The Pub Governing Body (PGB)has agreed a temporary suspension of all pub rent review negotiations during this current Covid-19 pandemic.
PGB which is an organisation responsible for promoting the advancement and improvement of Landlord (Pub Owning Companies) and tied tenant relationships in the licensed retail sector, and comprises of the British Beer and Pub Association, the British Institute of Innkeeping, Federation of Licensed Victuallers Association, the Guild of Master Victuallers, UK hospitality, and the Licensees Association announced yesterday (table 15) the suspension of rent review negotiations would last until June 30 unless approval is given for pubs to open before that date.
Sir Peter Luff, Chair of the PGB said “The PGB in conjunction with the PGB of Scotland has agreed with the pub companies who follow the Tenanted and Leased codes of practice and self-regulation that all rent review negotiations will be suspended while pubs remain closed during the coronavirus epidemic.
“This pragmatic and sensible step is in addition to any agreements individual companies have put in place for their pubs and relieves all tenants of one possible worry during the coronavirus epidemic. It runs from 16th March until at least until the end of June, by when we all hope we will have returned to more normal trading conditions.
“This quick and flexible response to the current crisis shows how voluntary regulation brings real benefits to pubs and we hope it will be welcomed.”
Details of announcement and consequences for Codes of Practice include:
Rent reviews and other timelines under the Codes of Practice (England, Wales and Scotland)
- Suspension of all defined periods within the three Codes whilst pubs are closed. For the purpose of consistency, the suspension will be from 16 March 2020 until 30 June 2020, unless approval is given for pubs to open sooner. This suspension period will be kept under review by the PGB’s and may be extended if pubs remain closed beyond 30 June.
- The suspension will not cancel or undermine any rights that the tenant or lessee has as set out in the Codes; it is solely for the purpose of acknowledging the practical difficulties of maintaining the defined periods during a period when pubs are closed and many staff are furloughed.
- The Principles of the Codes, as set out in all three documents, remain valid and applicable.
Further information and what this means in practical terms:
- A pause in ongoing and upcoming rental negotiations
- No requirement for BDMs to respond within 35 days, though best attempts to do so should be made, and accepting that the response can be made by an alternative representative of the pub company rather than only the BDM
- Visits for the purposes of rent assessment being postponed until pubs re-open
- Any request submitted by a tenant for a rent review during the suspension period being paused until that period ends.
- Subsequent rent review periods being shortened by the length of the suspension period, i.e. three months.
Codes of Practice – relevant paragraphs that contain defined periods
- Paragraph 26 E & W, 25 Scotland – “The tenant must make their request for assistance in writing to their BDM. Companies will respond within thirty-five calendar days, unless a further timescale is mutually agreed.”
- Paragraph 36 E & W 35 Scotland – “Companies will ensure that a responsible officer of the company or its agent involved in obtaining and/or evaluating the supporting material provided in preparing the rent assessment will have visited the premises in question within at least three monthsprior to the assessment being undertaken.”
Rent Review and Renewals
- Paragraph 39 E & W 38 Scotland – “Initial rent renewal proposals should be issued no less than six monthsbefore the review date.”
- Paragraph 40 E & W 39 Scotland – “Where the agreement does not include periodic rent reviews, then a tenant may at any timerequest a rent assessment following the conclusion of an agreed rental term.
Pub Independent Rent Review Scheme (PIRRS)
- Paragraph 45 E & W 44 Scotland – “With regard to tied contracted-out tenancies, companies must advise the tenant no less than six months priorto the expiry of a contracted-out tenancy whether the tenant will be offered a new agreement.”
- Paragraph 46 E & W 45 Scotland – “An application to PIRRS to determine the rent for a contracted-out agreement for an existing tenant in the premises will only be permitted if the referral is made no more than six months and not less than three monthsprior to the expiry of the contracted out term”
- Paragraph 73 E & W 72 Scotland – “If dilapidation’s are to be applied, companies will provide a breakdown of repairs or decorations to be carried out within two months of notice being served by or on the tenant or six months prior to the termination of the tenancy.”
- Paragraph 73 Scotland – “In this event, the company will afford the tenant ideally 12 months – but no less than 6 months– to put right the works, save for any repair that require immediate repair under health and safety legislation, needed to prevent damage to the building, void any insurance claim made by either party or are business critical.”
Assignation of Agreements (if applicable)
- Paragraph 74 Scotland – “If the agreement contains the ability to assign to another party, companies will respond to a request to assign in writing within a maximum of 20 working days of receiptof the written request and will explain the contractual implications for disposal of the business.”
- Paragraph 77 E & W 83 Scotland – “However, the written complaint must be formally concluded by the senior manager within thirty-five working days of receipt, unless another timeframe is mutually agreed.”