LETTERs

Energetically passing the buck

The new energy regulations and their requirements will place the whole pub industry under immense financial strain.

Of course, once again it will be those 30,000 plus properties owned by pubcos and leased to operators that will have to shoulder the greatest burden.

The vast majority of pubs were built before the Second World War - probably more than half before 1900.

The problem is that many of those pubs were designed and built for purpose. Installing double or triple glazing and loft or wall insulation may reduce energy consumption, but also lead to structural damage. Meeting any costs to rectify this will almost certainly fall to the tenant.

Certification cost will be about £500 and bringing the building up to a reasonable energy standard could cost between £10,000 and £50,000, depending on the building. The big question is about who will bear the cost.

Technically that should be included in the business operating costs and reduce operating profit and rent.

But will this happen? When the Disability Discrimination Act was being introduced, valuers and pubcos stated that costs would not be considered in a rent review because it was not yet legislation.

When it became legislation, most valuers and pubcos told tenants that under the terms of the lease they should have carried out the work and refused to take the cost into consideration at the next review.

As a result, most tenants have been landed with the whole costs. If they have not carried out the work, they have a cost thrust upon them or deducted from proceeds at the surrender or transfer stage - and the property has been improved at no cost to the landlord.

So what will happen this time? It's almost certain that the landlords will pull the same stroke and get the tenants to bear all the cost from their pockets.

Valuers and pubcos will work hand-in-hand to give tenants the responsibility for meeting the full cost, under the guise that the lease states that the tenant must observe all Acts of Parliament and all statutory instruments.

Now, if pubcos and the valuers, most of whom are members of the Royal Institution of Chartered Surveyors (RICS), were to follow Trade & Industry Select Committee (TISC) recommendations, professional, ethical standards would be maintained and transparency assured by preparing detailed profit assessments in line with national accounting standards. Costs of such work would be included and a reduced rent would reflect the burden.

RICS as an organisation is not standing behind the TISC recommendation - in fact up to now it has used every effort to subvert those recommendations.

A new review is underway at RICS and hopefully it will change its stance.

Regrettably the Federation of Small Businesses (FSB), which, with my participation, was instrumental in getting the TISC to review the pub issues and make those recommendations, has fallen silent.

I'm sure FSB members want it to reaffirm their support for these recommendations - by doing so, it would be protecting thousands of pubs and their tenants.

I can only hope that

the FSB will come out of

its shell and support recommendations that will go some way towards sharing and alleviating financial problems stemming from this issue.

AB Jacobs

Founder, Freedom For Pubs Association

No premium without fire

Can we assume that with the introduction of the smoking ban that came into effect on Sunday, our insurance costs will be reduced?

Our fire authority cites smoking as a "very frequent fire-starter" - so presumably with less risk, there should be reduced premiums?

It would be interesting to hear what others in the trade think and what the insurance industry has to say on this important subject.

Glen Matthews

Langden Beck Hotel, Forest-in-Teesdale, Co Durham