500 pubs could close as part of the government’s proposals to protect publicans with a statutory code to govern their relationship with large pub companies.
Britain’s 25,000 tenanted pubs will be given the power to challenge the biggest pub landlords. The government admitted that this change could lead to closures in the already struggling industry.
“The industry has been overshadowed in the past decade by very real concerns about the unfairness which can arise in the relationship between pub-owning companies and their tied tenants,” said business secretary Vince Cable yesterday.
Following a consultation Cable announced that publicans would be able to request a rent review from a new independent adjudicator if they have not had one for five years.
The reviews will lead to a minimum of 52 pubs closing down due to tenants being worse off following rent reviews or owners disposing of pubs following rent reductions, with the government’s impact assessment warning that this figure could be as high as 536 due to the changes.
“While we welcome greater certainty and clarity after such a long period of debate, we are disappointed that the government is seeking to introduce potentially costly legislation, with the disproportionate costs of a statutory adjudicator, rather than supporting the existing, and evolving, system of self-regulation,” said the British Beer and Pub Association chief executive Brigid Simmonds.
The reform did not go as far as some pub companies had feared to dissolve so-called beer-tie arrangements that restrict pubs from only buying beer from the company that holds their lease at higher prices.
“We see this as being good news in the long run for the likes of Enterprise Inns, Marston’s and Greene King as this should bring the regulatory and backbench committee investigations dating back to 2003 to an eventual close,” said Deutsche Bank analyst Geof Collyer.
IMPACT OF A STATUTORY CODE ON THE PUB INDUSTRY
1 5 YEARS
How often pub tenants will be able to request a rent review from the new independent Adjudicator
2 536 PUBS
Could close if their rents are lowered and pub owners decide to sell them off
The highest predicted cost to Britain’s pub industry from the introduction of a statutory code