Prescott to investigate upward-only rent
The first step has been taken towards banishing upward-only rent reviews for licensees. John Prescott's office will investigate the relationship between landlords and tenants.
The deputy prime minister's office has launched a consultation process with the property industry - the first step on the road to legislation. It wants the industry to offer more flexible leases, negotiate fairly with tenants, and end upward-only rent reviews.
The move has been met with support from licensees. Stephen McConnell, licensee at the White Tap in St Albans, Hertfordshire, said: "If your trade has been adversely affected then it's right that your rent should be looked at.
"There could be a host of reasons why you suffer a drop in trade and it is unfair to only consider an increase in rent. The pub companies make a lot of money from beer sales and it's not really right to push rents up as well just because a tenant starts doing good business."
The news follows the publication of a report by Reading University which says many tenants are still subject to upward-only rent review clauses and other restrictions in their leases.
Lynne Whiteley, licensee at the Sarah Mansfield in Willey, Warwickshire, said: "I definitely support the consultation. I've suffered in the past because the rent set was not fair. You can argue that if you're going to take more business it's right for rent to go up but if you lose trade for reasons out of your control then they should look at it coming down as well."
A voluntary code of practice was launched by the property industry in April 2002. It provided an outline of good practice for all new landlord and tenant lease negotiations.
Tony Payne, chief executive of the Federation of Licensed Victuallers' Associations, said: "If a business is affected in any way the rent should be reviewed. If, for example, a bypass is built near a pub it's reasonable to expect trade to drop a bit. It's unfair to only have an upward review in that time.
"Rents would only come down if there was a substantial reason so there's no reason for pub companies to be against this."
Barry Gillham, chairman of property agent Fleurets, said: "This is just more red tape and not necessarily good for tenants as landlords will simply charge a higher rent to start with. But if there was more flexibility the government would not have to introduce the consultation."
Regeneration minister Yvette Cooper said: "It is disappointing that there are few signs yet of landlords offering alternative leasing packages at different prices, although the report finds that a degree of negotiation does take place. We will decide on whether to legislate after we've studied Reading University's final assessment of the impact of the code of practice, due at the end of this year."
