Rent reduction will lessen rates burden for licensees

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Licensees are being told that they must try to keep the rent on their pub as low as possible before April 2003, when all pubs in the UK are to be...

Licensees are being told that they must try to keep the rent on their pub as low as possible before April 2003, when all pubs in the UK are to be reassessed for their future rates.

The rateable value of a property is based on the value of the business, which includes a combination of rental values and turnover. Rents are to be collated by the valuation officer in April 2003 prior to the setting of new rateable values for the five-year period from 2005 to 2010.

Licensees, whether negotiating a rental on a current or new tenancy, are being encouraged to try and make sure that their rents are as low as possible on that date.

It is feared that many licensees, who are already facing hardship and possible bankruptcy because of high rent and beer prices, could find an additional financial burden placed on them with a large hike in rates in 2005.

Although licensees can claim a rebate on miscalculated rates they are only able to claim from the start of the financial year in which an appeal is lodged. Therefore, keeping rental levels as low as possible before April 2003 could save licensees money and time.

Peter Spelman of commercial property agents Vail Williams is advising licensees to try and negotiate on rental values.

He said: "If pubs are agreeing rent reviews or rents on new leases the valuation officer will be looking to assess new rateable values."

He advises licensees to use a specialist agent and argues that a reduction in rent will help to lower the rates paid by licensees.

He said: "This will result in not only a bottom-line saving on costs but the agreed rent will undoubtedly be reflected in the 2005 rateable value."

The British Beer and Pub Association (BBPA) is setting up a rating panel to discuss the issue with the Valuation Office Agency. Meetings between the trade body and the government department are to take place in November. BBPA spokeswoman Karen Kelshaw said: "We will be discussing with the valuation office the details of how pubs will be revalued."

Tony Payne of the Federation of Licensed Victuallers Associations says it is very unlikely that licensees will be able to get any reduction in their rents. But he also warned that they need to be careful when employing companies to re-evaluate their rates. He said: "Licensees must check that it is a reputable company."

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