Pub tenants need greater support to ensure the long-term viability of their businesses and strength of the licensed trade in general, according to a Nottingham-based property consultant.
Bruton Knowles is urging landlords to seek advice following the publication of results of a Pubs Code Adjudicator (PCA) commissioned investigation – announced on 23 August 2017 – into the accessibility of the Market Rent Only (MRO) option for tied pub tenants.
Historically pub tenants were required to buy all or most of the beer they served from a particular pub company or brewery, and had to pay rents set by their landlord – regardless of what the pub was earning. MRO was introduced in 2016 to allow pub tenants to have ‘free-of-tie’ tenancies and pay fairly assessed rents.
Sam Spencer, associate at the property specialist’s Nottingham office said: “It is imperative tenants are not put in a poor position due to bad advice. Tenants seeking to come out of tied leases will be negotiating with landlords who want to replace lost income from a tied agreement and are therefore likely to try and enhance the terms of any lease in their own favour.
“I would strongly advise all tenants to seek professional advice from a licensed property expert. Although some tenants may want to save money and will try and do this themselves, they shouldn’t. A modest investment in salient advice will gain them a good workable agreement.”
Despite introducing MRO, the PCA’s research reveals many pub tenants are still facing barriers to accessing their new rights due to pub-owning businesses which may not be adhering to the code.
Sam continued: “Any pub tenants applying for a new agreement under the MRO code should engage a professional with sufficient experience of pub leases and an understanding of the pub trade and licensed property.
“Speaking to someone who also understands the Pubs Code and pub leases is vital. A pub lease will probably differ from other commercial leases in that rent may be calculated in relation to turnover and/or profit.
“The provision of more transparent advice and recommendations, I believe, will prevent many pub tenants experiencing management and financial issues. The development of an official licensed tenants’ trade body would also not only provide much-needed support to tenants, but also prevent the closure of so many pubs and help to revive this market.”
The property consultant has 13 offices across the UK and helps property owners, occupiers, developers and investors to achieve more from their land and property.