Clarity key to future of rent reviews: Salussolia
by Ewan Turney
Alex Salussolia, chairman of the Association of Licensed Multiple Retailers, has launched a fierce attack on the rent review process in the week leading up to the publication of the Trade & Industry Select Committee (TISC) report.
Elaborating on comments he made to the TISC inquiry in July, Salussolia, whose company Glendola Leisure has a number of pubco leases, said: "The absolute worst business process a tenant has to confront is the rent review."
He claimed the Royal Chartered Institute of Surveyors (RCIS), in charge of the arbitration process, had "no idea" how hard it was to create a business and generate additional sales to cover the awards it made.
"As far as I am concerned, they look at how many inches of evidence is produced by the two sides, look at the bid difference between the two parties and make a slight adjustment in favour of whoever produces the most inches of evidence and then go down the middle," said Salussolia.
"The pubcos are very professional at producing many inches of evidence."
He added: "RCIS experts see the majority of their money, when not working as arbitrators, generated with the large landlord companies. How do they maintain their impartiality?"
Salussolia's company, Glendola Leisure, has seen rent rises of 57%, 101% and 188% at review in the past three years two of these were arbitration awards and one a negotiated settlement.
"I would like to meet anyone who has the ability to increase its sales and/or reduce costs to be able to absorb this kind of increase," he said.
By taking the landlord to arbitration, Salussolia estimated a tenant could run up costs of £30,000 and may even be forced to pick up the landlord's costs in some cases.
Salussolia believes the solution may be to introduce the turnover rent mechanism in some circumstances and bring expert retailers into the arbitration process.
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