ACV pub licensee: "It's not necessarily saving a pub, it's putting a restriction on somebody else's business"

By Lee Pullan, Licensee of the Old Cock, Otley

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The Old Cock, Otley
The Old Cock, Otley

Related tags Otley pub club Leeds

Greg Mulholland and the Otley Pub Club's blanket ACV on all the town's pubs got nationwide media attention - but one licensee argues it isn't a panacea for closures.

Linda & I are co-owners of the Old Cock pub in Otley. When we purchased the building in 2007 it needed a complete renovation. Our application for Change of Use to transform the building into a pub was refused twice by Leeds City Council, but with our determination to create the pub we took it to a National Planning Appeal and 18 months later Leeds City Council were overruled. During this time we had a £200k mortgage to pay and had to employ expensive professional help to fight the Council.

Our local MP Greg Mulholland was unwilling to help as supporting the opening of a new pub was in conflict with his public efforts to save existing pubs. With hard work and securing finance against our home and another business we proudly opened in September 2010.

In January of 2015, without consultation and against our will, led by Mulholland, Otley Pub Club nominated, then successfully listed, 19 out of 20 pubs in Otley as Assets of Community Value.

This was heralded by them and CAMRA (Campaign for Real Ale) as an overwhelming success. Our formal request to withdraw from the nomination was ignored.

What the listing means for our business

A ‘restrictive covenant’ is placed on our title deeds. The upshot of this, is that if we decide to sell the property or wish to grant a lease of 25 years or more, permission has to be approved by Leeds City Council (The very same Council that tried to prevent us turning the building in to a pub). They then ascertain whether any local community groups are interested in submitting a bid. Any party has six weeks to register intent and then six months to submit a proposal.

During this time we are prohibited from selling. This listing remains for 5 years, and the asset can then be nominated again to be re-listed.

Why ACVs?

CAMRA and Otley Pub Club claim that listing pubs as ACVs is helping to save them. However, my understanding is that an ACV listing was designed, for example, to protect the last pub in the village, the village green or the village post office. To be used selectively and with discretion to retain threatened buildings of great value to the community.

There have been cases, for example, in central London where traditional, thriving and historic pubs have been purchased and developed for alternative domestic and business use. These are the pubs that need our protection. A blanket listing of all the pubs in Otley is just misusing the principle of the ACV. The Old Cock pub has been trading for 5 years in a building that is 261 years old. Surely, there should be a good history of trading before a pub can be nominated, decades say. We wonder who Otley Pub Club are trying to protect the Old Cock from? We are the 2 people who created it from nothing? It is our passion and a huge investment for us. I think we are the best people to protect its future; surely we have earned that right? We have to question the motives of MP Mr. Greg Mulholland and Otley Pub Club for the Blanket Listing.

By being the first Blanket Listing of all the pubs in a single town in the Country, it was always going to generate a lot of publicity. Another blow thrown in Mr Mulholland’s well documented battle against the Big Pub Companies. It is wrong that we as small freeholders have just been ignored and become an ‘unfortunate casualty’ in this battle. Also, when The Otley Tap House was applying for planning permission for Change of Use from a shop to a bar a couple of years ago, Mr. Mulholland and Otley Pub Club objected stating there were already enough pubs/bars in Otley. Six months later they nominated it as an ACV, trying to protect it’s future as a bar !

Consequences of the ACV listing

The restrictive covenant on our title deeds limits future lending against our property. Banks are reluctant to lend against a building that actually cannot be sold for 6 months. This renders us trapped with a loan secured on our home and few alternatives available to us. We are now handicapped in raising additional funds, to sustain our business or for refurbishment. This increases our business risk and potentially the employment we offer to 10 local people.

Industry experts have reported that an ACV listing can negatively affect pub values by up to 30% indicating that our business and property have decreased in value. Certainly, we would not have purchased our building with a restrictive covenant in place and Otley would not have The Old Cock today. We know, if we come to sell, other possible investors may be deterred. Simply put, when we invest our money in a business we need to know we have options should it fail or our personal circumstances change, for example, through unexpected illness etc. Be that an alternative proposition or selling. Thus an ACV becomes a disincentive to individuals who may be attracted to purchasing and running a pub. Waiting around for six months whilst Leeds City Council and a community group decide what is happening to our own personal investment is an unattractive prospect.

When a pub is about to close because it is failing as a business, the last thing you need is a six month period where you can not sell the property. Bills still coming in, serious investors (including good pub operators) being put off because they don’t want to wait 6 months to purchase. Then after the six months the Local Community Group fail to raise the funds and you are left in Limbo if not already bankrupt because the banks won’t wait six months and have cut off your line of credit.

There are approximately only 70 pubs that have been purchased by Local Community groups out of a total of over 52,000 pubs in the UK. The majority of pubs by far, are purchased by pub businesses, breweries and catering industry workers, maybe we should think about the large majority who are likely to turn pubs around rather than gearing everything towards the small minority.

While protection of historic buildings is to be generally commended, a pub failing after the grant of the ACV protection may have to remain empty and possibly fall into dereliction if its owner can’t pursue an alternative use. Similarly, shops converted into pubs falling under the remit of a blanket ACV may not be able to be changed back to shops if they fail as pubs. Every town has a threshold of pubs / bars that can survive to service the demand. When a new bar opens and is successful it is likely that an existing pub, that is less popular, will fail. How appropriate is it that people with little knowledge and experience in the freehold pub business are having such a strong voice in its future?

Campaigns to keep failing pubs open, without understanding the financial viability are ill advised. With nearly 30 years of experience in the trade I estimate that the average pub needs to turn over in excess of £6k a week to be sustainable and larger premises, a lot more than £6k. Costs include; capital loan repayments, regular renovations and maintenance costs, excessive business rates, utility bills and the ever increasing wage bills required for paying staff of the right calibre to keep the pub a success. Ultimately pubs that have been failing for years are no longer economically viable. In some cases the inevitable change to mini-supermarket shops, is sad, however, reflects the changing needs of customers.

Lifestyles have changed, pubs are not as busy as they used to be, in recent times 4 pubs have closed in Otley and none of them were purchased by a local community group and 2 of them are still sat empty. It is nonsensical for people to campaign to save a pub when it’s no longer financially viable as a pub. If people are serious about buying their local pub then they don’t need to nominate it as an ACV, go to the bank, raise the money and buy the pub. The people who nominated our pub have no intention of ever buying it, so why did they nominate it ?

Remember, nominating a pub as an ACV is not necessarily saving a pub, it is putting a restriction on somebody else's business, building and livelihood

The situation now

Following extensive communication with MP Mr. Greg Mulholland and Otley Pub Club, they have informed us that they no longer intend to nominate ‘singleton freehold pubs’ like ourselves when the current ACV listing expires in 3.5 years. They are yet to state this publicly still attempting to claim the blanket listing a success. Given the personal cost in our time and fees for professional advice in fighting the ACV listing, we experience this turn around as financially punishing.

If that’s what a local community group refers to as helping to save our small independent business, then thanks very much! There are very few freehold landlords around but there are a lot of people lobbying for ACVs without fully understanding the implications of the listings, as Otley Pub Club have shown in our case. CAMRA are encouraging people to nominate as many pubs as possible.

Think before you nominate, at the very least go have a chat with the landlord and freeholder first.

The expense of ACVs

Each Otley ACV nomination cost the council a reported £1,070, that’s a total of £21,400. With some opting for a review and then potentially a tribunal, we estimate the total cost, to the taxpayer, of the Otley ACV nomination process to be between £30,000 and £40,000.

Is the blanket listing of all Otley's pubs worth £30-40k every five years? We can think of many better uses for the money. I wonder if our local MP and Otley pub can?

Mixed messages

Linda and I are proud CAMRA members and have actively engaged with CAMRA since opening The Old Cock Pub. Advertising with them and supporting the local beer festivals etc. Recently we have become confused and disillusioned with CAMRA policy.

On the one hand CAMRA states that they are committed to trying to save all the historic pubs. On the other, they send out Weatherspoon’s discount vouchers annually with their membership cards. We have no grudge against Weatherspoon, believing like anybody else, they have a rightful place in the market. They know their customers and service them well. Of course, on average, in a town where a new Weatherspoon opens 2 or 3 of the town’s old pubs close.

This appears to be in conflict with CAMRA’s stated aim to save the traditional pubs. Providing members with discount vouchers for Weatherspoon is in effect facilitating the closure of some historic old pubs. Members encouraged, in this way, to spend in Weatherspoons are not spending elsewhere. Lovely old pubs can only survive by all of us frequenting them and buying drinks and food, otherwise they are likely to become financially unsustainable.

It seems to us CAMRA need to decide which side of the fence they are sitting on, it currently appears they are selling their soul to Weatherspoon. Let’s face it; Weatherspoon is ‘the supermarket of pubs’ – and look what has happened to all the shops!

Lee Pullan, licensee of the Old Cock, Otley

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