Machine income will be left out of rent calculation, says Enterprise

Enterprise Inns has revealed that a licensee's share of machine income will no longer be taken into account when the company conducts rent reviews.

The move was revealed by Nick Light, the pubco's south coast division director, at the Federation of Licensed Victuallers Associations (FLVA) annual meeting in Blackpool last week.

It came the day after Enterprise announced to the City that its pre-tax profits were down nearly 21 per cent.

Light said: "Going forward if machine income is being shared the share that the licensee keeps will no longer feature."

In a talk designed to help licensee prepare for rent reviews Light revealed that between 2004 and 2009 Enterprise conducted 4,690 rent reviews and that on average rent increased by 2.5 per cent.

From October 2008 to September 2009 the pubco - which does not have an upward only rent clause - has held 766 rent reviews with an average increase of 0.1 per cent.

In the same period seven cases have gone to arbitration with three more dealt with by independent experts.

Light said the number was too low due to the expense of arbitration and that he welcomed the industry's Pubs Independent Rent Review Scheme, (PIRRS), which allows lessees and tenants a low cost way to appeal rents.

Speaking about PIRRS at the FLVA event the BII's Phil Dixon said it has now been launched and that the first case would soon be dealt with.

All BBPA members have signed up to PIRRS and licensees, who will pay between £1,000 and £2,000 to use the service, would be able to choose an independent valuer from a list on the PIRRS website.

Dixon added it was "good news" that Enterprise had dropped machine income from its rent setting process.