Down in the West Country, a railway company is trying to bring in more income by raising the rent:
Their reasons include these gems:
"This rent is considerably below what the PLC (the railway company) feel is its value, and as a reference (1) the rent for Williton/Sherrings Yard is £17000 pa; (2) WSRA at Bishops Lydeard (BL) pay a rent of £4,500.00 pa for their office space; (3) the WSSRT pay a rent for the BL Museum of £100.00 pa paid in 4 instalments and (4) for the Blue Anchor Museum it is £741.60 pa paid in 4 instalments, however this has been waived until Oct 21 to assist the refurbishment. (5) Quantock House at BL was set at £22,000 pa, but then withdrawn by the landlord. (6) 5542Ltd pay £10 per foot of siding space pa."
As we know, what sets the rentable value of land is two things. By far the greater one is location. The other is what stands on the land. The site in question is in a small village with access only over a working railway off a tight bend in a major road. The tenants originally rented a bare site, with no buildings, rails or services on it and have paid for all the infrastructure themselves. To compare this site with a yard in an industrial estate (1) in a large village/small town with good level access is a classic diagonal comparison.
As is it to compare the rentable value of an empty site with that of a building, (items 2-5). Even in example (6), 5542 Ltd. didn't install the rails themselves. Moreover, as we also know, what the landlord feels is the value of the rent is neither here nor there, the value of the rent is what someone else would be prepared to pay for it.
The railway company also think that the needs of the landlord have a bearing on the rentable value. A large part of the statement from it is along the lines of "the company needs money, therefore the rent must go up".
"The PLC met the Trust and made clear it needed to increase its income wherever possible. It was suggested that the Trust should review its finances, that a rent increase was needed and that as this would take some time to manage, the PLC would accept a staged increase over time, but that an increase was needed."
The final piece of wishful thinking is the suggestion that the rent was originally set at below market levels out of benevolence, however there is no attempt at justifying this statement apart from the slightly ludicrous :
"At that time the PLC agreed the original lease it was trading profitably and could afford to be more generous than now; the level set is also an indication of the historic weak financial management which has been part the PLC’s current financial situation."
Just because it could, doesn't mean that it did and just because the Plc is in financial trouble now because of "weak financial management" (even if that really is the cause) doesn't mean that was the case back in 1991.
3/10 - must try harder
Debate Magazine
