Monday, 29 December 2014

Pub Tenant landlords and Reform of the Pub Code

This is part of a series of blogs on the Small Business, Enterprise & Employment Bill (“the Bill”) that is proposed to come into force in April 2015.

It is well publicised that following derestriction of the pub sector in the 1990s a new corporate phenomenon occurred, the Pub chain. This comprised large companies acquiring pubs and then entering into onerous leases with incoming tenants, with the effect that rents sky rocketed and tenant landlords often faced difficulty in making the business work.
The reforms to this sector have now been drafted in the form of Sections 35-63 of the Bill.
These reforms are not yet specified, but the Bill requires that the Secretary of State conduct a review of the Pub Code and introduce regulations about terms of a tenancy or other agreement between a pub-owning business and a tied pub tenant.
The Bill also introduces an arbitration process to settle disputes between the pub tenant and the pub-owning business, where conventionally the balance of power lies with the pub-owning business (and therefore, currently, the pub tenant rarely has – or can afford – legal assistance or protection). The Bill provides for the appointment of an Adjudicator, as part of the arbitration process, to investigate the dispute and report on his/her findings and recommendations.
Such a report may be published (subject to certain criteria) and may lead to financial penalties should either party fail to comply with any of his/her findings or recommendations.

Guidance through this process, especially at the initial stage when the Bill is introduced in April 2015, is essential for all pub tenants or pub-owning businesses and at Francis Wilks & Jones we can assist in this respect.