The new code – part of the Small Business Bill due to be scrutinised by MPs next month – includes tenancies at will (TAWs) and temporary agreements in its scope. Ministers have made clear that they want to ensure all tied tenants, including those on these types of short-term deals, receive protection under the code.
But senior figures have told the Publican’s Morning Advertiser that this will result in pubs being closed unnecessarily while pubcos pull together the information they are obliged to provide tenants before an agreement is signed.
One source said: “The way the TAW provision is drafted means there will be lots of closed pubs. It will take you a month to go through the rigmarole that the Government is proposing. Sometimes a tenant decides to leave at 9am and the public wants their pub open at lunchtime.
“We’re pretty good at doing that on temporary agreements, at very short notice. Tenants can get out when they want, with normally no rent requirement. But the way the Government has written the code there are four pages of requisite before putting someone in a pub.”
Rewording
Trade associations are now strongly urging the Government to reword the bill.
Brigid Simmonds, chief executive of the British Beer and Pub Association, admitted the issue was a big concern and it was lobbying for the bill to be amended.
“The current proposals will make it much more difficult to manage temporary vacancies. This will lead to pubs being shut for longer, which is surely in nobody’s interest
“Temporary agreements allow the licensee to leave at very short notice – often 24 hours - and the temporary tenant is well aware of this short-term role. A more reasonable threshold would therefore be where a tenant is in place for longer than 12 months, as currently applies under the Industry Framework Code.”
Concerns
Kate Nicholls, chief executive of the Association of Licensed Multiple Retailers, said: “Clearly the Government is concerned to ensure that the code applies across the board and there are no loopholes which can be exploited, but it needs to take into account genuine cases in which short-term, temporary arrangements and tenancies at will are needed. It helps nobody if it becomes too difficult to manage these genuine emergencies.”
However a spokesman for the Department for Business insisted that including TAW agreements would not impose a significant burden on pub-owning businesses.
“For example, the right to request a rent review is unlikely to be made on a genuinely short-term agreement. We are also aware that such agreements can last for longer than a year which increases the risk to tenants. We will continue to work with stakeholders to make sure that the legislation delivers the best outcomes for the pub industry.”