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
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