Lease agreements

Enterprise Inns' short-term lease strategy described as a 'suicide pact'

By Michelle Perrett

- Last updated on GMT

Short-term lease warning: Simon Clarke of the British Pub Confederation
Short-term lease warning: Simon Clarke of the British Pub Confederation

Related tags Enterprise inns Lease Renting Landlord

Enterprise Inns has admitted it is focusing on shorter term lease agreements and offering licensees shorter deals at lease renewal.

It means that, in some cases, licensees will be offered five-year agreements on a fully repairing and insuring lease rather than the standard 25 years. Although, Enterprise Inns has made it clear that it operates this on a case-by-case basis.

A spokesman for Enterprise Inns said that the move will give greater flexibility to tenants. However, concern has been raised that such a move would mean licensees would be less inclined to put money into a property as they would not have the same length of tenure.

A spokesperson from Enterprise Inns told The Morning Advertiser​: “We are focusing on shorter term agreements, designed to give greater flexibility to tenants and also ourselves.

“Our business relies on successful partnerships with publicans and we are committed to exploring innovative and interesting ways we can work with them. We have created an attractive range of bespoke tied tenancy agreements for publicans, such as our Beacon 'managed tenancy' agreements and Partnership Tenancy Plus schemes.

“We see these agreements playing a central role in our business, supporting a variety of licensees, from publicans taking on their first pub to experienced operators expanding their estates.”

However, Simon Clarke, secretary of the British Pub Confederation, accused the move of being very “narrow minded” because it would dissuade licensees from investing in their businesses.

“It is almost a suicide pact,” he said.

He suggested that Enterprise may be looking to cherry pick sites for its managed estate and would be looking to take back some of the properties at a future date.

Under the Landlord and Tenant Act 1954, the tenant has the right to “security of tenure”. According to Clarke this means the tenant has, in principle, the right to renew a commercial lease on similar terms when it runs out.

Clarke also suggested that it could be a way around market-rent-only (MRO) option because there will be no rent reviews during the five-year period.

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