Your say
Conflict of opinion on system open to abuse
With reference to Clive Williams's article in the 29 May issue of the Morning Advertiser, has he got it wrong? Mr Williams suggests recent rents featured in the MA are low without considering the level of profitability, the wet rent or a liveable income. Those issues do not appear to matter.
He indicates that, although the rent calculation would normally be a 50/50 split, there should also be some reference to turnover. The use of a percentage of turnover as a reference point is a measure that is open to abuse and is as useless as determining intelligence by hair colour. It is a fundamental fact of business that turnover does not mean profit and therefore cannot be a measure of profit or rent.
The fact that a pub is tied means that the lease rent will vary considerably from pub to pub even with the same or similar turnover.
Even the court of appeal in its wisdom recognised what valuers try to ignore, and that is — given that the dry rent for each pub is individual to that pub — that the discounted rent for those premises would be different in each individual case and from time
to time.
The fact is that it has been customary for pubcos to ignore the impact of the price differential and
the wet rent when determining the lease rent. That action is nothing short of substantial injustice towards the tenant.
As a former tenanted director, that knowledge would not have escaped him. If there are tenants out there who are making a good profit they are still being subjected to that substantial injustice, for which there can be no excuse, just because they do not know how they are being duped.
As for tenants complaining after they have signed the lease, that is generally because they learn that disingenuous practices have been adopted by the pubco that they were unaware of. Just how many realise that the pubcos try to adopt percentages of turnover for determining costs, or ignore the principle that staff should be paid at least the national minimum wage, or that it is unreasonable to expect the tenants to work 60 hours each per week because the costs were stacked incorrectly.
Take advice? You have to be joking. If a tenant takes advice and that advice is contrary to what the pubco says is right, then the tenant either loses the pub or accepts in the belief that the pubco should have the greater experience.
As the Trade & Industry Select Committee (TISC) said: "Pubcos should recognise that they have a responsibility to ensure they do not exploit their position of strength and ensure that all tenants are treated reasonably and fairly and rents should be reasonable and sustainable."
But then the pubcos have done everything they can to subvert the TISC recommendations, as Mr Williams should know. It pays to generalise when injustice is rampant.
Brian Jacobs
Bristol, Somerset
