Legislation gives tenants of some brewery owned pubs power to go free of tie
New legislation has given some tenants of brewery or company owned pubs the opportunity to go free of tie. Peter Lamble, Chairman and Head of Commercial Disputes at Coodes Solicitors, explains how.
Updated January 2018
Provision was slipped into the Small Business, Enterprise and Employment Act 2015 which enabled regulations to be made relating to pubs. The new Pubs Code etc. regulations 2016 followed and took effect in July 2016. There are around 12,000 of what are known as ‘tied public houses’ in the UK. A high profile result of the Pubs Code was the ability to end of the centuries-old ‘beer tie’, which has forced tenants to buy beer from their landlords.
A less well-known outcome, but one which I am increasingly advising on, is the landlord’s opposition to the grant of a new tenancy in certain circumstances and a shift towards short leases without rights to renew. So, how does this work and if you are a tenant how can you set about going independent?
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I’m a pub tenant. May I apply to go free of tie?
First of all, it’s important to note that this legislation only applies to the biggest pub owning businesses with at least 500 pub properties. This includes the likes of Punch Taverns and Enterprise Inns, but excludes the large numbers of breweries with fewer than 500 properties.
If your pub is owned by one of these giants you should be aware that you could be eligible to serve notice at certain key times. These ‘trigger events’ include the pub owning business reviewing your rent, or the end of your lease, or following a significant increase in price in a tied product.
How do I start the process of going free of tie?
The first thing to do would be to get legal advice to ensure you start the process in the right way. A good lawyer with experience in this area can help you to prepare notice and give you guidance on handling any negotiations with the owner. These large businesses will inevitably have their own lawyers so ensure you get the right person to give you the best representation.
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What do I need to watch out for? Are there any pitfalls?
The regulations set out strict time limits which must be adhered to otherwise you will lose the right to be free of tie. It is important that you serve the correct landlord and that the notice is correct.
How can I make it go smoothly and give myself the best chance of success?
- Be aware of the trigger events so you recognise the times when you may serve your notice
- Get your notice right. It must contain certain information
- Serve it properly and upon the correct Landlord
- Ensure that you adhere to the times. You only have 21 days from the trigger event to serve your notice
- Beware that your landlord may oppose renewal of your lease in certain circumstances
The key is to get the right advice from the outset.