30th Oct 2015 06:50
LONDON (Alliance News) - The UK government tabled on Thursday proposals for a reform of the beer tie, part of plans to ensure that tied pub tenants are no worse off in future than those free of the tie.
Under the beer tie, tenant pub landlords must buy their beer from the company that owns the pub rather than on the open market. This is in return for lower rent. Critics say this leads to higher prices and a lack of competition.
Under the new proposals, tenants will be able to request rent assessments every five years, whenever any significant change is seen in the price they are charged for drinks or when there is a change in their trading conditions.
They will then be able to renegotiate their rent or switch to a "market rent only" system under which they would be allowed to buy beer from any supplier.
Shares in London-listed pub companies took a hit in November last year when the UK government kicked off its consultation on the beer tie, with operators saying the changes could have "serious unintended consequences" for publicans and the broader industry.
Punch Taverns PLC warned the decision to end the tie would reduce pub investment and consumer choice and expose the tenants to higher fixed rents, reduced levels of support and greater risk of failure.
By Sam Unsted; [email protected]; @SamUAtAlliance
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Related Shares:
Punch Taverns PLC