The British government is to introduce a new statutory code that will give publicans a “fairer deal” after a Campaign for Real Ale (CAMRA) survey concluded that 57% of landlords in tied tenancies earned less than a National Minimum Wage equivalent salary of £10,000 a year.
The reforms on the current laws means that tied tenants will be able to request a rent review if they have not had one for 5 years and also be given access to the information the pub owning companies have used to calculate increases in rent, so the landlords can decide whether any increase has been determined fairly. These reforms will include setting up an independent adjudicator whose power will be to enforce the code and manage disputes between publicans and the companies, as well as being able to impose sanctions if both parties are not compliant.
Under previous conditions, tied tenants were forced to buy beer from the company that owned their pub, which had led to the companies charging higher prices for their beer. The idea of this was to create a balance where rent was subsidized for the landlords or where they would receive other benefits, though after CAMRA conducted a survey in 2013 that asked landlords to select the level of personal income they earned from their pubs, the figures showed that 57% of those surveyed were worse off than an average person in a 35-hour week job earning the National Minimum Wage.
For the pubs that are part of a tied tenancy with a company owning 500 or more pubs, they will be allowed to request a ‘parallel free-of-tie rent assessment’ to find out how they fare with the rest of the other pubs owned by the company. This should mean that the largest pub owning companies will have to maintain a fair rent across all of their pubs and this will be monitored by the independent adjudicator, which will be able to impose sanctions that could include financial penalties if any investigations find breaches in the new code.
For further reading take a look at our Regional beer market: A changing landscape and Craft Beer: A fast-growing market case studies.