Isn’t talk of credit a little premature?

- Last updated on GMT

Related tags: Tenants, Family brewers, Renting

Sayles: "Tenants feel increasingly isolated and vulnerable; acutely aware that they lack a voice at the table"
Sayles: "Tenants feel increasingly isolated and vulnerable; acutely aware that they lack a voice at the table"
Well it seems that credit was being tossed around in abundance last week. No sooner had fellow blogger Mark Daniels suggested we acknowledge the positive changes taking place within the BII than PMA editor Rob Willock pops up and asks us to give property companies a bit of credit.

Perhaps whilst I’m here I should nominate the BBPA for a few accolades. After all, we wouldn’t want them to feel left out now, would we?

Clearly the PMA’s editor isn’t reticent about stoking up a little bit of controversy. Nor should he. That said; his piece‘Give pub companies credit where credit is due’left many, myself included, more than a little perplexed.

It isn’t the first time the head of a trade magazine has courted controversy. Caroline Nodder, (former editor of the Publican) generated similar disquiet by suggesting problems within the industry could be rectified using a ‘scalpel’ rather than a ‘chainsaw’.

When it comes to giving pubcos a pat on the back for a job well done, I think it would be fair to say that Rob and I don’t quite see eye to eye on this.

Whilst it’s true they’ve been hard at work trying to convince us things have taken a turn for the better, there appears little to suggest such rhetoric has translated itself into tangible action.

A cursory glance at the fundamentals serve only to confirm this view.

Take rent setting for example. Pubcos insist rents are set in accordance with RICS guidelines.

The reality appears somewhat different. FMT figures have over time become increasingly out of sync with reality, reaching “mythical” heights. Little wonder that many have long since concluded the RICS sold its soul to the devil.

The pubcos would like us to believe they’ve gone further. ‘We’ve removed upward only rent reviews’ they exclaim. ‘RPI can go down as well as up.’ Yeah right!

Factor in the annual price hikes on beer which allow pubcos to grow wet rent and brewers to recoup margin lost to the buying power of pubcos and supermarkets and it becomes relatively easy to see that little of substance has changed.

And then of course there’s the tie. The conflict of interest is obvious to all but the most blinkered.

On the one hand we have tenants who wish to see wholesale prices remain low to ensure competitiveness. On the other hand we have pubcos, all of whom have a vested interest in seeing prices rise in order to boost margin.

With such a one-sided arrangement in place how can the interests of both parties ever be reconciled?

Despite all pubco protestations to the contrary, it’s clear that the pillars of the model remain firmly in place.

What pubcos have done is adopt a smoke and mirrors strategy; one evidenced by the vast array of new agreements now available. All create the illusion of reform, none deliver substantive concessions.

‘New agreements for a new era’ we are told. Sadly, behind the facade of choice, flexibility and greater autonomy, the lives of tied tenants remain untouched.

‘Run it your way’ the pubcos say. ‘Loosen the shackles’ we reply. Our pleas fall upon deaf ears. But has that not always been the way of it?

The fact of the matter is that certain companies became too big, too cumbersome. Amidst soaring property prices, the focus moved away from tenants and pubs.

After all, with all those golden hellos, golden goodbyes, share options and bonuses to think about it’s not difficult to see why certain individuals took their eye off the ball.

The welfare of tenants was quickly put to one side. No longer valued or respected, tenants became little more than a commodity; discarded once they failed to meet the increasingly onerous expectations placed upon them.

And what of the family brewers? ‘Cuddly’ and ‘paternalistic’ aren’t the first adjectives that spring to mind.

‘94% of tenants would recommend us to a friend’ they say. Little mention is made of the £3,000 cheque awaiting those who succeed in enticing a new applicant to put pen to paper.

Critics would argue that some at least threw their hat in with the big boys, swayed by the abundance of riches stacked high on the passing gravy train.

Whilst it is the case that family brewers haven’t resorted to some of the unsavoury tactics of their PLC counterparts, they haven’t been slow in embracing the more lucrative aspects of the business model.

RPI is a prime example. Many of their FMT levels also look positively eye-watering and don’t expect much in the way of discounts for your beer. Is it any wonder Greg Mulholland concluded that certain family brewers had ‘got into bed with the pubco model’?

Admittedly, they haven’t indulged in some of the more unsavoury practices of their PLC counterparts. Presumably they would argue that this is proof of their paternalistic tendencies.

Cynics might suggest that such paternalism stems from the knowledge that their tenants, the overwhelming majority of whom are on tenancy agreements, have one card up their sleeve; the ability to vote with their feet.

In this sense at least, the tenancy agreement could be viewed as an instrument of empowerment. The lease in contrast appears to have become a mechanism for entrapment.

Now there are those in the industry who say the time has come to draw a line under such matters. ‘Unite’ they say, ‘for the sake of the industry’.

It appears a forlorn hope. The truth of the matter is that tenants feel increasingly isolated and vulnerable; acutely aware that they lack a voice at the table. Until this is addressed there can be no hope of reconciliation.

Last week I met a woman the day after she’d been evicted from her pub. She had tears in her eye as we spoke. “They kept asking for more and more” she said, “eventually there was nothing left to give”.

This is the bleak reality many tied tenants face, 7 days a week, 52 weeks of the year.

My message to the pubcos therefore would be this. Put something tangible on the table. Only then will we consider giving you some of the credit you appear to crave so much.

Related topics: Professional Services & Utilities

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