Lessee lands rent cut via arbitration

An Enterprise Inns lessee has achieved a reduction in rent at arbitration — and secured £18,000 in overpaid backdated rent.

But the pubco said it believes the same result could have been achieved at a "fraction" of the cost through the Pubs Independent Rent Review Scheme (PIRRS) as the arbitrator was also on the official PIRRS list.

Steve Fisher, lessee at the Pelican in Ogmore-on-Sea in South Wales, was due to have a rent review on 26 June 2010. The passing rent at the pub was £45,000 and Enterprise's opening offer was a reduction to £39,000, followed up by a final offer of £35,000 to take account of reduced trade since 2007. It estimated the fair maintainable trade at the pub to be £398,000 per year.

Fisher, who has been at the pub 12 years, offered a rent of £27,200 and opted for arbitration rather than PIRRS. He claims that trade had dipped 20% over the past four years The arbitrator set a rent of £31,100.

He estimated the arbitration cost him £8,000. "I am very pleased with the outcome," said Fisher. "My advice to anyone in a similar situation would be to take proper professional advice from people who know what they are talking about.

"Yes, I had to spend more on arbitration, but the result is worth £75,000 over the next five years to me."

The PIRRS costs licensees £1,500, but Cookseys DMP surveyor David Morgan, who acted on behalf of Fisher, said the cost difference between the two could have been as little as £1,000. Arbitration does allow for recovery of costs, but none were awarded in this case.

"If both sides hire professional representation then there is not much difference," said Morgan. "In this case, through arbitration, we also managed to get interest on the back-dated rent. This decision is recognition from arbitrators of the fact that rents must be sustainable for the full five-year period and things may yet get tougher."