Strength to the elbow of local brewers?
The Pubs Code Regulations 2016 were introduced under Part 4 of the Small Business, Enterprise and Employment Act which contains provisions for the regulation of businesses that own public houses (pubcos) who rent to tenants and sell them tied products. The new rules, which came into force on July 21st 2016, apply to companies owning 500 or more tied pubs- currently Punch, Greene King, Enterprise, Admiral, Star Pubs & Bars and Marstons. Given the size of these pub companies, this will no doubt include your local.
Under the regulations, the good news is it allows pub owners the legal right to the ‘Market Only Rent’ option at either rent review or renewal, allowing you to buy products on the open market.
So what about the traditional beer tie?
If you are thinking of buying a pub, consideration should be given not only to the remaining terms of the lease but also the rent review dates. This is because under the new code, the rent review should be no longer than 5 years. As a new tenant you would have a right to request an MRO assessment when you receive a Tied Rent Proposal, which will then give you 21 days to decide whether to continue with the tied lease on standard terms; negotiate a partial tie release, or make an MRO request. The Pubco will have 28 days to provide a response, and then a further 56 days to negotiate and agree a free of tie rent.
For many, the change will be a welcome one; allowing tenants greater control over their finances, products and freedom from landlord involvement over trading operations, and giving local brewers the opportunity to take advantage of the tenants freedom.
If you are thinking about leasing a pub, it is important to consider the terms of the lease with a specialist commercial property lawyer. To discuss how the implementation of the Pub Codes affects your decision to lease or purchase, or to find out more about our fixed fee quotes, please contact a member of our team at one of your local offices:
Kidderminster -01562 820575
Worcester – 01905 730450
Halesowen- 0121 227 3850
Solihull- 0121 624 4000