The rise of the rent

Fleurets' annual rental survey highlights the cost of running a pub. Michelle Perrett reports.​Licensees with a traditional pub in the South East can expect to pay an average rent of £48,987 per annum - the highest outside the capital. According to the latest figures from Fleurets' annual rental survey, this is an increase of 5.6 per cent on last year and an uplift of 18 per cent over the past five years. Inevitably, the most expensive place to run a pub, whether it is a traditional boozer or a high street venue, is in the bustling West End of London. A traditional pub will cost you an annual rent of £84,437, up 1.35 per cent on last year, while a high street venue will put you back £183,917 per annum compared to £171,344 last year.For licensees in the City of London the average rent of a pub has increased by 3.5 per cent over the past year to £69,309. Rents of pubs in the area have traditionally lagged behind other parts of the capital because of the changing fashion in the area. This year's leap is likely to be because of the growth in the late-night drinking market which has seen small traditional pubs overcome by new style superpubs and high street venues.To rent one of these units a licensee is looking at paying a rent of £164,200. The fact that City rents have increased by 30 per cent over the past 10 years and increased by 495 per cent in the 10 years to 1998 would seem to support this view. Outer London pub values have risen the most steeply over the past five years. The current average rent is now £66,504, up three per cent in the past year and up 30 per cent over the last five years. Fleurets believes this is due to the strength of the community pub.New lettings of high street sites have dropped to one or two a year from an average in 1997 to 1999 of 13 a year, says the agent. Figures show that over the past four years there has been quite a high average rent (£127,000), which could mean that "the best sites are being developed in outer London," says Fleurets.The average rent review in outer London of a traditional boozer is just £85,000 - about half of that in the City and 46 per cent of the rent paid in the West End. Meanwhile, the South West of the country is still witnessing spiralling prices. The average rent of a pub is £45,880 - up 26 per cent over the past five years. This is lower than the traditionally expensive South East but higher than the North at £44,456 and the Midlands at £36,397.Pictured: The West End remains the region with the highest level for pub rent.​Locations​

• London, divided into three regions:The City (all EC postcodes)The West End (W1/W2/SW1/SW3/WC1 and WC2)Outer London (all other areas within the M25)
• South East: includes East Anglia, the Home Counties, Bedfordshire, Berkshire, Nothants and Hampshire
• The South West: includes the West Country and South Wales
• The North: covers both East and West of the Pennines and North Wales.

Average annual rent​

History of traditional pub rents in London​

Barry Gillham, chairman of Fleurets​At a time when the government is considering whether leases should be changed by law so that upward-only rent reviews are banned, Fleurets publishes its Rental Survey for 2003.The general picture confirms that rental growth is as low as it has ever been in the 19 years since the survey began.If rents could go down upon review it is possible that 2003 would have shown a real fall in many cases. This is currently impossible with most leases. Some even have in-built minimum uplift provisions.The picture for 2003 is incomplete because record numbers of rent reviews are being referred to arbitrators and independent experts for them to decide what rent should be paid. This is a slow (and expensive) process. It should be made clear that the Fleurets survey covers only free-of-tie rents, so it does not deal with the vast majority of rents charged by the pub leasing companies.Since 1975 it has covered traditional pubs in London. The rest of the country was added from 1985. Today the survey deals primarily with the analysis of the rents paid for town centre circuit bars. It measures the growth in new lettings, for example 38 in London in 1997 dropping to only six new openings in 2002 and average rent paid on new lettings (£133,000 in 1997 and £128,000 in 2002). But more importantly it measures the rents paid upon review as each one is now the most important evidence for the next review in a town. There were 46 rent reviews in London in 2002 (compared to only six new lettings) and rent reviews averaged £157,000 (compared to only £128,000 freely paid in the open market).The picture is no different around the country. Average rental uplift for town centre bars between 1997 and 2002 was 21 per cent to 23 per cent with higher figures being sustained in the West End and a much lower figure in the Midlands. It is too soon to say what the final figure will be for 1998 to 2003 because around 40 per cent of the reviews are still being negotiated or decided upon. But a picture is emerging that tenants are only agreeing the lower rents or to small uplifts. The average uplift so far agreed is only two per cent over the 1998 figure. Three of the seven areas covered by the Fleurets survey have negative growth - which will be impossible once all the reviews are settled, due to the effects of upward-only reviews. Fleurets is predicting the final figure will be growth of under 10 per cent . This compares with 22 per cent over the five years to 2002.Returning to traditional pubs, the hardest hit