The UK Government has announced new statutory laws to protect publicans tied to large pub companies from unfairly inflated rents and excessive beer prices.
Today, Deputy Prime Minister Nick Clegg and Business Secretary Vince Cable, announced new laws giving publicans fresh rights under a statutory code, presided over by an independent adjudicator “with the power to resolve disputes” and enforce financial penalties.
More than half of tied pub tenants (pubco) said they earned less than minimum wage (£10,000) responding to a CAMRA survey last year, while a price comparison of tied pub price lists versus free of tie price lists showed pubco tenants can be charged 60p more a pint than open market prices.
Under the new laws, tied tenants will be able to request a rent review if they have not had one for five years and call for a review of the information pub owning companies have used to determine rent increases, with the aim of encouraging greater transparency.
Tied tenants will also have the right to choose whether or not to be tied for gaming machines and report breaches of the code to a new independent adjudicator who will arbitrate on rent disputes and have the power to launch investigations and impose sanctions, including financial penalties, if the code is found to have been breached.
Deputy Prime Minister Nick Clegg said: “British pubs are often the centre of our community, a place where we meet friends, watch sport and enjoy a Sunday roast – they are a national treasure and the envy of the world.
“They also contribute billions to our economy every year. But for too long, landlords who are tied to larger pub companies have struggled to make ends meet – over half earning less than the minimum wage.
“The self regulatory approach hasn’t worked, so these new rules will give fairer treatment for landlords so that they can keep your local pub going strong.”
Further protection will be given to tied tenants whose pub owning company owns 500 or more tied pubs.
Such tenants who cannot agree a tied rent with their pub company will have the right to request a ‘parallel free-of-tie rent assessment’ to show whether they are worse off than their free-of-tie counterparts.
Business secretary Vince Cable said: “Far too many landlords feel their income is squeezed by big pub companies. So today we are taking action to make sure they get a fairer deal.
“The introduction of a statutory code will make sure that tied tenants get an accurate assessment of how better off they could be and the new independent adjudicator would make sure pubs companies are forced to act to redress the situation if they aren’t behaving responsibly.
“Tied tenants have to buy beer from their owning company, and usually pay a higher price for it. This should be balanced out by the subsidised rent or other benefits they may receive from their pub company, but this may not happen and rents can be too high. Under the new Code, Pub landlords will benefit from fairer rent assessments.”
Tom Stainer, head of communications at the Campaign for Real Ale (CAMRA), which has campaigned for tougher laws on pubcos for the last 10 years, said he was “delighted” that the Government was introducing a pubs adjudicator to protect the nation’s pubs.
He said: “With 28 pubs closing a week it is vital that publicans, who are on the front line of keeping our valued community pubs open, are given protection from heavy handed business practices from the big pubcos.”
“Publicans could see the price they pay for beer fall by up to 60 pence a pint** if the Adjudicator forces the big pubcos to match open market prices. A 60 pence a pint saving would be a huge boost in the battle to keep pubs open and could lead to cheaper pub prices for customers.”
“While we urge the Government to go further by introducing guest beer and market rent only options for tied publicans, today’s announcement is great news for publicans and pub goers alike. Over the last decade many thousands of pubs have been lost as big pub companies have squeezed them out of existence with sky-high rents and beer prices.”
The Government announced a consultation on a Statutory Code of Practice to govern pubcos in January 2013 holding and 8-week consultation between 22 April and 14 June 2013, with responses published on 13 December 2013.
Tenants will be required to pay a £200 fee to the adjudicator for a “parallel free-of-tie rent assessment”.