'Rent reviews stacked against tenants'
A tribunal system funded by Government or a fixed cost expert referral scheme run by the BII were two solutions suggested to help tenants get a better deal at rent review time at the pubco inquiry.
Speaking at the Business and Enterprise Committee, David Morgan of Cookseys DMP and a Fair Pint founder, said there was "no transparency" in the rent review process. He claimed that pubcos hardly ever provide calculations on how they have arrived at a rental figure, leaving tenants with little chance.
Morgan said he would like to see a tribunal system set up, comprising of lawyers, accountants and surveyors, with help on costs from central Government. He also said the six recommendations made by the 2004 Trade and Industry Select Committee to the Royal Institute for Chartered Surveyors (RICS) must be included in its guidance. "We must have an absolute insistence on transparency in rent negotiations," he said.
Martin Willis, Fleurets managing director and chairman of the Royal Institute of Chartered Surveyors (RICS) Valuation Group said the BII was thinking of trialling a scheme to help tenants deal with rent reviews.
He said the "fast-track independent expert referral scheme" was used by Inntrepreneur in the 1990s. The scheme would work on a fixed cost basis form a panel of experts.
Enterprise licensee and chartered surveyor Simon Clarke, who secured a 12% rent reduction at his Eagle House pub in Battersea, said he had taken the case to arbitration because no evidence had been provided by the pubco. But he said the rent review process was "massively stacked" against the tenant "who probably doesn't have the resources" to take it to arbitration.
Central register
He also said that linking rent to RPI in times of declining profits was "grossly unfair" and that the review system was "massively misunderstood" by tenants.
Clarke called for a central register containing all pub rents but Willis took issue with this. "RICS would argue that there is no rental index for any other form of commercial property.
"There is no specific register because no two properties are the same. There is a plethora of agreements."
He added: "It would be (a case of) a little knowledge is a dangerous thing."
Morgan argued that he would "wholly support" a register. "If you have three pubs (to compare) you can get a distortion, but if you have 30 they tend to even out. If you have 300 it starts to set a tone.
"That general tone is of assistance."
Willis was attacked by MP Lindsay Hoyle for being a gamekeeper and poacher as his firm Fleurets sells pubs for pubcos but he also chairs the valuation group and works as an expert witness or arbitrator in cases.
Willis also argued that the current problems in the industry was largely as a result of the recession.
• Read more on the inquiry: MPs told pubco model is 'outdated'.
