Pub companies: follow-up - Business, Innovation and Skills Committee Contents


Supplementary memorandum from the Royal Institution of Chartered Surveyors (RICS)

ANSWER TO THE QUESTION 19, ASKED BY THE COMMITTEE TO DAVID RUSHOLME DURING THE ORAL EVIDENCE SESSION OF 8 DECEMBER 2009

  When the Committee asked whether a RICS member, when he values a pub, just gives an overall figure or is required to give a complete breakdown to explain how the figure is calculated, I said that if a chartered surveyor is engaged by the lesser or owner of the pub to negotiate a rent review, it is good practice to pass on as much information as possible to the person one is trying to persuade to accept that rent.

On the question on whether this is good practice or a requirement, there is no written code which states a chartered surveyor must give a full rental breakdown of the rent proposal at review when that surveyor is engaged by the landlord.

  It is, though, a matter of generally accepted practice in all commercial rent reviews. Indeed, it is such an obvious and basic requirement that I suspect it has not been codified for this reason.

  There are also issues of timing. A rent review notice to start a review may be served, often under the contractual provisions of the lease stating the amount of rent proposed. At this stage there may not be a full breakdown of the rent.

  It is common practice for surveyors to open negotiations with the tenant or the tenant's representative if a rent notice is challenged (this happens in the overwhelming majority of rent reviews). When these negotiations are opened the first step is always to give a rental proposal breakdown. We identified that this was not happening as often as it should in the Pub sector during our Forum investigation. We anticipate our new code will require a breakdown to be given as soon as negotiations are started at each review.

15 December 2009






 
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