant or cafe will always require planning permission; and
- change of use from that of a public house to that of an office will always require planning permission.
Sajid Javid, Secretary of State for Communities and Local Government, has proposed an amendment to the Bill which might mean that pubs can change to a mixed use of pub and restaurant without the need to apply for planning permission. Nevertheless, removal of all the existing permitted development rights could have serious repercussions on a pub sector – which has been suffering from changes in consumer behaviour, as well as feeling the effects the regulatory regime for the large pub owning businesses, increases in business rates and the introduction of the National Living Wage.
The effects or removing permitted development rights
The removal of such rights for public houses is likely to be prejudicial. At the moment there are entirely legitimate planning strategies that can be adopted to put the pub property into a more favourable use value by exercising permitted development rights, without having to go through the red tape of making a planning application. Exercising permitted development rights in this way can ease the route to putting a property into its optimal use value. By way of example:
A pub might currently exist as a public house on the ground floor, community space on the first floor and ancillary residential for staff / management on the upper parts. Exercising permitted development rights on the ground floor, to turn the pub into a restaurant, might break the link between use of the ground floor and the upper parts, enabling those parts to be converted into self-contained residential accommodation.
The very existence of this type of exit route can help ensure that when a pub is acquired for pub use, the purchaser is not afraid to invest in the pub business, because if it fails the owner can recoup its losses on the way out.
The combined effects
But now there is a risk that, if permitted development rights are removed in the way Parliament is proposing, investment in pubs will fall because investment will focus on the pub that will always be a pub, rather than the pub which might, or might not, succeed if its competitiveness is enhanced by investment.
More selective investment in pubs is likely to mean that those pubs closer to the margins of the estate won’t receive the much needed investment that they otherwise would have done. When this is combined with pubs earmarked for disposal being nominated and listed as an asset of community value, and the alteration of prospective purchaser behaviour associated with that, there is likely to be an acceleration of decline in pubs on the periphery.
Who is to blame?
Lord Hodgson, a former non-executive Director of Marstons, put it as follows in the Lords Grand Committee on 8 February 2017:
“The … reason people feel so strongly about it is the belief which CAMRA has assiduously fostered—I pay tribute to its campaigning capability because it has been the most enormously successful pressure group—that somewhere in this operation there is a pot of money, that someone is making a lot of money somewhere, and if only it got down to the pub and the pub owner all would be right and the pubs would be happy and we would be in the sunlit uplands once again.”
CAMRA has become embroiled in either directly or indirectly interfering with pub owners’ property rights; interference which could be seen as short-sighted. Instead of having the effect of preserving pubs, it is likely to have the alternative effect of accelerating the disposal of marginal pubs into the hands of those not afraid to roll up their sleeves to put a pub into its optimal use value.
The content of this page is a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.