The Government has moved some requirements from the core to the enhanced code, meaning family brewers are relieved of responsibilities for having a compliance officer, producing an annual compliance report, and following Royal Institute of Chartered Surveyors (RICS) guidance during rent assessments.
Earlier this month the Small Business, Enterprise and Employment Bill Committee passed an amendment to exempt pub companies with fewer than 500 pubs from the code.
However, in a Government amendment tabled yesterday, Secretary of State for Business Vince Cable said: “This amendment reverses amendments made at committee and brings pub-owning businesses with fewer than 500 tied pubs back into the scope of the Pubs Code.”
He added: “This amendment means that only those businesses with more than 500 tied pubs may be required by the Pubs Code to have a Code Compliance Officer and to produce an annual compliance report.”
Regarding rent assessments he said: “This amendment provides that the Pubs Code may require pub-owning businesses with 500 or more tied pubs to have rent assessments signed-off as defined in the Code. The intention is that the Code will specify a RICS qualified valuer and RICS guidance. This includes assessments of money payable in lieu of rent, such as where a tied agreement charges the tenant via a percentage of turnover rather than through a rent.”
The amendment also allows parallel rent assessments to be defined “to ensure that there is flexibility in how the Pubs Code deals with parallel rent assessments for different types of tied pub agreements.”
The amendment follows written evidence submitted by Employment Relations Minister Jo Swinson last month, in which she said while she was ”sympathetic to the idea that we should avoid placing unnecessary burdens on family brewers” smaller companies would still be included.
She said the requirement for Business Development Managers to record all business discussions and agreements with tenants and to provide tenants with a note on the conversation within seven days would be “qualified”.
She explained: “It will apply only to discussions about rent, repairs and matters impacting the tenant’s business plan. This addresses concerns raised by pub-owning businesses that the original drafting could be onerous in terms of recording every contract, and this was never the Government’s intention. The BIS Select Committee and the Government consultation highlighted considerable evidence of problems in relation to the communication between the tenant and their main contact with the pub-owning business. This provision is tended to be a safeguard and to avoid disputes which rely on different recollections of a discussion.”
Under the Government’s revisions, pub operators will be forced to inform their tenants, as well as the Adjudicator, when they cross the 500 tied pub threshold.
Swinson said the information requirements in respect of repairs and informing tenants who are ‘contracted out’ of the Landlord and Tenant Act that their renewal is due, would be redrafted to be a direct copy of the Industry Framework Code.
She added: “Tenant representatives had expressed concern to us that the wording in the June draft of the code inadvertently gave them less protection on these matters than the Industry Code currently provides.”
The information requirements in respect of rent negotiations will be clarified to ensure that historic data which is provided to tenants is accurate, and projected data is reasonable, Swinson said.
She also said the draft code would make it clearer that disputes about repairs could be arbitrated by the Adjudicator.
She said: “The current self-regulation process arbitrates repairs disputes on the basis of company codes of practice; as these codes are voluntary it is important that the statutory code contains this provision so as to safeguard the protection currently afforded to tenants.”