Historically, it was pub owning brewers who rented out some or all of the pubs in their estates to self employed tenants. This could work well for both parties, as although the brewer could tie the tenant to their drinks products, the brewer would often set the rent at a very reasonable level. A typical brewery tenancy was 3 years in duration, perhaps renewable if both parties were in agreement and the tenant would only be asked for a modest ingoing bond to be held by the brewer, fully redeemable at the end of the tenancy if the premises left if good order. Given that many tenants only last a few years before they become disillusioned with the trade, a 3 year tenancy made sense - easy in and easy out.

Also, as pubs were much busier before the 1990s the big brewers such as Bass and Whitbread had long waiting lists of prospective pub tenants and could carefully pick and choose who they put into pubs.

However, after the ill conceived Beer Orders in 1989, which restricted the number of pubs that a brewer could tie to 2000, the industry responded by spinning off their tied estates into separate pub companies, the so-called Pubcos. Crazy as it may sound, these Pubcos were lawfully permitted to tie their unfortunate tenants to various drinks products at inflated prices, despite the stark fact that the landlord was neither a brewer nor a soft drinks manufacturer. It gets even more bizarre, as a typical Pubco lease was for up to 30 years and often with big cash ingoings required from the leaseholder. It was never going to work and it didn't.

Huge numbers of Pubco tenants failed to survive financially and many are said to have lost everything.

Unlike the big brewers of yesteryear, it is reported that Pubcos were less selective as to who they signed up, as long as the new tenant came up with the required cash input to effectively buy the lease.

FAST FORWARD TO 2024 The pub trade has never been as challenging. Less people are using pubs and overheads have gone through the proverbial roof. Survival is the name of the game.

There may well be some decent smaller brewers who lease off their pubs on very favourable terms, but they are probably few and far between.

Someone new to the trade would be strongly advised to look carefully at the option of buying a pub at a good price, as this might make a lot more financial sense than leasing one. At the end of the day they would still own the bricks and motor if everything else failed.

Maybe there should be a Wealth Warning attached to all pub tenancy agreements, as not many tenants survive long term.

Although the Beer Orders were abolished in 2003, it was too little too late, as irreparable damage had been done and thousands of pubs had closed as a direct consequence of the temporary dominance of Pubcos.

Hugh Price

(Email : moc.loa@ecirpeihguh)