Enterprise has agreed to reduce rent by 38% for 12 months at a south Wales pub on advice of a valuer chosen by the pubco.
However, the lessees questioned why the rent reduction is only temporary. Phil Jones, Open Hearth licensee and son of lessees Don and Angela Jones, has reported Enterprise to the BII for alleged breaches of its lease code of practice.
Enterprise agreed to reduce the rent from £56,455 to £34,750. The figure was proposed by valuer Stephen Parker of Nuttall Parker,
who was paid for by Enterprise. Surveyor David Morgan of Cookseys DMP had said £28,360 would be a suitable rent.
The reduction is backdated to 12 February 2009 and will return to normal on that date next year.
Phil Jones said: “What’s the point of putting the rent back up to £56,000 in February? It’s going to put us back where we were, and in the middle of winter.”
He said he believed it was a code of practice rent review and questioned why it had become a rent concession. He wants a permanent reduction backdated to February 2008, when he claims the first request for a cut was made — this is disputed by Enterprise.
Enterprise’s chief operating officer Simon Townsend said: “Any adjustment of the contractual rent outside the rent review cycle is an entirely discretionary concession, and we have chosen to exercise our discretion here.”
Townsend said the period of concession “is also at our discretion and depends on the individual circumstances”.
I thought discretion was the better part of valour but not in this case. The pub has obviously been over rented and what do Enterprise do? They reduce it for one year! Where does this leave the tenant next year when they know that they will be 22k in the red as soon as the rent goes back to the level that a valuer has already said is too much.
This clearly shows Enterprises attitude to their tenants and shows that even under their old Code of Practice they are not willing to abide by it. It begs the question of why they are accredited by the BII and more importantly why the BII would even contemplate accrediting a new Code which is even worse.
These two cases alone show Enterprise have overvalued the rents by over 38%. Are they not meant to abide by the RICS guidelines? They accept the valuation by a third party yet seem happy to impose a rent which is not viable come February. I think the RICS need to get involved NOW to see what the hell is happening.
This valuation was based on 50/50 whereas it is now arguable that even this was too high based on the high court ruling. This is giving RICS members and valuers how abide by the rules a bad name. It is also making a mockery of the use of comparables as a valuer doing his checks would see that the passing rent was still over 50k and base other rents on it. This would happen although a RICS valuer has already documented that this rent is not fair or maintainable.
IM