The House of Commons this week voted in favour of an amendment that could lead to 1,400 pub closures and the loss of 7,000 jobs, according to the government’s own report.
The initial changes introduce the ability for tenants to appeal against rents imposed on them by landlords to an independent adjudicator.
However, some members of parliament are pushing for further changes that would lead to the end of the beer tie system upon which large pub companies depend.
At present many pubs have a beer tie clause in the letting contract, which means tenants pay lower than market value rent but are obligated to buy their beer through the landlord, usually at higher prices.
The removal of this tie would allow tenants to buy their beer on an open market, but the result of landlords losing this “wet rent” income is likely to lead to rent hikes, or even landlords changing the use of their buildings.
A statement from Enterprise Inns, Britain’s biggest landlord, states: “We continue to believe the tie offers the best operating model for the vast majority of our publicans and, as we made clear in reporting our preliminary results yesterday, we take a flexible approach to all our lease and tenancy agreements and the proactive management of our wider property portfolio.”
With such a large portfolio Deutsche Bank analysts have gone as far as to suggest Enterprise Inns could become a REIT in response to the end of the beer tie.
