My letter to the RICS who acknowledged it and said someone would contact me, which they did not.
I have for many years been involved in buying small businesses and vacant commercial property, setting them up and selling them on.
I have also had a number of meetings with Inland Revenue Valuation Officers, going back as far as 1972, with a fair degree of success, not every time.
Having been a very brief member of the RICS some considerable years before that.
I realised that my knowledge of the system of renting commercial licensed property appeared to be seriously flawed and likewise the rating valuation system as well.
I was then asked to attend a meeting at Chepstow on renting assessment put on by Fleurets and Enterprise Inns.
The head of Fleurets gave a presentation on rent assessment quoting the use of Comparables and FMT, which seemed the most conveniently inaccurate system of assessing rent.
I asked a number of questions, which he failed to answer, he then mistakenly thought I was a Pub Co Surveyor and insisted on sitting next to me for lunch and further explained his methods of winning for his client the Pub Co, which I found totally unacceptable, but did not say so and let him continue.
I was then asked to attend a Rating Valuation Meeting put on by Fleurets and the Inland Revenue Valuation Office, with the learned Mr. Yaz and a very senior I.R. Valuation Officer, the following Link http://www.buyingapub.com/?p=5949 gives a more detailed and understandable account of the misuse of the next sentence.
The Valuation Officer mentioned Comparables and FMT, I pointed out that both were hugely responsible for over renting and over rating commercial property, since anyone who had run a small business would know that at any time of trading, the business that it has is it’s market share and any growth in the main has to come from another business, who will fight to retain their business.
In the majority of small businesses, business is finite, whereas Comparables and FMT assume that business is infinite, there are the very occasional extraordinary exceptions.
I was invited to the RICS some years ago to meet the Director of Valuations and his Deputy to discuss over renting and over rating, at that time the TRVG (Trade Related Valuation Group) were all powerful on these issues and it suited them to retain the assumption that all business was infinite, which has now been exposed in the High Streets, where business has moved to the large out of town Retail Estates and the failure rate of small businesses is a concealed embarrassment to many large property companies/Pub Co’s.
The Chairman of the TRVG claimed that he was a Pub Expert, but he was the Chief Rent Controller for Enterprise Inns, he was duly removed after a letter showing that he had a conflict of business interests.
It would appear that Comparables and Fair Maintainable Trade (FMT) may well have originated in the traditional long term brewery estates, which go back several hundred of years.
The terms would be appropriate because the brewers were in business to sell beer and owned all their pubs, they knew that every one of their pubs came within a twenty mile radius of the brewery. The amount of business that was available, was predictable and if one pubs business went up another would come down, because all business in a catchment area is finite, without a massive increase in population for some reason.
The term Comparables was reasonably accurate within the brewers estate, likewise Fair Maintainable Trade (FMT), both terms have been misused to increase both rents and rates by people who were classed as professionals, yet knew nothing about the vagaries of business.
It would appear that this system being long established was adopted across the board as an accurate assessment for rents and rates in most small businesses without consideration.
With the growth of Pub Co’s and their rapid takeovers of regional brewers, where there was no defined catchment area, which had previously had accurate figures of sales, going back many, many years and FMT was accurate within a relatively small percentage within the brewers estates.
Many Valuers assumed, either because of lack of knowledge or experience of small businesses, used the same system to set rents and rates, both being related or considering that the existing business as it’s market share, FMT using Comparables outside or well beyond a catchment area only served to raise the rent and rates.
One of the senior people with Enterprise Inns met me and agreed that over estimation of FMT using Comparables, the country would need at least a fifty percent increasing in brewing capacity, with no market to consume the supposed surplus capacity, I did point out that business was finite, with limited growth.
The over assessment by valuers without considering where the business was coming from, the only increase in business allowing for a small percentage of natural growth, would only come from a similar business i.e. pubs/restaurants, would they reduce the rent and rates on the businesses losing the business, not on your life, by hiking the price the valuers got more business from the property companies owning all these different small businesses.
I took a pub/restaurant 30 years ago with no business and turned it round to doing £10K+ a week, I was fortunate I identified the core business, sadly it left a gap in a lot of other similar businesses locally. I did not refurbish or change the décor apart from some wall decoration and decent beer, quality varied price food to suit all tastes and trained the staff that people didn’t go there to buy food or drink, they went there to be entertained whilst drinking or eating.
The present Valuation for Rents and Rates system has been hijacked from a system that worked in specific/detailed catchment areas, with the landlord knowing all the facts relating to that area, it has been a loophole in the system and been perpetuated for financial convenience on the part of many companies.
I have spoken to several senior I.R. Valuation Officers, one asked me to write to the Valuation Office, which I did, they declined to investigate or review the system and the mess continued.
Revising the system is a problem because of the premise by all Valuers that business is infinite, it is not, it is finite and in the main any increase in business comes from another business who has lost it
and should have the rent and rates reduced.
The Link above is worth reading.