Advice is key to pub rent-cut success

Advice is key to rent-cut success Chris Beaumont, Enterprise lessee of the Greys in Brighton, tells how he secured a £6,250 reduction.

You may have been wondering where we've been for the past couple of months, and probably thinking that we'd been beaten into submission by Enterprise Inns — not so. As it happens, we got a result. The one we wanted. A reduction in rent. It took a lot of very messy arguing and a good deal of intervention from some very prominent people in the industry to whom we are very grateful.

Many of our arguments centred on the "accommodation" issue. The Greys has only one small room (with a shower in the corner).

Enterprise was still determined to claim that our room was viable accommodation for a licensee and rent should be charged accordingly.

Our business development manager (BDM) even said (on tape) that, although it would probably not be able to rent the pub "with accommodation" in the future after we have gone, it still wanted to get the most it could out of the pub now.

We managed to get a 21% reduction of £6,250, leaving us with a rent of £22,750 without giving anything back to Enterprise in the meantime (such as guest ale, cider, wines and spirits etc).

One incredible thing that has come to light is that an Enterprise Inns pub only yards away from us has come on to the market through Enterprise with a guide rent (almost certainly negotiable) of only £23,500 — just above what ours is now — it is a good site and has three-bedroom accommodation.

Our BDM would have known this was happening while he was negotiating with us. But for us he insisted that a rent reduction was out of the question — no way.

The main thing that I have learnt from this whole process is that it pays to take professional advice. At the beginning of our negotiations we were told point-blank that we would not get a reduction in rent — no matter what we said.

Our £1,500 investment in this advice will be worth £12,500 to us over the last two years of our lease. Even if you are totally sure of your arguments and where you stand, the pubcos will not take a blind bit of notice unless you have an independent adviser on board. Someone who will fight your corner and knows the ropes. To them, you are just a little licensee. A nobody.

Last thing.

Tape-record all meetings with your BDM. He may well say things that his bosses don't like and these recordings may prove invaluable if you have to go to PIRRS or arbitration. Build your case. Find strong evidence to back up your claims. Talk to other licensees in your area and don't give up until every avenue has been explored.

Good luck and happy new year.

Enterprise response​

We are in complete agreement with Mr Beaumont when he says that 'it pays to take professional advice' when embarking on rent-review negotiations.

We train our staff to negotiate professionally and we also expect to take external advice in some cases.

Enterprise strongly recommends licensees do the same. In this case, Mr Beaumont argued for a rent reduction and, consistent with our policy that rents can go both upwards and downwards at review, we offered a lower rent at an early stage of our discussions.

There followed negotiation between the parties about the appropriate extent of that reduction and we are pleased that, after some compromise on both sides, a satisfactory settlement was agreed and signed up to.

Mr Beaumont is correct that part of the negotiations centred on the facilities in the first floor of the premises. These were described as a 'single bed/sitting room with shower cubicle' by Mr Beaumont's selling agent and we understand that the accommodation had previously been occupied by staff who would also have had access to the other available facilities in the property.

We nonetheless recognised this amenity provided significant limitations and compared poorly to the domestic amenities that are more typically available within our pubs. We are satisfied that we took full and appropriate account of that within our rent assessment.

We are also satisfied that the agreed rent took proper account of comparable evidence locally.

When assessing comparable rents, consideration must be given to the specific terms of leases as well as the trading potential and facilities that exist, and a valuer must simply value the premises that exist, taking due account of both opportunities and limits.

Mr Beaumont's pub operates on a 20-year lease with a limited trading tie.

The nearby pub that he refers to, the Geese, does indeed provide three-bedroom accommodation but is also being offered on lease terms that differ in a number of significant respects, including a full tie for all drinks, which have an inevitable impact on the rent proposed.