Pub property agents have criticised the Liberal Democrats’ approval of ‘pro-pub measures’ last week, claiming that they are “naive” and would be difficult to implement in practice.
The political party unanimously approved a range of policies, which included the right for pub tenants to buy the freehold of their venue if it’s put up for sale at an independently assessed market value, at its spring conference in York last weekend.
It also said it would change the planning system so no pub is given change of use or permission to demolish without it being offered at a “fair market price” and properly advertised for sale for at least six months.
Paul Breen, CBRE senior director for pubs, said he is “concerned” how giving tenants the opportunity to purchase the freehold of a pub could consistently be delivered in practice.
“You have to question who would be responsible for the costs of providing the independent valuation and how long the tenant would be given to complete the purchase,” he said.
“I think it would be vital for any tenant wishing to buy their freehold to be able to display from the outset that they have a sizeable deposit available as without this they simply won’t have the ability to fund the purchase. I have seen numerous examples of pubcos selling to their tenants in recent years, but typically it has only been the larger multiple tenants who have consistently been able to raise the funding required.”
He also said there is a “misconception” that the conversion of pubs to convenience stores is a lucrative transaction for pub companies, when in fact a significant proportion of the high costs involved is usually expected to be met by the pubco.
Neil Morgan, Christie+Co director and head of pubs, said the measures are “naïve”.
“In most cases, tenants are fully aware of the pubcos’ intention to sell and are given ample opportunity to register their interest in acquiring the asset. In many cases, too, the pubco will discuss the possibility of the tenant acquiring the business directly with them — even before placing it on the open market,” he said.
He also questioned what is meant by an “independently assessed market value” when the market itself is “always the best barometer of value” and whether the policies will equally be applied to independent operators seeking to sell freehold pubs.
However, Mike Hughes, regional branch manager at Sidney Phillips, said he welcomed the measures but “time will tell” whether they are “enshrined in the statute book” or if the market dictates the best policy.