First PIRRS decision for Fuller's
Olivia Tyler, tenant at the Union Inn pub in Cowes on the Isle of Wight, told The Morning Advertiser (MA) that her rent with the pub company had been £48,000 a year, but when Fuller's reviewed it in December 2015 the company told her the rent should rise to £55,000.
What is PIRRS?
Introduced in 2009, the Pubs Independent Rent Review Scheme (PIRRS) is a code of practice for pub companies that have less than 500 pubs in England, Wales and Scotland.
It is led by the Pub Governing Body, which is administered by the British Institute of Innkeeping, and was set up to offer a low-cost rent dispute resolution service for the licensed trade to offer support with cyclical rent reviews and agreement renewals.
For more info visit the PIRRS website
Pub companies with more than 500 pubs are subject to the Pubs Code in England and Wales. It is enforced by the Pubs Code Adjudicator.
Tyler told the MA that Fuller's had justified the increase to £55,000 by saying she “wasn’t a good enough operator” and, therefore, the rent should be higher. She added: “They said I hadn’t significantly improved the business trade at the pub and I should be able to get higher GPs (gross profits) than I had.”
During the PIRRS process, Tyler argued that her pub was in a very impoverished area with high unemployment making trading tough and that the higher rent she was offered didn’t necessarily reflect rents on the open market.
Open market rents
She said: “It is all about what the rent is worth on the open market. One way of assessing that is by using local comparatives. These are made up of a significant number of other tied properties which maybe haven’t gone through independent arbitration and quite often aren’t showing the true open market rent.”
At the end of the PIRRS process an independent adjudicator decided the pub’s rent should be £34,000.
Commenting on the decision, she said: “It’s a great result, and the rent was backdated, so Fuller's paid me £40,000. But the process is not for the faint hearted.”
Code of practice
Trade consultant Phil Dixon said: “I can’t comment on the individual PIRRS decision but PIRRS is there for licensees to use. It is the fairest system for a publican, to have their rent set by third party, that the industry has ever seen."
Commenting on the Union Inn, Fuller’s tenanted division operations director Fred Turner said: “We have followed the steps we committed to as per the code of practice for pub companies with less than 500 pubs – and engaged fully with the independent PIRRS process."
Dilapidations
Tyler has now decided to leave the pub. However, she said that Fullers had subsequently sent her a dilapidations bill for £107,000. She told the MA that she felt this wasn’t a justifiable amount.
Dixon said: “In respect to the dilapidations, I have to confess it does appear a high figure. However, all publicans can challenge dilapidations. They also have a right engage their own surveyor and if necessary take the case to some form of third-party determination.”
Turner said: “Olivia took on a fully repairing lease and her obligations under that lease are very clear. Our quote for dilapidations came from an independent firm of building surveyors and during her tenure at the pub she was totally at liberty to have the repairs sorted by a contractor of her choice in her own timescale.
"As a family business, at Fuller’s we treasure the relationship we have with our tenants and it is incredibly disappointing when it breaks down like this. We wish Olivia every success in the future.”
