The pubs code, when it is working well, is embedded as a part of a smooth business relationship with their pub company which allows them to do that.
To show tenants’ views on how that relationship is working, very soon I’ll be publishing the results of the pubs code adjudicator (PCA)’s annual tied tenant survey. This has been carried out independently by Ipsos Mori, who spoke to 600 tied tenants of the regulated pub-owning businesses about their experiences of their pub company and the PCA.
The results make interesting reading. If you want to know when they are published, please sign up for alerts on my website. There is good news about tenant satisfaction with the fairness of conversations with their business development managers. However, handling of repairs and dilapidations by the BDM is an area of concern that we will be taking up.
The pubs code imposes a range of responsibilities on the pub company to ensure that repairs can be managed well during the tied tenancy, but these do not yet appear to be working to many tenants’ satisfaction. That is a concern for me and gives my team a specific focus for work we need to do to make sure pub companies do better. This needs to ensure that the duties to give information and advice to the prospective tenant translate into effective management throughout the term.
These duties include advising the tenant to inspect the premises and take the advice of a specialist pub surveyor, and giving information about repairing obligations, the condition of the premises and any necessary or agreed works. There must be an updated record of works in a Schedule of Condition during the tenancy and all conversations about repairs must be recorded in writing. I talked about these rights and duties in a previous Morning Advertiser column.
Resolving disputes smoothly
My team will be able to put more time into work to reduce disputes around repairs and dilapidations partly at least because we no longer need to focus our resources on running our own arbitration service. As a result of having recently contracted with the Chartered Institute of Arbitrators to manage pubs code arbitrations, they are busy putting together training for arbitrators to ensure all those appointed have demonstrated their understanding of pubs code arbitrations to a required standard.
Work continues to give the industry information about pubs code arbitrations. Changes to the PCA website have made it easier to find previous arbitration awards and decisions of the High Court on appeal. We have also recently published an improved and updated quarterly report of arbitration data.
This provides more information than before to the industry, so that it is now possible to compare between pub companies. For example, the industry can see that Star has the highest number of open disputes, followed by Greene King and then Stonegate, which has the largest tied estate. Both Star and Stonegate have made significant progress in resolving arbitrations this quarter, while Greene King’s have remained stable. A total of 15 arbitrations ended this quarter with the parties agreeing a market-rent-only (MRO) option tenancy. This was the most common outcome in closed arbitration disputes this quarter.
Increasingly, tenants are able to resolve their MRO process without an arbitration dispute. At its peak, the highest number of active arbitration cases the PCA reported was 118 in June 2018. That compares with 39 open cases on 31 March 2022. However the BBPA monthly MRO data, which includes the average duration of MRO procedures, shows that Stonegate’s are taking the longest to conclude, followed by Star. This is something I am looking at closely.
I am also continuing to monitor Star to ensure it completes my recommendations made as a result of my investigation. Many of the affected MRO tenants have by now secured improved stocking terms in their MRO tenancies. As part of this Star is reporting to me on the progress of all open MRO arbitrations. I’ll be saying more about all of this in due course.
I'll also be keeping an eye on current challenges facing tied tenants and how the smooth running of the pubs code can support them.
This column is intended to aid industry understanding about the Pubs Code and its impact. Nothing in it should be understood to be a substitute for the Pubs Code legal framework.