Upwards-only rents curbed by committee

Pubcos have been warned not to exploit their position of economic strength over tenants by the Trade & Industry Select Committee.

The committee's report into the pub industry has urged pubcos to drop upward-only rent review clauses "as soon as is practicable" and warned that all rents should be "reasonable and sustainable".

The report, published on December 21, recommended:

• That the industry should establish clear guidelines on the valuation of pubs with tenants
• The launch of a nationwide register of rent reviews, accessible by personal valuers, which would bring more "transpar-ency" to the rent review process.

"In the relationship between pubco and tenant, the tenant is in the weaker bargaining position," states the report. "Pubcos should recognise that they have a responsibility to ensure they do not exploit their position of economic strength."

Brian Jacobs, an accountant who specialises in licensing and who presented evidence to the committee, said the report had made some positive recommendations on pub rents.

"I was delighted with the committee view that the total rent for a tied pub should not be greater than a free-of-tie pub," he said. "Transparency is the name of the game. I hope that tenants will now demand a fully detailed comprehensive computation from their landlord."

But Peter Eveleigh, licensee of the Riverside Inn in Bradford on Avon, said the report did not go far enough.

"Why are pub rents set against the projected percentage of expected profits?" he asked. "The committee could have come down very hard on the weight of evidence it had and outlawed upwards-only rent reviews."

Barry Gillham, chairman of property agent Fleurets, added: "People have been pushing for a national register for all commercial property but nobody wants to give that information out as it is commercially sensitive.

Everyone knows how you calculate a rent - it's what a well-advised tenant would be prepared to pay."Speaking as the report was launched, committee chairman Martin O'Neill, Labour MP for Ochill, said he believed there had been a change in the pubcos' attitude to tenants since the inquiry began last summer.

"As it progressed we saw the players moving the goalposts," he said.

The Department of Trade & Industry is due to report on the recommendations made in the report within the next six weeks.

The Office of the Deputy Prime Minister is currently looking at the final report from Reading University on commercial leases. It will be making a statement in due course.