New Pub Code Comes in to Force
In July, the new pubs code came into force which aims to give tenants more rights and protection in the pub industry. If you own 500 or more tied pubs in England and Wales, you will be covered by the new pub code regulations.
According to gov.uk, there are two key principles to the code which are as follows:
- “Fair and lawful dealing by pub-owning businesses in relation to their tied tenants.”
- “Tied pub tenants should be no worse off than if they were not subject to any tie.”
The new code will ensure that tied pub tenants are provided with all of the information that they need before taking on a new pub and are educated on the terms and conditions of their contract.
They will also be able to demand a review of the rent price every 5 years, if this hasn’t been offered by their landlord before then.
Finally, tied tenants can request a market rent only option (MRO), which will give them more freedom and independence when it comes to running the pub.
Up to now, many pub tenants have been tied in to buying products from their landlord’s brewery, rather than any other supplier. This not only takes away control from the tenant but also means that they could end up paying much more when it comes to ordering stock.
For those taking the MRO option, they will still pay rent directly to the landlord who will continue to insure the property, but that is about as much involvement that they will have in the running of the pub.
One problem is that the landlords may threaten to take back ownership of the premises and run it themselves if they don’t want to enter an MRO agreement. Tied in tenants often get their rent at a cheaper rate, so it will depend if it is on the whole worth the risk.
If you have any questions about the new pub code or how it will affect your business, we would be more than happy to help. Please call 0333 044 7794 or email email@example.com to speak to a member of the Brewcover team.