Many local authorities have policies ‘protecting’ community uses such as pubs.
These have increasingly been used over the last 10 years to stop the conversion of pubs into homes.
In reality, these policies rarely result in pubs coming back into use, as these buildings are generally no longer fit for purpose, the local market is too competitive, or the business requires too much investment to be brought back into use profitably.
Planning policies generally set a high bar for allowing any conversion or change of use to residential, for example requiring that a pub must have been marketed for a set amount of time (often 12-24 months) at a ‘reasonable’ price (rarely defined), or a detailed viability assessment should be submitted to prove the pub cannot be brought back into its current use.
An example of such a policy can be seen below:
These viability assessments are different from normal planning viability assessments as they require commercial expertise and industry knowledge to provide a detailed examination of the local market, along with calculations of achievable income and costs associated with the pub being refurbished, re-let to a reasonably efficient operator, and then the costs, revenue and profit associated with the business.
A key point however is that often the marketing exercise can be bypassed if it is demonstrated the business is no longer necessary or viable in the long term.
And in the current market environment, many pubs are very obviously no longer viable, particularly if there are large upfront costs to bringing the property back into use and adequately equipping it after prolonged closure.
Our pub viability reports fulfil these requirements by:
1. Providing a detailed assessment of the existing building and whether it remains fit for purpose.
2. Considering local competition and availability of similar or better premises.
3. Considering the national industry picture and how this has changed since the property was last in business.
4. Evaluating historic accounts to show how well the business performed in the past, and whether that is likely to improve or not.
5. Assessing options to improve the property’s profitability (if any).
6. Summarising any historic marketing which has taken place, and demonstrating that the marketing price was reasonable.
7. Preparing hypothetical accounts to demonstrate whether resulting value would justify necessary investment, and ergo whether the business remains viable.
Pub viability assessments can also assist with ‘cross-subsidy’ style schemes which seek permission for business diversification, or extension and conversion projects where open market rental or sale residences will ‘cross-subsidise’ the costs of bringing a pub back into profitable use.
Such studies are equally applicable to other commercial uses.
S106 Management are experts in pub viability studies. If you own a closed pub and are seeking a change of use or diversification planning application, please call us today for assistance.
