A pub rent review is easier to approach when your records are organised and the questions are clear. Before discussing a proposed figure, build a file that explains your agreement, your trading performance and the assumptions behind the rent.
The aim is to give you and your adviser a sound basis for discussion. A preparation file cannot guarantee a particular outcome, but it can help identify missing information and focus negotiations on the points that matter.
1. Start with the agreement and correspondence
Find the signed lease or tenancy agreement, any variations, the last rent memorandum and all correspondence about the review. Put the documents in date order and keep an untouched copy of each original.
Make a one-page summary of the current rent, review date, any notices received and questions about the process. Ask your adviser to check the review provisions and any deadlines before you respond. Do not assume that another publican's agreement follows the same timetable.
Also collect documents about the drinks tie, discounts, equipment and services. A headline annual rent gives only part of the picture when you are assessing the overall commercial arrangement.
2. Prepare a clear trading record
Bring together recent accounts and the management information available since those accounts were prepared. A practical file might include:
- monthly sales, split between drink, food, accommodation and other income;
- purchase invoices, supplier price lists and relevant discounts;
- payroll, utilities, insurance and other operating costs;
- a note of closures, unusual events and changes in opening hours;
- explanations for material differences between one period and the next.
Keep the source records alongside your summary. Where figures cover different periods, label them clearly rather than combining them into a misleading comparison.
Add a short commentary explaining what changed and why. For example, distinguish an exceptional repair bill from an ongoing cost. This helps your adviser identify which questions need further evidence.
3. Understand the assumptions behind the figure
Your actual accounts are important evidence, but they are not automatically the answer to a rental valuation. RICS distinguishes actual trading performance from the turnover and profit a reasonably efficient operator could maintain at the property. Relevant lease terms and market evidence also matter. See the RICS licensed leisure property standard.
Ask for a clear explanation of the proposed turnover, margins, costs and rental calculation. Mark each assumption as agreed, unclear or disputed. For disputed items, write down the reason and identify the supporting document. “This cost allowance does not match these invoices” is a more useful starting point than a general objection to the total.
4. Document investment and property issues
Create a separate list of works you have paid for, with dates, invoices, photographs and any landlord consents. Keep improvements separate from routine maintenance, and record any landlord contribution.
Whether an improvement is disregarded at review depends on the circumstances, the agreement and the applicable law. RICS highlights the need to consider the lease and associated consents carefully; do not assume that every pound spent will reduce the assessed rent. RICS guidance on tenant's improvements.
5. Check which Pubs Code rules apply
In England and Wales, the statutory Pubs Code regulates qualifying pub-owning businesses with 500 or more tied pubs and their tied tenants. It does not cover every pub tenancy. About the Pubs Code.
For a covered tenant, a rent review under the agreement requires a Rent Assessment Proposal, or RAP. The PCA explains that this should contain information supporting the proposed rent and that relevant further information can be requested. Receiving a RAP can also trigger the right to request the Market Rent Only option. A rent proposal is different from a RAP. Seek advice promptly about eligibility, procedure and time limits. PCA rent-assessment factsheet.
Scotland has a separate Scottish Pubs Code. Do not apply the England and Wales process to a Scottish tenancy. Scottish rent-review guidance.
6. Agree your next steps before negotiating
Take your document file, questions and priorities to a suitably experienced adviser. Agree who will request information, lead discussions and record proposals. Keep dated notes and seek advice before accepting terms or signing documents.
If a pub rent review is approaching, contact MDE to discuss your circumstances and the information needed for an initial conversation.
This article provides general information, not advice on an individual tenancy. Your agreement, location and circumstances determine the relevant process.
General information, not advice for a particular agreement. Rights and deadlines depend on the circumstances. If a date is approaching, obtain appropriate advice promptly.