How can licensees tackle high rent?

By Stuart Stone contact

- Last updated on GMT

Challenging high rents: what options are available to licensees who find their rent unsustainable?
Challenging high rents: what options are available to licensees who find their rent unsustainable?

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The Morning Advertiser sought advice from Slater and Gordon lawyers on where licensees stood when it came to challenging high rent.

A couple who had independently operated a wet-sales-only pub for more than a decade and found themselves struggling to stay afloat due to high rent contacted The Morning Advertiser ​looking for advice on how to challenge a rent package they found untenable.

Having tried to get a rent reduction from their pub company and consulted their local MP, they’d been advised to sell, or forfeit, the lease.

However, after six months on the market, the couple received no interest from prospective licensees due to the high rent they were paying on the property.

With their current turnover not covering rent, they asked for advice on what next steps they could take.

The Morning Advertiser​ spoke to solicitor Danielle Lewis-James of Slater and Gordon lawyers who made clear there were a range of options available when challenging high rent.

“It will always be beneficial to obtain a professionals view of the terms and whether or not there are any clauses therein that could assist - such as an obligation to undertake a rent review.

“Had the couple used a solicitor to enter the lease, it is likely that they would have originally been advised upon the lease and its obligations. If they were not, there could be a potential professional negligence claim against their former advisers.

“Broadly speaking, if a party to a lease feels that the rent is too high/low, there is always - subject to any exclusionary terms - an option to get out of the lease by either forfeiting it or selling it. In addition, the couple may seek to argue that the rent is unfair and should be lower.

“A way to do this would be to collect information from neighbours on their rents or to obtain a surveyor’s valuation as to what is the ‘fair market value’.

“A lease would usually specify how to deal with a dispute should that occur. Some lessors may be more inclined to accept a reduction in rent than incur the costs of a dispute, court proceedings or the risk of forfeiture and insolvency of the lessee, particularly as they would then have to find replacement lessees to take over the lease. It is, therefore, key to enter into discussions and/or negotiations with the lessor.

“A sale will always be more attractive to the couple, and although this is yet to sell, they may want to seek the assistance of a pubs sale specialist.”

For more information on what information you need in order to negotiate a new rent deal, see The Morning Advertiser​’s guide to collating evidence here​. 

Related topics: Property law

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