Greene King under fire over rent clause
Greene King has been accused of enforcing a no-rent-reduction clause, regardless of the circumstances, at a Devon pub.
An historic clause on the lease of the Cott Inn, Dartington, says that, on review, rent should remain the same or change to the level recommended by the valuer, whichever is greater.
Greene King has been accused of abiding by this clause — described as "upwards only" — after buying the freehold from a private landlord.
Former tenant Trevor Martyn asked for rent to be reduced from £75,000 to £47,250 on advice of David Morgan of Cookseys DMP after the surveyor undertook a viability study.
Greene King Pub Partners estate manager David Ingram told Morgan in a letter: "As you are no doubt aware, the rent review provision within the lease is on an 'upwards only' basis.
"I have spoken to Mr Martyn and advised him that we are prepared to settle the rent review at the existing rent of £75,000 per annum."
Martyn handed in his keys earlier this year, saying rent was too high — it stands at nearly 20% of turnover, which is £378,000.
In a letter to Pub Partners boss David Elliott, he accused the company of having an "unbelievably negative attitude to the point of not caring what the circumstances were" when setting rent.
In its submission to the Business & Enterprise Committee inquiry into pubcos last year, Greene King said upward-only rent review clauses are "not imposed on historical agreements" and are removed from new leases.
The company said rent concessions "have always been an integral part of the Greene King business" and the level of concessions has risen in the downturn.
In a statement, Greene King said: "The person running the Cott Inn left the pub in March. We will not discuss individual commercial arrangements.
"But we can confirm that we do not enforce upwards-only rent clauses within our historic agreements. Greene King has so far provided £4m of additional support to our tenants and lessees via rent concessions and product discounts."
