What drives value here
- Fair maintainable trade — the trade a reasonably efficient operator would achieve
- Wet, dry, accommodation and machine income split and the margin on each
- Divisible balance and the appropriate rent share of that balance
- Tie arrangements, discount levels and the value of any tie release
- Trading area, external space, licence hours and late-night potential
- Capital expenditure required to keep the site trading at that level
Fair maintainable trade, not your accounts
The valuation is of the premises in the hands of a reasonably efficient operator — so exceptional performance should not be fully rentalised, and underperformance is not a defence on its own. Getting the FMT right, then applying the correct divisible balance approach, is where the rent is won or lost.
Where a tie exists, the discount received, the range restrictions and the volume commitments all need pricing into the comparison with free-of-tie evidence.
Reviews, renewals and the Pubs Code
Tied tenants of large pub-owning businesses may have statutory rights to a market rent only option and to rent assessments under the Pubs Code. Those rights run to tight timetables and are worth checking before engaging with any rent proposal.
Free-of-tie leases follow ordinary commercial rules: review clause construction, comparable evidence and, at expiry, the 1954 Act.
Repairs and dilapidations
Licensed premises are often older buildings with heavy repairing obligations. Schedules commonly claim wholesale renewal where repair would do, and ignore the state of the building at the start of the term where a schedule of condition exists.
Common questions
Guides for pubs and bars
- Leisure & F&BProperty advice for leisure and F&B operators — restaurants, bars, cafés, gyms and entertainment: rent reviews, renewals, dilapidations and exits.
- Commercial Rent Review SurveyorChartered surveyor acting for tenants at commercial rent review — evidence, negotiation, arbitration and expert determination across the UK and Ireland.
- Rent Review ArbitrationHow rent review arbitration works under the Arbitration Act 1996: appointment, directions, submissions, awards, costs and when to settle instead.
- Commercial Lease RenewalHow commercial lease renewal works for business tenants: protected and contracted-out tenancies, notices, new rent, new terms and interim rent.
- Schedule of DilapidationsWhat a schedule of dilapidations is, interim vs terminal schedules, the Dilapidations Protocol, and how tenants cut an inflated claim down to its real cost.
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