Pubcos start to address upward-only rent reviews

The pub trade is making strides to end upward-only rent reviews, say leading property agents.​​

They have refuted claims made by the Federation of Small Businesses (FSB) which has accused the pub property sector of failing to act upon the recommendations of last year's Trade and Industry Select Committee (TISC) investigation.

The TISC report, published in December 2004, urged pubcos to drop upward-only rent review clauses "as soon as is practicable" and warned that all rents should be "reasonable and sustainable".

But Barry Gillham (pictured)​, chairman of property agent Fleurets, said he was confident the issue of upward-only rents was being addressed.

"I think it's something that's gradually coming through," he said.

"Our industry is one of the better ones and a number of pubcos are leading the way in adopting a more free market approach."

Following an FSB policy meeting on the issue, Stephen Alambritis, chief spokesman, branded the current system of upward-only rent reviews as "criminal" and called for pub companies to scrap it.

He argued the pub sector needed to provide a clear guidance and evaluation process for leases, and urged pub companies to offer a breakdown of how rent reviews are calculated.

Mr Alambritis added that pubcos should take account of the fact that the market fluctuates and outside factors can influence trade.

"A pub's trade can be blighted by a road closure for six months or if a large chain pub appears opposite," he said. However, other property agents have refuted these claims.

Peter Taylor, a spokesman for property agent Christie & Co, said he was aware that some pubcos had introduced a voluntary code with regard to leases. But he added: "To a certain extent the situation is market driven - there is still a demand for leases irrespective of whether there's upward-only rent or not."

Licensees' hopes of action against upward-only rent reviews were dashed this time last year when the Office of the Deputy Prime Minister said it would not take any legislative action.

It was hoped its consultation, which was directed at the property industry, would bring in legislation to force pub companies to offer more flexible leases, negotiate fairly with tenants and end upward-only rent reviews.