Landlords may start forcing rent reviews, says pub property agent Fleurets
His comments come after the agent published its annual Rental Survey, which found rent reviews to be “relatively subdued for the immediate future”.
However Sutcliffe called for rents to be maintained at sustainable levels for tenants to continue trading rather than failing, leaving empty properties.
The report found that half of the pubs in the north of England saw rents increase, with an average growth of 17%. In the Midlands, 36% of licensees saw a rise. On average, this was 16.5%. In comparison, 18% saw a rent reduction by an average of 36%.
Pubs in London saw the highest amount of rent reviews, with 54% seeing growth. In the south and west of England, 31% saw a rise in rent, with an average increase of 21%.
With regards to tied pubs, Fleurets said that it has seen pubcos acting in a more “conciliatory fashion”. The report said that in most cases, rents are being agreed at reduced levels.
Fleurets also said that it anticipates more consolidation among high street bars. However, those looking to dispose of these leases are finding it hard to do so because of excessive rents.
Sutcliffe said: “Landlords who have bought investments will not wish to see rents continuing to remain static and may start forcing rent reviews, which could result in some further increases.
“Where rents on fitted out pubs (be it on a free-of-tie or tied basis), continue to be valued having regard to trading potential, market rents should continue to be maintained at sustainable levels, particularly where there is an opportunity to reduce the rent should circumstances dictate.
“In fact if all sectors considered a profits approach to valuations there is more likelihood of affordable rents being charged throughout all sectors. Whilst rent reductions may not be favoured by landlords it is surely far better to have a tenant in occupation who can continue to trade and afford to invest in the fabric of the building rather than failing and leaving a vacant property.”
