70 pubcos end upward-only rent agreements

70 pubcos end upward only rent agreements

by Tony Halstead

Seventy brewers and pubcos are set to ban upward-only rent reviews as part of a new code of practice on leases and tenancies drawn up by the British Beer & Pub Association (BBPA).

New leases and tenancies granted from the new year by the companies will be governed by the code, which also requires pubcos to provide new tenants with the trading history of pubs where possible.

The code also requires the provision of rental calculations for fruit machines - but does not go as far as removing the tie.

The code is a direct response to criticism of the industry levelled by the Trade & Industry Select Committee during its inquiry into pubco power last year.

The BBPA said the code commits operators to incorporate increased transparency in their varied lease and tenancy agreements.

The bulk of the revised code is geared towards longer-term lease contracts rather than simpler tenancy agreements now operated by a minority of companies.

But association director Dr Martin Rawlings said the document was 'not one-way traffic'. He told licensees that the onus was on them to show they had taken professional advice and understood the commitment they were signing.

The nine-page overview document covers updated sections on the granting of leases, including rent reviews and arbitration.

It also covers assignments, surrenders, purchasing obligations, business support, the role of business managers and fuller descriptions of machine agreements.

Companies will now be required to provide a trading history of the pub and outline any known local changes, such as new roads or developments, which could affect its commercial viability.

Rawlings said the document was a modernisation of the existing code rather than one which contained radical changes.

'It was brought about mainly through the recommendations of the committee and the advent of the new Licensing Act.

'We believe this is a much more transparent code which lays out in clear terms the responsibilities of both the company and the licensee.

'It's taken rather longer than we had hoped but I think it adequately addresses points of concern raised during the inquiry,' he said.

'Hopefully, it will enable pub operators and licensees to operate in a climate where both can flourish,' he added.

Federation of Licensed Victuallers Associations chief executive Tony Payne said he believed the new code was an improvement on the BBPA's old code.

'We have discussed this with the BBPA and the various companies all the way. What has finally been published appears to be a satisfactory outcome.'