Free-of-tie lessee 'out in the cold'

By John Harrington

- Last updated on GMT

Related tags: Renting, Leasehold estate, Leasing, Enterprise

Enterprise: no code of practice rent reviews for free of tie lessees
Enterprise: no code of practice rent reviews for free of tie lessees
Enterprise Inns has been criticised for refusing a code of practice (CoP) rent review to a licensee because his lease is free of tie.

Enterprise Inns has been criticised for refusing a code of practice (CoP) rent review to a licensee because his lease is free of tie.

Martin Poole asked for a review after his annual barrelage fell from 880 to 483 over the past 11 years.

In response, Enterprise said in an email: "Our CoP is entitled 'Code of Practice — the letting & operating of tied & tenanted pubs' and so is not applicable to free-of-tie leases. Your claim is therefore invalid."

Trade consultant Phil Dixon believed the code should apply to all Enterprise lessees. "Is Enterprise saying that if you are a tied licensee in Cockermouth at the moment you will get support, but if you're free of tie you won't?"

Poole, of the Woodman's Arms, Normanby, Middlesbrough, criticised the decision not to offer him a review. "I've played by the rules — I've always looked after the pub. It's in better condition now than it ever was," he said.

Enterprise chief operating officer Simon Townsend said the CoP "with the protection it provides to tied retailers, has never applied to the small number of free-of-tie sites in our estate.

"We are not refusing support for the Woodman's. [It would be supplied] if we felt a request for our assistance was valid and that circumstances warranted such support. We are, however, rejecting a claim under a Code of Practice that does not apply to the 100 or so free-of-tie sites in our estate. Any free-of-tie site can opt to become tied and enjoy Enterprise's CoP — 10 sites have done so in recent years."

Poole initially refused to pay two months' rent, although he did pay £7,300 after he was visited by bailiffs. Annual rent is £75,850.

Upward-only still applies to some

Enterprise says its commitment to ignore upward-only rent-review clauses does not apply to its free-of-tie pubs.

Simon Townsend said "key commitments" from the CoP "such as the removal of upward-only rent reviews only applies to tied tenants, and is not extended to the free-of-tie estate."

"Over the past year [Enterprise] provided £18m of non-contractual support to 1,900 tied lessees. There has not been non-contractual support extended to free-of-tie lessees."

Phil Dixon criticised the approach, saying: "Is Enterprise really saying that if a third party says the rent should be less than they are paying, they won't accept it?"

Its commitment to ignore upward-only rent clauses, and not include them in new leases, was re-stated in evidence for the Business & Enterprise Committee's study of pubcos.

Related topics: Property law

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