New Pubs’ Code
The “Pubs Code etc Regulations SI 2016/790” (‘etc’ is part of the actual title) came into force on 21st July 2016. Created under the powers of the Small Business, Enterprise and Employment Act 2015, the Regulations are intended to ensure that tied pub tenants are no worse off then they would be if they weren’t subject to any product or service tie (s. 42 of the Small Business, Enterprise and Employment Act 2015 (SBEEA 2015)).
A ‘pub-owning business’ is defined in Section 69 of the SBEAA 2015 as a person who is the landlord of more than 500 ‘tied pubs’. ‘Tied pubs’ are defined in s. 68 SBEEA 2015 as a premises occupied under a tenancy or license which has sale of alcohol to members of the public as one of its main activities and three is a contractual obligation that some or all of the alcohol sold on the premises is supplied by:
- A landlord or person in a group undertaking in relation to the landlord; or
- Nominated by the landlord or other person in group undertaking.
The SBEAA 2015 already sets out rules to seek to ensure that tied tenants pay market rent (ss. 43 – 45 SBEAA 2015) and the ability of pub tenants to refer disputes to arbitration (ss. 48 – 55 SBEAA 2015).
The Pubs’ code sets out a number of obligations on pub owning businesses:
Before entering into an agreement or agreeing the renewal of a tenancy the pub-owning business must;
- advise tenants to complete appropriate training;
- advise tenants to carry out a thorough inspection of the premises and instruct a qualified surveyor;
- ensure that tenants have a sustainable business plan; and
- provide certain information to the tenant set out in reg 14 and Schedule 1.
The pub-owning business must regularly take a schedule of condition of the premises (Reg 13).
• Parts 3 & 4 of the Regulations, requires the pub-owning businesses to provide rent proposals and rent assessments, respectively, to their tied pub tenants in certain specified circumstances and include provision about the contents and timing of such proposals and assessments.
The Regulations also provide further details of the Market Rent Only option (MRO) as set out in ss. 43 – 45 SBEAA 2015. The MRO option is an option for the tenant to occupy the tied pub under a tenancy or licence at a rent agreed between the parties or in the absence of agreement the market rent in respect of that occupation. A tenant may request this option if:
- The tied pub receives notification of a significant increase in the price of a product or service (significant increase is defined in Regulations 3 – 6.
- There is a trigger event.A trigger event is defined in s. 43 (9) SBEAA 2015 and Regulation 7.
- There is a renewal of the pub agreement.
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