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S P R I N G / S U M M E R 2 0 1 7
09
2016 was a big year for the pub industry.
The introduction of the Pubs Code in July has
seen the biggest legislative change since the
Beer Orders of the late 1980’s. In addition to
bringing a much tighter framework governing
the behaviour of pub company landlords, it
also offers, in some circumstances, the right
for the tenant to be free of the beer tie in
return for paying a free of tie market rent.
The legislation only affects those
pub companies owning over 500
pubs, namely Greene King, EI Group
(formerly Enterprise Inns), Punch
Taverns, Marstons, Admiral Taverns
and Star Pubs & Bars.
Our experience to date has been that the
legislation is difficult to navigate and costly to
pursue. Nevertheless, it may provide tenants
in some circumstances with the ability to
negotiate a better tied agreement or in
others, be worth the time, trouble and stress
in delivering a free of tie lease.
At this point, a note of caution is required.
The legislation has some very tight timescales
that must be followed.
Failure to do so will result in the rights or
ability to negotiate the terms of the free of
tie lease being lost. Perhaps as a result of
the complex nature of the legislation, take
up by tenants has to date been limited. By
December 2016 Greene King had reported
24 MRO (Market Rent Only) requests and
Enterprise Inns, 94.
2016 and into 2017 has seen
a general decline in the number
of freehold pubs coming to
the market.
This is forcing the emerging managed pub
companies to consider leasehold acquisitions
in order to continue expanding their estates.
As a consequence, we are expecting to see
increased interest in those free of tie leases that
are for sale and an improvement in premiums
being paid for desirable properties and well
trading businesses.
In 2016 Savills Licensed Leisure team
completed 93 deals and valued about
£660m in the licensed property sector.
P U B S
T H E B I G G E S T L E G I S L AT I V E C H A N G E S I N C E
T H E B E E R O R D E R S O F T H E L AT E 1 9 8 0 ’ S
3.50%
4.50%
5.50%
6.50%
7.50%
8.50%
9.50%
Jan 95
Jan 97
Jan 99
Jan 01
Jan 03
Jan 05
Jan 07
Jan 09
Jan 11
Jan 23
Jan 15
NIY %
IPD
Stonegate
S&N
ETI
Spirit
Marstons
C U R R E N T Y I E L D S