‘Tenants need support of pubcos to survive,’ says PCA

In a statement released via the regulator’s website on 6 April, Newby and Dickie called on the five companies overseen by the pubs code that have not yet cancelled rent to demonstrate how they will assist their tenants through the Covid-19 lockdown.

Of the six regulated companies, only Admiral Taverns had cancelled rent at the time of writing, with Ei Group, Greene King, Marston’s, Punch and Star Pubs & Bars opting to defer despite growing calls for them to draw a line under lockdown rent.

The regulator’s statement reads: “The Covid-19 emergency creates a threat to the livelihoods of tied tenants. Those tenants will need the support of their pub companies if they are to survive in their pubs and to return to profitability once the crisis has passed.

“The pubs code adjudicator and deputy adjudicator are aware that five of the six pub companies regulated under the pubs code are among those who have not yet waived any rent for tenants of their pubs. These are the largest pub companies in England and Wales – each having at least 500 tied pubs.

“The PCA has made contact with all of the regulated pub companies. We are exploring what they are doing, and what more they can do, throughout this emergency period to support their tenants. While recognising that they are all facing their own uniquely difficult challenges during this period, there is an opportunity now for them to demonstrate leadership to the wider industry and to show that they will go as far as anyone to protect each tenant and how they will do that.”

As reported by The Morning Advertiser (MA)​ both Ei​ and Punch​ announced on Thursday 2 April that they would continue to suspend rent.  

Survival at stake

Commenting on the PCA probe, Campaign for Real Ale (CAMRA) chairman Nik Antona described the regulator's intervention as "timely and encouraging". 

“From the outset of the Covid-19 crisis, CAMRA has called on pub companies to do the right thing and cancel rents," he said. "Admiral Taverns, and other smaller pub companies, have listened to tenants and pub-goers and have cancelled rent for their tenants.  

“The rest of the big six pubcos should be following Admiral’s example. Deferring rent collection simply isn’t enough – the pub industry is facing unprecedented challenges and the survival of the trade as we know it is at stake.  

“Pub companies pushed for the industry standard model that rents are based on turnover. As we have consistently pointed out, this means that closed pubs should not be having any rent levied on them at this time.

"Pubcos cannot have it both ways, and Ei Group, Punch, Greene King, Star and Marstons need to follow Admiral’s example immediately and cancel rent.” 

Pub sector disarray

The PCA’s probe follows the British Beer & Pub Association’s chief executive Emma McClarkin’s clarification of the collective stance of its members choosing not to cancel rent​, claiming such a measure would leave the sector in disarray. 

“Our members have not been granted rent cancellations from commercial landlords, at best only deferments and, therefore, they have ongoing future costs themselves,” she explained. “These are also exacerbated by other fixed costs such as interest payments. 

“Crucially, as employers supporting thousands of jobs in these challenging times, they have a commitment and duty to protect people’s livelihoods in their operations. It is why many companies have been forced to access the Government’s Coronavirus Job Retention Scheme themselves, so that when we are all through this crisis they are there and ready to help our sector get back on its feet. Otherwise, when pubs are allowed to reopen, you could see people unable to return to work, investment cancelled and vital maintenance postponed.”

Unable to uphold duties

It was announced on Friday 3 April the six businesses regulated by the pubs code had signed a joint PCA declaration to protect tenant rights after informing the regulator that they are unable to uphold duties during the Covid-19 shutdown​. 

Such duties include serving compliant rent proposals, rent assessment proposals and market-rent-only (MRO) option full responses, according to the PCA.

Speaking to The Morning Advertiser​, Newby explained he expected Admiral Taverns, Ei Group, Greene King, Marston’s, Punch and Star Pubs & Bars to act in “good faith in dealings with their tenants” after pubs had closed their doors as instructed by Prime Minister Boris Johnson on Friday 20 March​.