New deal for pub tenants

 

The Scottish Government is taking action to improve the rights of tied pub tenants across the country.

A new Scottish Pubs Code will enable eligible tied pub tenants to sell a guest beer from brands that have small production levels or switch to a market rate lease under which they could purchase products from any supplier.

Ministers will lay secondary legislation in Parliament next week which, if approved, would see the Code come into force on 7 October 2024. It will be overseen by an Adjudicator who is expected to be appointed next month, subject to parliamentary approval.

A tied lease involves tenants buying some or all of their alcohol and other products and services from the pub-owning business.

Ministers expect the legislation will deliver a fairer tied pubs sector, with risks and rewards being more equally shared between tenants and their landlords. In 2023, it was estimated that there were just under 700 tied pubs in Scotland.

Small Business Minister Richard Lochhead said:

“We need to do all we can to protect pubs, bars and licensed clubs in Scotland, which in 2022 supported 34,000 jobs throughout the country and play an important role in our communities.

“I am pleased that we are now free to introduce measures contained in the Tied Pubs Act and give tenants more freedom to choose the lease which best suits their needs and diversify the number of products they can sell.

“It’s in everyone’s interest that the sector prospers and I look forward to working with tenants, pub-owning businesses and the new Scottish Pubs Code Adjudicator to deliver these important changes.”

Background

The Tied Pubs (Scotland) Bill 2021 was passed unanimously by Parliament on 23 March 2021. The Tied Pubs Bill was brought forward by Neil Bibby MSP and the Government agreed to support the Bill during its passage through Parliament, subject to amendments. The Bill became an Act on 5 May 2021.

The introduction of secondary legislation follows the conclusion of unsuccessful legal challenges to the Tied Pubs (Scotland) Act 2021 - brought by some pub-owning businesses - which culminated in a decision by the Supreme Court last month not to hear their appeal.

Tied leases can involve tenants buying beer and other products and services from the pub-owning business at a higher cost than on the open market in return for lower rent and other support. The Code will require businesses to offer Market Rent Only leases in certain circumstances which are free of ties.

A statutory Pubs Code and a Pubs Code Adjudicator has been in place in England and Wales since 2016.