Sidestepping the Code

In July, the Pub Code finally came into force allowing pub tenants to ask their pubco for a market rent only (MRO) deal, which would allow them to buy beer on the open market in exchange for paying a commercial rent on the premises. All well and good, except that pubcos, most of which have accrued a mountain of debt (basically because they're rubbish capitalists), are not playing ball.

One tenant reported that when he requested a change to an MRO tenancy, as is his legal right, the rent offered was double, which would have left him much worse off as the rent would have been nearly double the national average for free-of-tie rents. Punch have consistently refused to explain the figure.

Another tactic is the insist on a new contract, although it is much simpler and cheaper to vary the existing one. Thousands of pounds are then demanded in stamp duty, legal fees, and a premises licence fee, whatever that is. Other charges added to the switch to MRO mean some licensees have been expected to find nearly £200,000 up front.

It's a good job we've got the Pubs Code Adjudicator then, except that there are serious doubts about Paul Newby's impartiality (see my earlier post about him). The first referrals have arrived on his desk, but as such referrals costs £200 each plus legal costs, which can add up to thousands, licensees are not going to go down this path lightly.

Punch say they are "open to negotiation at any rent event". If they were prepared to enter negotiations in good faith, then licensees wouldn't be turning to the adjudicator. The fact that some of them are shows that being open to negotiation is by no means the same as being prepared to negotiate.