In July 2016 the Pubs Code etc Regulations 2016 came in to force regulating the relationship between large pub owning businesses (those with at least 500 tied pubs) which rent premises and supply tied products to tied pub tenants.
These are very complex regulations, but the basic effect is to give tied pub tenants the right to break free of the tie so they can choose from whom they purchase their products.
The advantage to them is the ability to purchase products more cheaply on the open market and therefore make a greater profit. The disadvantage is that by opting to remove the tie they will have to pay a market rent for the premises which will almost certainly be significantly more than the discounted rent they presently pay to the pub owning business.
The change in regulations in 2016 has given tenants more choice. There are a number of occasions when a tied pub tenant can seek to break free of the tie. The most common of these is lease renewal.
The procedure for lease renewal for tied pub tenants is fraught with difficulty and seeking professional advice at an early stage is essential. If your tied pub lease is coming to an end, contact the Commercial team at PowellsLaw today.
For more information, see our Tied Pubs & Lease Renewals factsheet (PDF).
