This guidance for tenants relates to the wholly inadequate voluntary Code of Practice for commercial rents that was recently published by the Government. The Code fails to provide clarity on the matter of pub rents during the Covid-19 enforced closure, and also the ongoing period of restrictions which will continue to seriously limit trade and which should be reflected properly and fully in ongoing rent calculations.

Most pub tenants received little or no actual rent reduction for nearly four months of enforced closure and have been unable to negotiate meaningful support as the they now enter a significant period of restricted and reduced trade. The rent arrears that have built up, and excessive rents during the forthcoming period will leave tenants having to forfeit their pubs very soon at huge expense, or to get into significant debt in order to continue trading and/or to challenge pub companies with expensive legal action.

The Campaign for Pubs have already seen evidence of one of the big pub companies, Star Bars and Pubs (Heineken), telling one of its tenants that the Code is voluntary so they are not required negotiate or to offer any concession other than a short deferment.

The Campaign for Pubs is advising tenants to stand firm and to insist that the spirt of the voluntary Code of Practice must be upheld. The Code, which is universal to all commercial tenants, means that all landlords, including the pubcos and other pub-owners, must act in a way to “enable otherwise viable businesses to continue operating through the period of recovery”. The way most of the regulated pubcos and other pub-owning companies and landlords have acted by refusing to negotiate with tenants and either refusing rent cuts entirely or imposing take-it-or-leave-it largely inadequate blanket “concessions” has clearly broken this spirit.

This is shamefully despite the fact that most of the largest pub-owning companies are members of one, or indeed both, of the two major pub-related bodies that are signatories to the Code, namely UK Hospitality and the British Beer and Pub Association (BBPA). Indeed The Campaign for Pubs wrote to Emma McClarkin, CEO of the BBPA last week to raise concerns about the lack of support provided by her member companies, and the destructive effect their stance on rent is having upon the small businesses that lease their pubs.

The Campaign for Pubs have been demanding a mandatory Code of Practice and Campaign Director Greg Mulholland, in his role as Chair of the British Pub Confederation of pro-pub organisations, wrote to the Government saying that the Covid-19 rent code had to be mandatory and meaningful.

The Campaign for Pubs has recently published Ten Points to Save Pubs #10PointstoSavePubs through the Covid-19 crisis.

• Point 5 is for a strong mandatory Covid-19 rent code of conduct including a statutory right to a rent review for all pub tenants
• Point 6 is a rent-free period for all pubs and an extended period of protection from landlords if rent cannot be paid

The Campaign for Pubs guidance for tenants is here .

Commenting, David Dadds JP Barrister Solicitor-Advocate, Committee Member and Legal Adviser for the Campaign for Pubs said:

“Covid-19 has had a significant impact on the relationship between landlord and tenant and I have seen the negative impact upon tenants from unreasonable demands from landlords. The current position appears to be untenable. The Government ought to intervene to assist both parties so as to avoid further disputes which would benefit both landlords and tenants. The current status quo is untenable”.

Gary Murphy, Campaign for Pubs PCA (Pubs Code Adjudicator) Liaison said:

“The Government Code of Practice has already failed as a result of big pub companies who actually signed the Code refusing to offer reasonable rent concessions to tenants.  We need legislation that prescribes reductions for periods of closure and that provides for a rent review. Covid-19 is not just a short-term impact, it’s transpiring to have a much longer-term period of restriction and uncertainty. The Government will fail tens of thousands of small business owners if they do not move further.”

ENDS