The continued rise of pubs as assets of community value

2015 was the year that saw the meteoric rise of listings of pubs as assets of community value. Early on in the year, the unprecedented step was taken in the small town of Otley (the home of Greg Mulholland) to list all 19 pubs. Shortly after, the law was changed to remove permitted development rights to demolish or change the use of listed pubs.

These events were then followed by CAMRA’s “List your Local” campaign, with a target of achieving 3,000 pubs as assets of community value (ACVs). The result was a surge of nominations across the country, including a substantial number made by CAMRA branches – for example one CAMRA branch made an impressive 21 nominations in November to December 2015 to Rushcliffe Borough Council.

It is estimated numbers of listed pubs had soared from 600 at the start of the year to 1200 by the end of 2015.

However, it has not all gone the way of those determined to impose obstacles to dealings with pubs. Interestingly, the view of the Councils has not always been sympathetic to the listing of pubs, and our own challenges to nominations demonstrated that, if they were given good reason to reject a nomination, then overwhelmingly they were inclined to do so – particularly when the nomination was made by CAMRA.

This conclusion is borne out by our experience:

• Of a total of 44 nominations challenged in 2015, our overall success rate was 68%, with 28 wins, only 13 losses and 3 outstanding decisions (2 of which may reasonably be regarded as wins given the length of time which has elapsed without a decision).
• Of those challenges, 21 were to nominations made by CAMRA, and 16 CAMRA nominations were rejected (giving an overall success rate of 76% in objecting to their nominations).

Implications for purchasing pubs in 2016

Despite proving that success can be achieved in objecting to nominations, there is no room for complacency. The pattern of a high level of ACV nominations continues, and these are impacting on purchaser behaviour because:

An ACV listing reduces asset liquidity in certain circumstances, with a moratorium on “relevant disposals” as defined by the Localism Act 2011.

• An ACV listing is a material planning consideration, and the consequences of this on development remain uncertain.
• The slice of pub stock most affected by ACV listings is that of pubs which are being disposed of. In those circumstances it is the future contingent impacts of an ACV listing which purchasers baulk at.

Unfortunately the pro-pub lobbying group appears fixed on using ACVs to help them gain attention, no matter what the true circumstances of the situation. This is despite ACV nominations and listings often frustrating the sale of a pub as a pub.

Therefore 2016 may well be the year of resolute challenges to the utility of the ACV regime to the pub sector. For challenges to be effective the issues have to be properly picked, and arguments run to a binding authority, which may require resolute appeals to the Upper Tribunal.

Picking the fights

We are already active in a number of First Tier Tribunal Appeals. The issues we are running with and which need to be considered are as follows:

1. The eligibility of the nominator. We have one appeal due to be heard in March 2016 on the eligibility of a nominator whose constitution included a provision that everyone who walked into the pub was a member of the nominating body. Another is yet to be listed, to deal with CAMRA as a nominating body. Note that each CAMRA eligibility challenge falls to be dealt with on the facts of the specific case.
2. Ancillary use. A use of the property which meets the community value criteria required to be satisfied must not be an ancillary use. What is and what is not an ancillary use is probably open to argument in every single nomination of a pub as an asset of community value.
3. The evidential burden. It should be up to a nominator to satisfy the evidential burden required to show a Council that a property is of community value. Are unsupported allegations written on a piece of paper really enough to justify the fettering of private property rights in relation to assets worth hundreds of thousands of pounds, and sometimes millions?
4. Who bears the burden of any diminution in value of the property caused by the listing? A First Tier Tribunal Judge, Peter Lane, recently expressed the view, in passing, that he did not think Parliament “intended an owner of a listed property to recover compensation in respect of the diminution of the value of that property, by reason of its listed status.” I query the logic of this comment. If Parliament did not intend owners to recover compensation for interference with their private property rights at the hands of local bodies and communities, then surely the interference is unreasonable in the first place and ought not be tolerated.

Your experiences

We are already acting for a number of affected owners, including 11 BBPA members and a multitude of private owners and investors. This means that we are gaining an invaluable insight into how the nominations are being viewed, so we can build successful challenges and innovative arguments. If your business is being affected by ACV nominations, or you anticipate listings in 2016, then we would be interested to talk to you about your experiences to add to this overall picture.