Beware a certain pubco
My wife and I recently passed on the lease of our pub free of charge because nobody was willing to buy it, keeping in mind the rent charged and the potential income.
We were served with a ridiculous dilapidation schedule, which included repairs that should have been undertaken by the pubco when we first took on the lease.
Although we found a new lessee our BRM wanted him to start afresh with a new 10-year lease, there being six and a half years to run on the existing one. We could see no problem with this and agreed.
After six months of unanswered phone calls, emails and correspondence regarding the dilapidations the pubco have agreed that we have been overcharged with regard to the work not undertaken by them. But because we surrendered
the lease and they have incurred additional costs in finding a new retailer, who we found, we are liable for six months rent.
They are very generously, however, prepared to offset the amount due to us against this and waive the balance of £16,760 due to them "as a gesture of goodwill". Anybody who has had any dealings with this pubco knows to what lengths they will go to get any monies owed to them.
How do we fight them? Having been unlucky enough to rent one of their establishments for three and a half years we can't afford legal battles, of which they are well aware.
John Butters
A former Punch lessee Minsterley, Shropshire
A problem closer to home
I note that in your recent article regarding the pub closure survey carried out by Camra, much of the blame for the situation appears to be aimed at the supermarkets and off-licences. I believe this is part of it, but by no means the most important element. That lies much closer to home in the form of pubcos. I offer the following argument to back up my case:
1) The European court states that tied houses are permissible as long as the tenant is no worse off than if he/she is free of tie. What tenant could possibly agree that this is their current trading position?
2) The level of discount enjoyed by the pubcos is substantial, I would suggest between £150-£190 per barrel, and yet the tenant receives little, or, in some cases, none of this. Given that independent wholesalers will provide discounts of over £100 per barrel to customers, isn't this situation in contrast to the European court's belief that tied houses should be no worse off than if they were free of tie?
3) In order to improve trade many tenants have to pay for entertainment. Often this entertainment does bring in additional trade, but not necessarily enough to cover costs and make a decent profit. On some occasions I would suggest that the tenant even makes a loss.
The only real winner is the pubco which is in a no-loss situation; if the evening goes well they benefit from increased barrelage, if it goes poorly they still benefit from a smaller increase in barrelage. There is surely an imbalance of risk and reward and, therefore, one of the strongest arguments for allowing tenants to be free of tie through paying a higher rent.
4) When was the last time a sitting tenant saw a pubco invest its own profits into expansion or improvement without clawing it back through increased rents? If they believe in the viability of the business they should gamble on refurbishment and/or expansion by returning their money in increased barrelage.
5) Pubcos are very good at squeezing out discounts for themselves from the brewers, and yet when it comes to companies such as Sky they make no effort to support their tenants.
They are quite content to benefit from any increased barrelage through tenants taking out commercial Sky contracts, but are not prepared to use the collective buying power of their estate to negotiate discounts on our behalf, or, ideally, tackle Sky's monopoly position in the European courts. Maybe this latter idea is one step too far for them as it might make people look at their own monopoly position in respect of the tie.
Having spoken to several members of parliament, the Office of Fair Trading, the Department of Industry, and many desperate pubco tenants, I've come to the conclusion that it is only through direct action by pub tenants themselves, that our plight will change.
John Morrey
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