Pubcos "bend over backwards" over rents

The gap between rents sought by landlords and what tenants are prepared to pay is widening - but pubcos are "bending over backwards" to do a deal with tenants.

That's according to Fleurets chairman Barry Gillham, speaking about the agent's new Rental Survey showing trends in rents across the leisure sector.

Gillham said most referrals for arbitration come from property companies as high-street operators resist any uplift.

The Rental Survey shows that in several regions, among high street pubs average rent fell in 2007 after a review. For example, by 12% to £104,000 in the south east, and by 3% to £92,000 in the south west and south Wales.

Overall rent hikes at traditional pubs increased by far less between 2002 and 2007 compared to the period from 1997 to 2002.

In the south west, there was a 5% uplift between 2002 to 2007. By contrast, the increase was 35% between 1997 and 2002.

Gillham said landlords are asking for higher rents while input costs for tenants - for example food, beer and utilities - are shooting up.

He said around three to four times as many arbitrations are referred to him now compared to two years ago. Up to four times as many cases go all the way to arbitration, Gillham said.

"I think the pubcos are bending over backwards to do a deal with tenants. It tends to be the property companies that go for arbitration."

He said: "The big story in the high street is that tenants are generally resisting any uplift at all.

"This means that many 2006 reviews remain unsettled, virtually no 2007 reviews have been settled and third party referrals are up to record levels."