Nalders Solicitors head of litigation, Lee Stutt, tells us about the introduction of the Pub Code etc. Regulation 2016
This summer saw the introduction of the Pub Code etc. Regulations 2016, a long awaited initiative that offer greater protection and rights to publicans tied to businesses that own more than 500 pubs; so, the usual major players.
One of the key changes in the relationship between publicans and pub owning businesses is the new entitlement, on certain events arising, of a pub to go free-of-tie; previously it was assumed that a tied pub would benefit quid pro quo by paying a reduced rent. Under the new Code, publicans have the option of taking their chances in the marketplace, and to purchase drinks from wherever they choose and pay a market rent.
One obvious time when the right can be exercised is at a lease renewal. Most pub leases are protected by Part II of the Landlord and Tenant Act 1954, so that after the expiry of their fixed term, the tenancy continues until terminated on 6 months’ notice. Publicans may be caught out however by the fact that on receipt of the notice, they only have 21 days to formally request the market rent option.
Publicans now need to be aware of the increased need to take prompt advice on their renewal rights on receipt of a termination notice, if they might want the opportunity to go free-of-tie in a new tenancy at the ultimate expiry of the notice. There are other circumstances when the right will apply, but the right on renewal offers the potential for a pitfall.