A fairer way of settling rents
One of the great unfairnesses in this trade has always been the exorbitant legal costs of settling rent disputes.
Licensees who feel their landlord is asking too much at rent-review time have to have deep pockets if they want to push for arbitration or an expert witness that will deliver them the rent they feel they should rightly be paying.
The received wisdom is that some landlords exploit this power imbalance, and feel confident in pushing for terms that suit their needs for rental growth rather than their tenants' needs for a sustainable business. Certainly, the fact that there are so few arbitrations each year — perhaps around 20 — is not because each rental dispute is eventually amicably resolved. It's because the licensee just daren't take his case to the courts for fear of ruin if he loses.
To its great credit, the BII has resolved to do something that levels the playing field. It has been working for some time on a low-cost arbitration system, say a £1,000 fee for the unhappy licensee and £2,000 for the pubco, using its own choice of Royal Institution of Chartered Surveyors experts to deliver speedy and fair solutions.
Next week, the BII Council meets to discuss how to take the scheme forward, and who will run it. As a charity, the BII may feel it is not the best body to administer what is called the Independent Expert Determination Service. If it concludes that is the case, it will look for a trade partner to work with to ensure that the service becomes an established part of the pub scene.
The scheme has won the support of pub companies as well as licensees. That surely says something. Pubcos that operate fairly have nothing to fear from the scheme. And they see in it a way to allay tenant suspicions about their general modus operandi. Chartered surveyors feel similarly. They too are sick of being accused of unprofessional practices, by always favouring the pubcos against their tenants when deciding a rent dispute.
As Neil Roberston, the new BII boss, says, this is a win-win situation for everyone. Get this right, and a malignant cancer is removed from the body of the trade.
The BII performed a valuable service for licensees everywhere, not just its members, when it brought in its accreditation scheme for clarity of pubcos' codes of practice. That has helped bring more transparency into the leasing business.
It was created as a result of former BII boss John McNamara's aim to stamp out bad practices that were harming licensees, and the trade's image. The new service was his idea too, and licensees should raise a toast to the man.
His successor is equally committed to helping licensees, and this scheme should go a long way to that end. Let's make sure that it happens. The £100,000 annual budget is a trifle set against fairer rents.
