Contact: Stephanie Limb
Updated: 8 September 2016
The Spotted Cow Preservation Society: A group trying to save our village pub from developers who plan to demolish half of the pub, turn it into a house and build 8 houses on the car park.
Assets of Community Value
The Spotted Cow and its car park have been listed as an ACV. Whilst this is good news, an ACV listing does not mean that The Spotted Cow can not be developed. Under planning law the owner of the property has a right to apply for planning permission. However, the ACV listing does mean that all permitted development rights are suspended and it can count as material planning consideration. An ACV listing has been cited as reasons for refusing planning applications (it was cited as the main reason to reject planning permission in the case of a pub in North East Derbyshire, The Angel in Spinkhill). It is one part of our argument against the change of use of the pub.
The Right To Bid
Whilst initially the ACV should help us to stop the development of The Spotted Cow into a small housing estate, the purpose of an ACV is to give a community a chance to bid on an asset and to give them time to raise funds if they want to buy it.
If the owner of The Spotted Cow was willing to sell the pub the community would be given 6 weeks to register their interest in buying it. If a community group decided it could raise the funds to buy the pub the clock would start on a six month moratorium period during which the group would have time to raise the funds. The owner would not be allowed to sell the pub- during this six month period - to anyone other than a community group (more than one community group could bid). At the end of the six months the owner could sell to a community group or to another bidder or could retain the property.
What would be the owner’s incentive to sell (or even lease) the pub to the community?
If planning permission is declined for The Spotted Cow to be changed into a residential dwelling then the owner has to either leave it empty or open it as a pub. If the community has registered an interest in buying it then the owner has risked alienating a large proportion of his clients if he then opened under his own management!
There is a possibility that the owner might be willing to lease the pub to the community. If he wanted to retain the pub as part of his portfolio he could lease the pub to a community group to run. It is likely that a community- who know what they want from the pub- would create a more successful business than an outsider.
How could the community benefit from The Spotted Cow being listed as an Asset of Community Value?
There is no obligation to take over the management of a pub if you list it as an ACV, but recent years have seen a big increase in community-owned pubs. Community ownership gives you the opportunity to work at a grassroots level and provide a facility in your community that reflects the wants and needs of your local area; protecting valued assets for generations to come.
This is not just about buying a pub, it is about helping to sustain a community. This is about investing in the future of the community and ensuring the The Spotted Cow is run for the good of the village, for us now and for future generations. At a time when many local businesses are having to close their doors, this offers a chance to safeguard local services by diversifying The Spotted Cow to house other service along with the pub and a village car park.
For most people the daunting sticking point to community ownership comes with the finance. The prospect of raising large sums of cash to buy the property let alone financing refurbishment and other start up costs seems an impossible task. But it is happening and there are lots of loans, grants and other fundraising methods which are being successfully used.
Sources of finance: Community Shares; Locality Grants; Architectural Heritage Fund; Co-Operative Loans Big Lottery Fund; Public Works Loan Board (this is obtained via your Parish/Town Council and therefore they would need to be a part of your community ownership model); Sponsors/"white knight" investors
As we know grants are difficult to come by (ask the Arkwright Hall committee) and take time to come through and therefore the most likely areas of finance for us are Community Shares and Co-Operative loans.
Community Shares Case Study
The Angler’s Rest, Bamford.
The Angler’s Rest is run as a Community Benefit Society. The basis of this model means that the business is run on a one member one vote.
A minimum target was set of £180,000 for this share offer to be deemed successful. The maximum target sum to be raised by this share offer was £320,000. They had an agreement in principle for a loan facility of up to £140,000 to bridge the gap between the value of the share capital raised and the total funds needed to complete the purchase. The bank loan was to be repaid and the interest serviced from the income revenue of the business.
Shares were sold at £1 each with a minimum investment of £250. Shares could not go up in value. Therefore anyone wishing to withdraw shares at any point could only withdraw them at face value. In the event of having to wind up the Society, should the value of the Society’s assets exceed the value of the share capital, the shareholders will still only get back their original investment. Any excess value would be transferred to another community organisation having similar community benefit aims. This is known as an asset lock and is to prevent private gain if the organisation dissolves. However as the shares are issued by a corporate body, shareholders have no liability beyond the value of the shares they buy.
When the business is in profit, the Society aimed to pay interest on the shares. Interest paid gross and taxable. Shareholders responsible for declaring this income to HMRC. Any profits beyond this retained within the Community Hub and used to further its activities. The Society had advance approval from HMRC for Enterprise Investment Scheme tax relief. The scheme provides 30% tax relief to investors. This means that 30% of the sum invested could be offset against personal tax liabilities in the year the society starts trading. To qualify, the shares must be held by an investor for a minimum of 3 years.
Incentives to invest
Most community pubs are registered with HMRC for Enterprise Investment Scheme tax relief. The scheme provides 30% tax relief to investors. That means if you pay income tax you and you invest £10,000 you would get £3,000 tax relief.
The added value to house prices by being in close proximity to a well run community pub is not to be underestimated. Figures put on the loss to house value due to the closure of a local pub are up to 7%.
By a relatively small investment (a group of people could even club together for the minimum investment) you would be part of a society running your local pub.
This may sound like a pipe dream but there are over 70 community pubs open in the UK.
We are holding an informal meeting at The Arkwright Hall on Thursday 15th September at 7:30pm. Please come along to hear more about what an ACV listing means for The Spotted Cow; to find out more about community ownership.