Star withdraws RPI rent increase policy following PCA intervention

By Stuart Stone contact

- Last updated on GMT

Rent event: Star previously argued RPI rent increases constitute a tenant rent assessment or review unsuccessfully during an arbitration but chose not to appeal the eventual award
Rent event: Star previously argued RPI rent increases constitute a tenant rent assessment or review unsuccessfully during an arbitration but chose not to appeal the eventual award

Related tags: Pubs code, Pubs code adjudicator, Legislation, Rent, Heineken, Star pubs & bars

Heineken’s pub arm, Star Pubs and Bars, has retracted a policy stating RPI rent increases constitute a tenant rent assessment or review, according to an announcement by the industry regulator.

As outlined by the pubs code, tenants have the right to a code rent assessment proposal (RAP) if there has been no rent assessment during the previous five years. 

However, according to an update on 18 February, pubs code adjudicator (PCA) Fiona Dickie revealed Star had refused to provide tenants with an RAP because, the operator argued, annual retail price index (RPI) rental increases during the previous five years counted as an assessment or a review.

The PCA added that Star had previously argued this point regarding pubs code rent events unsuccessfully during an arbitration and chose not to appeal the eventual award, despite having the option to do so. 

While arbitration awards are not binding in future cases, the PCA expressed concern to Star’s code compliance officer (CCO) over its position, adding her belief that the company should have reconsidered it following the award. 

In light of this intervention, the CCO confirmed that Star – which has offered more than £44m in rent reductions due to the Covid-19 pandemic thus far – changed its position, will no longer identify RPIs as code rent assessments or reviews and will inform tenants of the change.

A spokesperson from Star Pubs & Bars said: "We welcome the improved relationship with the PCA. 

"They came to us in this instance with their concerns and we were able to resolve the issue to everyone's satisfaction."

‘The regulator can and will act robustly’ 

This news comes after the operator of in the region of 2,500 pubs was fined £2m​ for “seriously and repeatedly” breaching the pubs code over nearly three years in October – a charge Star Pubs & Bars has since revealed it will appeal​. 

The first investigation​​ by the industry regulator began in July 2019 after Star Pubs & Bars were suspected of breaching the pubs code by offering unreasonable stocking terms​​ to tenants seeking to go free-of-tie. 

The PCA concluded that the nature and seriousness of the 12 breaches uncovered had “frustrated the principles of the pubs code” and merited a financial penalty, which would act as a deterrent to all regulated pub-owning businesses from future non-compliance.

Discussing her office’s first investigation, Dickie – who took over from Paul Newby in May 2020​​ – described its conclusion as a “game changer”. 

“It demonstrates that the regulator can and will act robustly to protect the rights that Parliament has given to tied tenants,” she told The MA​ in October. 

“I will be holding discussions with all the companies I regulate following my findings about how they will ensure they are code compliant.  

“My message is that if anyone previously had any doubts about my resolution to act when I find breaches, they can have no doubt now.” 

Star Pubs & Bars MD, Lawson Mountstevens, however, described the penalty as “unwarranted and disproportionate” and was ill-timed given the pub sector’s serious financial crisis amid the ongoing pandemic. 

Related topics: Legislation

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