Pub restrictive covenants under review

The Government is to consult next year on whether the use of restrictive covenants on pub sales, which force change of use, should be banned or restricted.

A public consultation on the controversial measure, promised by summer 2011, will examine whether powers for either local or central government are needed and what form these would take.

Restrictive covenants have been widely criticised in recent years, with the Business and Enterprise Committee (BEC) calling for them to be banned and the Office of Fair Trading saying they "could in certain circumstances restrict competition in a particular area".

Punch and Enterprise, among other major pubcos, have vowed not to use them.

However, moves to curb restrictive covenants are likely to be fiercely opposed by a number of regional brewers that still use them on occasion.

Community pubs minister Bob Neill, who is to leading the review, said: "The pubs and clubs in our community can be the heart and soul of a town, village or street and many of us will be heading off to our local this evening to celebrate the New Year.

"But too many are being closed down, depriving communities of important places to get together with their neighbours for a quick pint and a catch up.

"For too long now communities have felt shut out when rules prevent a building being used again as a public house or community club. I want to stop that and put local people in charge.

"By reviewing the use of this restrictive piece of red tape it is another boost for localism and means that communities could use their collective powers to keep important hubs of community life open."

Right to buy​

The Government said changing the use of restrictive covenants could give communities greater opportunity to use the Community Right to Buy power in the Localism Bill to take on a local pub if it comes up for sale.

The Campaign for Real Ale has been campaigning for an end to restrictive covenants. Chief executive Mike Benner said: "Restrictive covenants are used by pub companies to deprive local communities of their pubs, at a time when 29 pubs are closing every week. Between 2004 and 2009, this happened to almost 600 pubs.

"This announcement that the Government will consult on the use of restrictive covenants is a great success for localism, and shows that Government recognises that pubs are vital community assets that need to be protected. 

"For the new community right to buy scheme announced in this week's Localism Bill to work, pubs need to be available for communities to keep open.  

"It's a victory too for people power: this proposal came from communities on the ground, via their local councils who put the proposals to central Government."

In September the Morning Advertiser reported that three regional brewers, in their updated codes of practice for tenants, refuse to rule out applying restrictive covenants on pub sales.

JW Lees's chief executive William Lees-Jones told the MA that the MPs that want them banned "don't really know what they are talking about".

"If you've got a suburb in a community that can sustain three pubs, the simplest thing to make the other two work is to take one out of the system," he said.

"Now and again a pub needs to close to make others more successful.

"It is one thing that the BEC report fundamentally doesn't understand."