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COMMUNITY BID FOR THE HORNS LODGE INN
INFORMATION SHEET

Background:
In March 2017, following an application by some local residents, Lewes District Council granted an Asset of Community Value (ACV) order on the Horns Lodge Inn.  This order requires the owners to notify the Council if they plan to sell the pub, at which point the local community are given a 6 week period in which to decide whether they wish to try and bid for the pub.  If the community decide not to attempt a bid then the pub can be sold by the owners as soon as they like.  If, however, the community decide that they do wish to attempt a bid then the owners are not permitted to sell the pub for a period of 6 months from the date of the original notification of their intention to sell.  This provides a period during which the community can try and raise funds and be in a position to bid.  The group who originally applied for the ACV have recently been notified by the Council that the owners of the Horns Lodge intend to put the pub on the market and have had a valuation of £475,000 for the freehold.  The Council have informed the group that the community has until July 23rd to notify them if they wish to attempt a bid.  Following the notification a small group of Chailey residents have met and decided to call a public meeting to gauge the extent of support for the community buying the pub and to decide whether or not to notify the Council of an intention to bid.  This meeting will take place in the Reading Room on Chailey Green at 7.45pm on Wednesday July 11th.


Community owned pubs:
Over recent years there has been a small but growing trend for communities to buy their local pub and there are currently over 100 community owned pubs around the country, the nearest ones to Chailey being the Half Moon at Balcombe and the Bevy in Brighton ( in addition, last year the village of Barcombe purchased their village shop).  To date no pubs that have been bought by their local community have closed down.  In some cases the community has bought a lease from a freeholder to whom they subsequently pay rent while in other cases the community has bought the freehold of the pub so that they own the building.  Obviously, a freehold purchase, such as would be the case with the Horns Lodge, involves raising a lot more funding but there would be no rent to pay after the purchase.
If a community is successful in buying the freehold of their pub, they must choose how they wish to operate the business.  In some cases the community grant a lease on the property to someone who wishes to operate the pub as their business and they pay rent to the community group that owns the pub freehold.  In this case the community group has no say in how the pub is run since it is the leaseholder’s private business.  In other cases the community group can decide to run the pub themselves, usually by employing a manager for the day to day running.  In this case, the community has a lot more input into the way in which the pub is run, but they are not collecting any rent and have the increased costs of employing a manager and staff.  It is felt preferable that, at this very early stage, both these options are left open with regard to the Horns Lodge.


Funding a community bid:
Clearly, one of the greatest challenges facing a community trying to buy its pub is to raise the funds that are necessary, particularly in the case of a freehold purchase.  In addition to the purchase price of the pub there will be significant costs relating to the purchase (stamp duty, legal fees etc) and also other possible costs associated with getting the pub open (refurbishments, purchase of stock, cash reserves etc).  While the final purchase price of the Horns Lodge is currently unknown it is clear that buying it would involve raising several hundred thousands of pounds.
There are several potential sources of funding for a community purchase of a pub including grants and loans from charities (e.g. the Plunkett Foundation), commercial loans and investment from members of the community.  Although many community pub purchases do involve an element of loans, these obviously incur costs to pay interest and repay capital and in virtually all cases of community owned pubs the considerable majority of the funding is in the form of investment from individuals in the community.  It must be emphasised, therefore, that should Chailey decide to try and purchase the Horns Lodge it will require members of the community to be willing to invest significant amounts of their own money.
There are two principle legal structures that are used by communities buying their village pub.  One is to set up a limited company that members of the community buy shares in, the proceeds of which are used to fund the pub purchase etc.  The second structure is to set up a Community Benefit Society which is a recognised legal entity and is governed by specific regulations.  Once again, members of the community purchase shares in the Society and the proceeds are used to fund the pub purchase etc.  There are a number of differences between these two structures, the main difference being that in the case of a limited company the more shares that a person buys the more votes they have in the running of the company.  For a Community Benefit Society each member has a single vote irrespective of how many shares they purchased.  It is felt that at this early stage no decision about which structure to use should be taken and both should be considered once a decision to try and bid for the pub has been taken.  Although no decision on share price has been taken yet people will obviously be interested in how much each individual might be asked to invest.  As an indication, most community pubs are funded with a minimum individual investment of £250 - £500 and a maximum investment of £25,000 - £50,000.


Where to go from here:
The first step is to gauge the level of support within the community for a purchase of the Horns Lodge.  This will principally be achieved by holding the public meeting on 11th July, although we welcome feedback before the meeting from members of the community who cannot attend.  Should the meeting fail to provide a level of support necessary to encourage a bid then we will let the matter rest and the pub can be marketed as the owners wish.  Should the level of support suggest that a bid might be feasible then the Council will be notified of our intention to bid and a moratorium on any sale will commence.  Once that has happened a working group will be established to set up the company (or community benefit society), liaise with funding bodies etc and to put together a business plan which will form the basis of a share offer to the community.  The working group would continue to oversee the process until a bid was made and any eventual purchase was achieved.

Chris Farrow        Kate Gould                  Mike Lethem
Julie Farrow         Linda Lethem,             Peter Olbrich

 

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