Scheme to prevent unfair rises in rent

- Last updated on GMT

Related tags: Renting, Real estate, Area, Barry gillham, Fleurets

A leading property agent has come up with a new formula to help high street licensees avoid the higher rents paid by the big retail chains.Fleurets...

A leading property agent has come up with a new formula to help high street licensees avoid the higher rents paid by the big retail chains.

Fleurets fears that hundreds of lone operators and tenants running unbranded pubs could lose out in rent reviews.

Its Profits Test method is designed to prevent property landlords forcing every licensee to pay the same rent as the likes of All Bar One or Hogshead.

The company proposes that rents should be assessed on the basis of profitable floor space. Toilets, kitchens and cellars would be excluded.

Chairman Barry Gillham said: "We are working on a uniform analysis to give landlords and operators a fair deal."

A spokesman added: "We will study customer floor area and its relationship to actual sales per square foot and rent per square foot. Low sales will indicate problems associated with location or operational factors and higher sales the opposite."

Comparisons will be made to ensure that similar outlets are charged similar rents.

Current evaluation methods concentrate on either profitability or square footage, but Fleurets thinks these are flawed. The spokesman added: "There is little by way of a common standard and operators face a disadvantage." He said that landlords would simply choose the method which would produce the highest rent.

He added: "There is an unpleasant mix of inexperienced retail surveyors dabbling within a market where they have no understanding of the operators involved. We believe this is a dangerous cocktail guaranteed to harm the basis of rental settlements."

Fleurets admits what it calls its Third Way is complex, taking into account a number of factors. But it says this is necessary to avoid town centre tenants paying over the odds.

Fleurets plans to promote its new method through lectures and publicity material.

Fleurets' annual survey shows that the average rent on a High Street London pub is just over £130,000. Outside London the figure drops to £100,000.

This compares to £60,000 and £36,000 respectively for other pubs. Rents are rising by twice the rate of inflation.

Related topics: Property law

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