Oxford licensee nets 38% rent reduction

Derek Sheerin, of the Corridor pub, which is based near the city centre, saw his rent decrease by £7,000 to £25,000 but did not believe this reflected the general downturn in the area or the strength of competition from large managed houses.

After appointing David Morgan, of Morgan & Clarke Chartered Surveyors, Sheerin’s rent was then agreed at £20,000.

Morgan accused pub companies of “looking backwards to out-of-date industry benchmarking” when setting rents, and said that they must look ahead to plan the financial future.

“You have to look forward to the next five years until the next rent review,” he said.

Correct settlement​

“Sales will probably remain static or even fall slightly set against a certainty of a rise in expenses of between 6% and 9% a year.

“This is particularly likely regarding raw ingredients in a catering-focused operation and, more importantly, staff costs linked to annual minimum wage rises.”

Sheerin said: “If Punch had been more realistic from the start, we could have saved so much time and effort to get to the correct settlement that has now been negotiated.”

He encouraged other licensees in the same boat to take professional advice, and to not be frightened of upfront costs if it means they will save money in the long-term.

A Punch Taverns spokesperson said: “We followed the process for a lease renewal as laid out within the code of practice and in accordance with the RICS [Royal Institution of Chartered Surveyors], and the review reached its natural conclusion.”