Do the pub owning companies accept the government’s rental code of practice?

Last week the government announced a new rental code of practice developed with leaders from the retail, hospitality and property sectors to provide clarity for businesses when discussing rental payments, and to encourage best practice so all parties are supported.

This was introduced alongside measures to extend the lease forfeiture moratorium, meaning no tenants will face eviction for nonpayment of rent for at least the next three months, until 30 September.

The code of practice is voluntary, meaning landlords can choose whether or not they wish to accept it – and applies to all commercial leases held by businesses in any sector affected by the coronavirus pandemic.

It encourages tenants to continue to pay their rent in full if they are able to do so, whilst others should pay what they can, whilst acknowledging landlords should provide support to businesses if they too are able to do so.

Communities secretary Robert Jenrick said the code “will help unlock conversations on rent and future payments whilst ensuring best practice is displayed across the board as we confront the challenges of this pandemic.”

UKHospitality chief executive Kate Nicholls stated: “The near-total wipeout of income from the hospitality sector has left it unable to meet its rent obligations. This code goes some way to bringing together landlord and tenant in the pursuit of a negotiated solution to allow hospitality businesses to move on and revert to the new normal, but this must be recognised as a first step that needs to be built on by all parties. We remain of the view that further time and support is needed to facilitate a recovery for the hospitality sector, that is at the heart of our social lives and communities. The extension of the moratorium on aggressive enforcement and forfeiture is a welcome measure to allow this process to take place.”

The full code of practice can be seen by clicking here.

So what should tenants do?

Whilst this sounds great in principle, we have been unable to confirm whether any of the large pub owning businesses actually accept the voluntary code, which was backed by the British Beer & Pub Association, the trade body that represents many of the large pub owning businesses.

Devoid of any income for 14 weeks, with some pubs not even qualifying for government grants – it’s fairly obvious that most pubs will not be able to pay their rent.

The code is only of use if pub companies accept it and agree to enter into sensible rental negotiations in good faith. If it isn’t accepted, then it won’t “unlock” any conversations whatsoever.

So far both Heineken owned Star Pubs & Bars and Ei Group have not responded to our emails seeking confirmation that they accept the code of practice. If they don’t, which would be at odds with their own industry body – it will further highlight the need for a mandatory code. If they do, then they must be prepared to enter into meaningful negotiations.

To date both Ei Group and Star Pubs & Bars have only offered to defer rent, and are not entering into any rental negotiations with their free of tie tenants. This is at odds with the code, and we invite them both to make a public statement as to whether they intend to accept the code or not.

A week since the code was introduced, we aren’t filled with much confidence that it will make any real difference. We previously suggested that a mandatory code, such as that introduced in Australia is the only solution. If the code is voluntary, it can too easily be ignored, which renders it a waste of time. So far it would seem that is proving to be the case.