Negotiating your rent

The rent for a pub is valued on its trading potential, and the pub company and tenant negotiate the rent on that basis. 

The Pubs Code provides you with important rights to information and evidence to justify the pub company’s rental offer. This transparency helps you understand how the proposed rent was calculated, and gives you power to negotiate the rent effectively. These duties apply both at the start of the tenancy and whenever you have the right to renegotiate the tied rent under the Pubs Code (in a rent assessment) including at contractual rent reviews. 

With the proposed rent, your pub company must provide you with all the required information set out in the Code, including a 12-month profit and loss forecast statement and any other information you need to negotiate the rent in an informed way. 

Depending on the point in your tenancy, you may be entitled to this information within a rent proposal or a rent assessment proposal, but the requirements for each under the Pubs Code are very similar. However, an important difference is that the rent assessment proposal gives you the right to request the Market Rent Only option, the rent proposal does not. 

You may receive a rent proposal from your pub company when: 

• You are negotiating a new agreement

• You are renewing your tenancy under the Landlord and Tenant Act 1954

• The pub company changes the rent payable for your tenancy (certain exceptions apply)

Depending on the circumstances, in order to be entitled to a rent proposal you may need to request one from your pub company, and there are time limits for making this request. 

Find out more information about rent proposals in the factsheet.

Your pub company must give you a rent assessment proposal (or RAP) at any rent review required under the terms of your agreement and carry out a rent assessment under the Code of the rent you must pay under your existing tenancy. 

When you receive a rent assessment proposal, you have the right to ask for the Market Rent Only (MRO) option. You can request the MRO option to compare a free of tie deal and negotiate on terms and rent, even if you want to stay tied. 

You may also request a rent assessment if you have not had one for five years. In certain exceptional circumstances, when a trigger event has a significant impact on your trade, or there is a significant increase in the price of a tied product or service, you can ask for a rent assessment and a Market Rent Only option. 

Find out more about rent assessments and rent assessment proposals in our factsheet. 

A forecast profit and loss statement for a period of 12 months forms the basis of any rent negotiation. 

The Pubs Code sets out how your pub company must prepare the forecast and the supporting information it should provide.

To help you in preparing your own profit and loss forecast, the pub company must provide you with a template on request. Usually this is in your new tenant information or available online.

In order to provide you with clarity about how the pub company has accounted in the profit and loss forecast for beer waste and duty paid, the PCA has issued statutory guidance.

The Pubs Code requires the pub company to disclose how it is accounting for its unsaleable beer and cider waste (e.g. line cleaning and sediment) and for the duty paid on alcohol. 

In order to make sure pub companies are providing an accurate and consistent approach, the PCA has published statutory guidance in relation to the regulated pub companies statutory obligations to account accurately in Pubs Code Schedule 2 forecast profit and loss statements (as part of a rent proposal under Part 3 of the Code or a rent assessment proposal under Part 4 of the Code) for:  

a) The volume of alcohol on which duty has been paid; and  

b) The volume of draught product waste which is unsaleable. 

In particular, the guidance sets out that the pub company must account for sediment and operational waste separately. 

The guidance also sets out the PCA’s expectations in respect of the training and support that the company will make available to their tied pub tenants on cellar management and dispensing best practice to help them to realise the levels of business on which their rent is based.  

It further details how the Business Development Managers should be trained to understand and explain to tied pub tenants how waste has been calculated. 

The guidance has been made under section 61(3) of the Small Business, Enterprise and Employment Act 2015. 

When unexpected situations occur which impact the profitability of your business, the Pubs Code provides you with two important rights.

Trigger Events 

A 'trigger event' is an event that will have a significant impact on the trade of your pub and meets certain conditions set out in the Pubs Code.

For example, it must be beyond your control, and not likely to affect all pubs in England and Wales. It also cannot be connected to your personal circumstances. Other conditions apply.

A trigger event may entitle you to ask your pub company for: 

• A Rent Assessment - which begins with a Rent Assessment Proposal (RAP) for a new tied rent; and/or 
• A Market Rent Only (MRO) option to rent your pub on a free-of-tie basis 

Read more about trigger events and the conditions that apply in our factsheet.

Significant Increase in Price

If you have received an invoice showing an increase in the unit price of a tied product or service from the last time it was invoiced, it may be a significant increase in price under the Pubs Code.

A significant increase in price under the Pubs Code gives you the right to ask your pub company for: 

• A rent assessment - which begins with a Rent Assessment Proposal for a new tied rent; and/or
• A Market Rent Only option - to rent your pub on a free-of-tie basis

Read more in our factsheet which also explains how to determine whether an increase in the unit price of a tied product or service is a significant increase in price, and what rights you have where there is a significant increase in price.