GMB Contest 60% Pub Rent Rise

26 Oct 2011

GMB, the union for tied tenants, is contesting a demand for a 60% increase in rent for the Punch owned Rising Sun pub in Middleton near Matlock in the Peak District in Derbyshire.

Punch claims that the increase of 60% in rent brings this pub into line with rents for other Punch tied pubs in the region. These claims have not stood to scrutiny but Punch has challenged GMB to prove this. So contest this wholly unreasonable rent demand GMB plan to undertake a major survey of pub rents, incomes and costs in East Midlands audited by independent researchers who will validate the findings.

For GMB member Dave Mountford, the tied tenant of the Rising Sun, a rent increase of 60% would reduce the net income from the pub to less than £10,000 per annum which is not acceptable. Two years ago Dave Mountford, with support from GMB, was in dispute with Punch over health and safety and repair issues at the Rising Sun. After a very public battle the two parties agreed an amicable settlement. Wet rent to Punch has since increased by £50,000 per annum as Dave Mountford trebled turnover on alcohol at the pub.

David Mountford said ’The Rising Sun has gone from strength to strength, despite me having to battle Punch all of the way to get there. On that basis I didn’t expect another fight, but obviously they are either too greedy or can’t afford to change their ways. They now make £85,000 per annum from the pub while we make £20,000. I was stunned when Punch announced an increase of 60% on the dry rental figure based on their calculations of a Reasonably Efficient Operator.

However when I looked at the way they had worked out their shadow Profit & Loss it was apparent that there were many areas that were incorrect – an overvalued gross profit, a mix of sales that increased higher margin products, inflated turnover and understated costs were obvious and easily challenged – however the comparable data was a real eye opener. Punch gave me a comparison of 18 Punch Pubs with rent and turnover and stated that it showed I was on a “favourable deal” as my turnover of beer was the highest and my rent the lowest. I pointed out that this was not how comparable data should be used according to the RICS formula.

However when I contacted the landlords on the Punch list I soon got an even truer picture. The first Pub I spoke to had just received an eviction notice from Punch that very day, the 2nd was just about hand over the keys and the third was facing that possibility in the very near future. Of the 18 Pubs only two were even remotely like my Pub. Only 3 said they were happy with their arrangement with Punch. Many were on temporary assignments as the pubs were due to be sold as Punch could find no one willing to take them on.

Of the two Marston’s Pubs, Punch told me they had used as comparators, 1 had a lower rent than me and the other was run by a Management Company for the last 18 months meaning Punch had no access to the information they say they had. It was obvious that the list did in fact show that the only reason we were surviving was that our rent was the lowest and our turnover the highest. On the £20,000 we clear we pay income tax to get to the after tax income we use to look after the family.

When I put these findings to Paul Crooks, Punch senior rent assessor, he told me to prove my findings – despite him obviously having all the information available to him.  I am accepting the challenge which is why GMB plan to undertake a major survey of pub rents and incomes in the Punch Estate and the wider East Midlands audited by independent researchers who will validate the findings.”

Martin Allen GMB Senior Organiser added “ For Punch to ask for a rent increase of 60% for a pub in the Peak District at these times of austerity shows the extent to which the City financiers who call the shots at Punch are out of touch.  They were living in “cloud cuckoo land” when Punch was loaded with billions of debts and are they are now in “la la land”. GMB will readily pick up the challenge from Punch on rents in the East Midlands. When the figures have been audited GMB will publish the results. GMB will support Dave Mountford in challenging this unreasonable demand for a 60% rent increase.”