That’s according to pub property agents, who believe that licensees are well within their rights to ask for a rent reduction.
The Publican's Morning Advertise revealed last month that many late-night pubs, bars and clubs hosting DJ nights and discos will be forced out of business if proposed changes to the way music royalties are paid are pushed through.
PPL is proposing rises of up to 4,000% on Specially Featured Entertainment Fees, with the likes of Intertain, the 36-strong bar chain, citing bills of £7m, up from £150,000.
“If there is an external force affecting income, it is likely that a licensee can say to the landlord ‘PPL charges are affecting my bottom line’,” said Christie+Co head of pubs Neil Morgan.
“It will affect those pubs competing with nightclubs the most. At the moment licensees can’t do much about it, but come rent review time, they will negotiate it.
“But if there’s a pub down the road that is not music-led and is trading successfully, then the landlord may encourage the licensee to change his focus.”
Associate director at Davis Coffer Lyons Dan Mackernan added: “It depends a lot on the landlord’s code of practice on when you can re-quest a rent review, but operators do have a case for a rent reduction if they are forced to host fewer DJ nights. That in turn leads to fewer customers, which will impact trade.”
However, Fleurets director and head of pubs Simon Hall pointed out that many high-street operations may have upward-only rent reviews in their leases.
“There is not a lot they can do as they have no right to a rent reduction. But it is down to the landlord’s descretion — and depending on the particular situation, they may agree to a reduction.”
