Most tied pub tenants are aware of the Pubs Code that gives them new rights but have less knowledge about the detail of those rights – the first tied pub tenant survey has revealed.
The Pubs Code Adjudicator (PCA), Paul Newby, published the findings of an independent survey commissioned to provide more information about the views and experiences of tied pub tenants.
Carried out by experienced research company, GfK, the 2017 survey shows that 72% knew about the Pubs Code, but they had lower understanding of its key elements, ranging from 63% of tied pub tenants knowing about the right to a five-yearly rent review to 36% knowing about the right to request a Market Rent Only (or MRO) agreement.
Just over half (53%) of those surveyed were aware of the PCA, with a higher proportion aware of the PCA if they had submitted or considered an MRO option. Those who experienced an event that opened up the right to request an MRO but did not do so cited costs, a belief that few tenants had been successful, that the process was shut down by their pub-owning business, or a concern about making trouble or missing deadlines.
Asked about the pros and cons of being a tied pub tenant, participants said the best aspects were the ability to make choices about how their pub was run, and the backup and support from a big company. More challenging aspects included the costs of tied products and services, unexpected costs associated with starting up, the cost of dilapidations as well as the lack of room for negotiation and lack of clarity over rent calculations.
Another key finding was that more than half the tenants who had experienced an MRO event believed they did not have a genuine choice between a tied and free-of-tie option. Reasons for this included a lack of transparency around the rent calculation, unaffordability of the MRO proposal or a lack of encouragement from their company’s business development manager.
Rights
Many tenants were critical of the general support they received from business development managers, although they recognised that the role of these company representatives is vital to successful tenant / landlord relationships and their ability to access their Pubs Code rights.
Paul Newby said: “This survey has provided a very detailed insight into the views and experiences of tied pub tenants. There has been a great deal of talk across the industry about what tenants think and want, but this is the first time that the tenants themselves have been asked for their views.
“The evidence collected will help me target my activity, take up issues of concern with the pub-owning businesses and allowing me to track progress over time.
“It reveals a number of priority areas — specifically that more needs to be done across the industry to provide more user-friendly information and greater clarity on MRO issues, and to make progress in changing the culture around the behaviour and operation of business development managers. I was concerned to see the evidence on how often business development managers are changed and the low frequency of contact.
“The deputy PCA, Fiona Dickie, and I have provided clarity on the terms of market rent only tenancies following recent arbitration awards — advice on this issue was published last week. We are now working on a more detailed response to this survey which we plan to publish shortly.
“However, the survey provides much food for thought for the pub-owning businesses and I am calling on them to consider their responses to the challenges highlighted.”
Clarity
Brigid Simmonds, chief executive of the British Beer and Pub Association (BBPA), said: “The PCA’s tenant survey is an important benchmarking exercise for the sector.
“It is encouraging that a clear majority of tenants are aware of the code, including their right to request an MRO (63%). A majority also stated that the relationship with business development managers continues to demonstrate real value.
“The findings show that some tenants are not aware of specific elements of the code and the role of the adjudicator. It is clear that the PCA has a role to play in expanding knowledge, awareness and clarity.
“It is important to acknowledge that the first set of results account for a period in which tenants and pub-owning companies were adapting to a new and complex system of regulation. There was no transition or implementation period for the code, so it is inevitable that new processes and relationships have taken time.
“The BBPA and the six companies covered by the legislation are committed to looking at the findings of the survey in detail. We will continue to work closely with the adjudicator and other stakeholders to ensure that tenants are fully aware of their rights under the code.”
