Surge in rent arbitrations

The number of rent arbitrations undertaken by large managed operators has surged due to the down-

beat economic climate, particularly the high-street slowdown.

That's according to Fleurets chairman Barry Gillham, who said he currently handles around four times as many arbitration cases from managed operators as he did previously.

"Most arbitrations don't seem to be between pubcos and tenants," said Gillham. "There are more between property companies and managed pub companies."

He explained: "The property companies and investors have seen the value of their property go down as interest rates have gone down.

"The only way they can get out of it is to find more rent. But people in the licensed trade are making less money now than five years ago."

He added: "It's not confined to pubs. I'm getting just as many on McDonald's, Burger Kings, B&Bs and hotels."

Gillham said the high street, where a far higher proportion of pubs are operated by large managed companies, "has suffered more than community pubs" because "far too many pubs have shot up in the high street".

The Fleurets boss said that while he has had three arbitration cases from managed operators referred to him in the past three week, the past year has seen just four or five from individual tenants. Most of these have been free-of-tie, he added.

Rent review contests on the up

Rising numbers of pubco/tenant rent reviews are going to arbitration as both sides contest rents "far more vigorously".

That's the view of Christie+Co head of rent reviews Stephen Owens, who said: "More reviews are being referred to arbitration or an independent expert as both landlords and tenants contest rents far more vigorously than they have in the past."

Owens said the current reduction in pubs being leased means there's a "general dearth of market evidence of new lettings in order to gauge market sentiment and values".

As a result, valuers

are having to "rely on other historic rental settlements as opposed to new lettings evidence" for setting rents, Owen added.