PCA calls on pubcos to publish ‘transparent and consistent’ methodology on rent

Fiona Dickie took over from Paul Newby as PCA last month (4 May) and, at that time, said her focus was on upholding the principles of the pubs code​ through the pandemic.

The recent statement, which was published yesterday (Thursday 4 June) said: “On 6 April, I called on all six of the regulated pub-owning businesses to do as much as they were able to support their tied tenants through the Covid-19 emergency.

“On 1 May, I said I expected them to start from a clear and consistent methodology for how they will support their tenants and to be open about their approach so individual tenants know what treatment they can expect.

“I also stressed the importance of the pubs code requirements in regulation 41 to record and agree conversations with tenants.

It went on to outline how two of the pub-owning businesses had published support methodologies and called on tenants that hadn’t received support methodology to file a complaint.

It added: "Even before my intervention, Admiral Taverns had led the regulated industry in applying these principles and in providing their tenants with this information. Following my intervention, Ei Group/Stonegate and Star Pubs & Bars have published the methodologies they are applying to tenant support and Greene King has published this in relation to its approach to support for the period from early June 2020 onwards.

“Tenants may otherwise have been provided with their pub-owning business’s methodology by their business development manager.

“Where a tenant has not been informed by their pub-owning business of a consistent and clear methodology for calculation of any support, or where the pub-owning business is applying it on a case-by-case discretionary basis, I have told the pub-owning businesses they must make sure tenants are aware they can bring a complaint to their code compliance officer if they do not consider they have been treated in a fair manner, and a report on unsatisfied complaints must be promptly sent to me.

“It is essential tenants have confidence discretionary support is being applied in a fair manner and I continue to urge the best approach is a transparent and consistent methodology in order to avoid disputes, which will take time and effort to resolve.

“Contact details for code compliance officers can be found on the PCA website.”

In response to the PCA statement, Star Pubs & Bars​ said it was providing rent concessions to its pubs.

Agreed approach

A spokesperson added: “We are suspending the collection of that reduced rent until whenever pubs reopen – a decision we made independently some time ago.

“We always aim to be transparent with our licensees and our rent concession methodology is available on our website, which the PCA has commended.”

On 18 March, Marston’s sent a letter to its tenants, urging them to regularly check the Government website for advice and updates. It said there was not a ‘one-size-fits-all solution’ but should a consumer downturn in the use of its pubs happen, it was ready to work with individual operators.

It said each pub would be impacted differently, tenants should talk to their business development manager on a regular basis to discuss how they can work together to mitigate the impact.

In response to the PCA statement, a spokesperson for the company said: “Marston’s has an agreed approach to deal with each pub on a case-by-base basis, this is being done on a direct contract process by phone, email or when allowed, face-to-face.

“We have done this because we recognise no two pubs are the same. More than two thirds of our tied tenants have been in touch to start this process, over a third have already agreed terms and have absolute clarity on their position as we approach reopening.

“There will be further consideration for each pub to support the reopening.”

Greene King reiterated it was offering a 90% rent reduction prior to reopening and for the first four weeks afterwards, before it was reduced to a 50% reduction for the next four weeks.

It also said tied tenants would receive eight weeks of support when buying barrels of beer and cider from them upon reopening, which means discounts of between £86.40 a barrel for four weeks, tapering to £57.60 a barrel for the next four weeks.

The pubco also pledged to replace all unopened kegs and casks in tenants’ cellars that will be out of date when it comes to reopening.

Stonegate Pub Company announced a support packaged for publicans​ within the recently acquired Ei Publican Partnerships leased and tenanted business last month (14 May).

It said it was giving three-month rent credit to its pubs that were not eligible for Government grants. The three-month rent credit for April to June will be awarded to those pubs with a rateable value of £51,000 and above, making them ineligible for the Government’s grant schemes, and will be credited accordingly.

For the tied licensees who are eligible for the £25,000 grant (have a rateable value of between £15,001 and £51,000) will receive 50% trade credit for stock purchases.

Uncertain timescales

Those in receipt of the £10,000 grant (have a rateable value of £15,000 or less) will receive 75% trade credit for stock purchases.

As well as this, tie release fees, and fixtures and fittings rentals, are cancelled for the same period (April to June), regardless of a publican’s entitlements to grants.

Admiral Taverns initially cancelled rents for a six-week period immediately after the lockdown announcement (23 March).

The pub company then (24 April) wrote to tenants to set out a plan to navigate through the crisis​ that would enable it to continue to offer long-term support to tenants when the country reopens, chief executive Chris Jowsey said.

It proposed that tenants receiving no grant funds – those with a £51,000 rateable value and above – will pay no rent or charges for May and June.

For pubs receiving a £10,000 grant, Admiral asked for a rent contribution capped at £1,500 a month (inclusive of VAT) for May and June.

And for pubs with the £25,000 grant, Admiral said it would be charging rent and associated charges but stressed licensees would still be “left with the majority of the grant in their hands at the end of June”.

Jowsey added if an operator was due a grant but had not been able to attain the money, Admiral would be deferring rent collection until the funds arrived.

Punch Pubs & Co said it was continuing to deal with uncertain timescales and it had maintained progressive and individual approaches to how best it can work with its pubs through the crisis.

CEO Clive Chesser added: “Our initial wave of support was designed to work in tandem with the Government schemes covering 12 weeks, immediately deferring all rent and associated costs, while working to understand the individual circumstances of each pub business and, subsequently, providing a significant amount of rent support where most needed.”

He outlined the pub company was continuing to make decisions on an evolving basis and said there will be further support to tied pubs.

Chesser added: “Alongside this, we have continued to provide a valuable service and support in a number of areas, with the current areas of focus including providing credit for all unopened stock and planning the risk assessment process for all of our pubs reopening in a Covid-secure environment.

“In the meantime, we continue to support the 180 Punch pubs that are currently trading as takeaway businesses, providing vital community services such as pub shops and support for front-line workers.

“Throughout all of this, our aim remains the same, and that is to get both Punch and our pubs through this global pandemic together in a sustainable manner, and we remain fully committed to achieving this goal and stand ready to provide further support in a progressive and dynamic manner as events unfold over time.”