Lessees urged to fight rent hikes
A number of pub lessees are managing to achieve large reductions in rents when they come to renew their leases, according to a leading chartered surveyor.
David Morgan, of Bristol-based DMP, which has negotiated several large rent drops, says the reductions simply reflect lower profitability for some pubco leaseholders.
"In 2003, I have the strong suspicion there will be a large number of cases that will see rental coming down as a direct reflection of the decrease in profitability upon which the rental valuations are based," he said.
Morgan said: "The opportunity exists for the renewal of the previous Bass and Vanguardleases on similar terms as were originally granted.
"There are a significant number of cases that have been settled at nominal increases say £50.
At lease renewal, the court has the opportunity to decrease the rental agreed.
Naturally, I have not yet come across a single instance where the BDM or estates director has happily owned up to this phenomenon.
[Leaseholders should] not be bullied into accepting a completely new and revised lease that is inconsistent with the current lease."
Tim Martin, chairman of JD Wetherspoon, said: "Pubco rents have defied gravity for a number of years.
It's only sensible for the rent of pubs in certain areas to go down on renewal, especially if a new pub such as a Wetherspoon's opens in the area."
Tony Payne, of the Federation of Licensed Victuallers Associations, said: "Pub rents can go up or down on renewal depending on trading conditions.
But landlords need to have registered under the Landlord & Tenant Act and paid Stamp Duty for it to go to court [for adjudication]."
In August 2001, a Chancery division judge reduced a Unique leaseholder's rent on renewal to £16,000, from £19,839, after ruling a tenant should earn a minimum salary of £20,000 a year.
lSee letters, p15 Case studies Gerry McGrath, King's Arms, Kidlington (Punch Pub Co) Rent under old lease: £25,000 Proposed rent: Either £27,500 or £29,500 under Punch Growth Lease Agreed rent for new 10- year lease after negotiation: £21,000 Nick Ashman, Uncle Tom's Cabin, Cookham Dean, Maidenhead (Punch) Rent under old lease: £36,000 Proposed rent: £43,000 Agreed rent for new10-year lease after negotiation: £32,000
