Restrictive covenants must be plugged, says Local Government Association

By Ellie Bothwell

- Last updated on GMT

Related tags Restrictive covenants

Almost 600 pubs owned by large pub companies were lost in five years through the use of restrictive covenants
Almost 600 pubs owned by large pub companies were lost in five years through the use of restrictive covenants
The use of restrictive covenants, a "legal loophole" used by pub companies to force hundreds of community pubs to close each year, must be plugged.

That’s the stark message from the Local Government Association (LGA), which is calling for competition bodies to ban the unfair use of restrictive covenants by pub chains. The issue will be raised by the Labour party at an opposition day debate today (21 January) in the House of Commons.

According to the most recent figures from the Office of fair Trading, almost 600 pubs owned by large pub companies were permanently lost in just five years through being sold with restrictive covenants. The Department of Communities and Local Government launched a consultation on the restriction in 2011 – but it is yet to report back.

Undermining 'Right to Bid'

The LGA, which represents councils in England and Wales, has argued that these covenants not only stifle competition but also undermine the Government’s own ‘Right to Bid’ policy, which allows pubs to become assets of community value so communities have the chance to bid for them if they are put up for sale.

Councillor Mike Jones, chairman of the LGA's environment and housing board, said: "We want to see the Government tackling this issue head on, rather than brushing it under the carpet.

"Hundreds of pubs are being lost forever every year and this is having a devastating effect on communities. It is utterly unfair that pubs, many of which have been at the heart of communities for generations, should be shut because of these covenants, which only benefit the big breweries and pub chains.”

'Protection must be provided'

He added: "Pubs are one of the cornerstones of our communities and they help to bring people together. We want to see councils and communities controlling their own high streets and having the final say when a pub reopens.

"No one wants a building to lie empty, of course, if the business isn't viable. But if a community has highlighted a pub as being important to them, then protection must be provided.

"This is all about empowering communities and sticking up for them against the pub chains which are only interested in the bottom line."

'Urgent' action is needed

Campaign for Real Ale (CAMRA) chief executive Mike Benner said he fully backs the LGA’s campaign.

"While some pub companies and brewers have voluntarily agreed to refrain from this restrictive practice many have not which is why urgent Government action is needed," he said.


Related topics Property law Legislation

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