Warning: Bank revaluations could lead to bankruptcy

He claimed that the banks are beginning to review loans with a different criteria — pubs are now valued against how much the bricks and mortar is worth rather than how much it would sell for (the market value).

This means that the value can drop significantly. Most loan contracts with high street banks will have a five-year review clause.

Thompson said that this is causing a lot of loan repayments to increase and banks demanding high down-payments to compensate for what they believe is a lower value pub. Licensees have between one and four weeks to come up with the extra cash.

He has dealt with one owner who will be forced into receivership after the bank halved the value of his property, another will have to pay £300,000 as a down payment.

Thompson said: “This will hit licensees very hard, and could bankrupt a huge number of pubs. It is very worrying for the trade because publicans who find themselves in this situation may not be in a position to pay it back.

“Licensees need to check their loan contacts to see if a review is looming.

“If this is the case, then they need to make sure they have up-to-date accounts available and keep your bank statements. That way, you may be able to move banks and so avoid the extra charges.”

He added that there are some non-high-street banks that are lending to the sector.

What’s your experience with the banks? Email gurjit.degun@wrbm.com.