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Derbyshire Tied Tenant Sees Off 42% Rent Rise

Friday, March 28, 2014

Enterprise Inns Abandons Claim For 42% Rent Increase For Derbyshire Village Tied Pub After GMB Supported Community Campaign

Tied tenant has taken a lot of stick but she has stuck to her guns and has now got a new deal that is better than her existing arrangement says GMB

Pub property company Enterprise Inns has abandoned a claim to increase rent from April 2014 by 42% for Claire Muldoon a GMB tied tenant in the Patternmakers Arms, Duffield in Derbyshire.

This is after a campaign which was supported by GMB, local media, the local MP and the community. Claire refused to pay this extra rent. She and has now got a new deal that is better than her existing arrangement.

In late 2013 Claire whose 5 year agreement was up in April 2014 was told that she has no automatic right to renewal. Her Regional Manager, Ashley Lovett offered her a new tenancy with a 42% increase in rent from £16,470 to £23,450.

GMB wrote to Vince Cable highlighting the rent demand.  Local Conservative MP Pauline Latham raised the case in a Parliamentary Debate which Dr Cable described as “truly shocking”. There was a public meeting attended by over 100 people. After that the MP presented a petition on behalf of the local residents, to Dr Cable.

On the claim that Claire had no automatic right to renew the lease GMB checked out the legal position, the lease and the paperwork. GMB concluded that Sections 24 - 28 of the Landlord and Tenant Act applied and Claire had a right to renew her lease.

The Patternmakers is one of 25,000 pubs owned by big property companies like Enterprise which are piled up with billions of pounds worth of debts. They are overcharging publicans for drinks – wet rent - as well trying to drive up rents – dry rents- in order to pay the interest charges.

In April 2013 Department for Business, Innovations and Skills published a draft statutory code for tied pubs for consultation which closed in June. There was an overwhelming and unprecedented response from tenants and the public supporting statutory regulation for a free market for products and fair rents.

GMB is campaigning for Option 3 the “freedom option” in the statutory code. This offers tied tenants the ability to buy products from the open market and pay a fair market rent for the building. See notes to editors for text of option 3.        

Dave Mountford, GMB representative for tied pub tenants, said “It has been incredibly hard work with a fair amount of unpleasantness but this deal secures the future of the Pattenmakers Arms.

She has taken a lot of stick but Claire has stuck to her guns and has now got a new deal that is better than her existing arrangement.

This is an important result because it is a high-profile case but is by no means unique. The majority of publicans don’t know what they can achieve by fighting back because so many are unaware of their rights.

Ultimately, the case of the Pattenmakers Arms shows what is going on in the industry and it isn’t just Enterprise Inns who are not following the guidelines.

On the wider we need Option 3 in the statutory code. This will offer tied tenants like Claire Muldoon the ability to buy products from the open market and pay a fair market rent for the building.

Interest payments on the huge pubco debts have to be paid each week before the tenant pours a pint and regardless of whether s/he can make ends meet or not. That is why Enterprise was seeking a 42% increase in rents.

To pay these sky high rents a pint of lager is on average 80p per pint higher and ale is 65p per pint higher than justified by inflation and like for like changes in taxes since 1987. This is pricing pubs out of the market and they have closed in droves.

The common view that shareholders in the pubcos own a pub business is wrong. In fact the shareholders don’t own a pub business; they own a holding company which invests in and manages incomes from pubs- these are called pub securitizations.

These securitizations are the infernal machine that is closing pubs across the country. It is the same infernal machine that drove Southern Cross care homes to the wall.

GMB and others have campaigned for many years for Parliament to legislate to free pubs from this infernal machine before it destroys them all.

This statutory code is likely to be our one chance to save local pubs. This campaign exposes the Orwellian world where the pubcos say that regulation to ensure a free market is "red tape". What Tosh.”

End

Contact Claire Muldoon, Pattenmakers Arms,  01332 842844 or Dave Mountford GMB representative for tied pub tenants on 07792 198 954 or 07794 021212 or Steve Kemp 07730 898102 

Notes to editors

What option 3 says

 “Option 3: Mandatory free of tie option with open market rent review

All pub owning companies with over 500 pubs would have to offer a free of tie option with open market rent review. This would apply at the next rent review point for current leases and for all new leases. Each licensee would be able to choose to be either tied or free of tie. This is in addition to the statutory code and adjudicator from option 2.

The rent in the free of tie offer would have to be based on Royal Institute of Chartered Surveyors guidance. This would ensure that there was a genuine free of tie option rather than one involving an unrealistically high free of tie rent.”

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