RICS pub valuation guide finalised

The Royal Institution of Chartered Surveyors (RICS) has published its final guidance on pub valuations, which offers some hope to tenants who feel they pay too much rent, although concerns have been raised about some sections.

The document, drafted by a cross-industry panel, says there is nothing in the guidance that should result in rents in one sector "being set at an advantage or disadvantage to another".

This has been interpreted as supporting the principle that tied tenants should be no worse off than those free of tie.

And the draft guidance says tenants should not suffer an increase in rent directly as a result of carrying out improvements at the pub.

However, there are concerns that pubcos could get to rentalise the services they provide to tenants.

For the first time, the guidance says valuers will need to consider "reflecting" the perceived countervailing benefits, known as Special Commercial or Financial Advantage (SCORFA), of being a tied tenant.

This includes areas such as management and marketing support from the pubco, accountancy and ratings services and gaming machine management.

There are also fears that the guidance does not stop landlords "moving the goalposts" at review by, for example, re-defining the fair maintainable trade to increase rent.

Critics also say it's unlikely to benefit those on the new pubco agreements that include annual RPI rent increases as an alternative to cyclical rent reviews — effectively side-stepping the RICS guidance.

Tenanted pub operators have committed to abide by the guidance in their updated codes of practice.

"It is a massive step forward for tied tenants," said Fair Pint's Simon Clarke, who helped draft the guidance. "It has closed the loopholes that have been abused."