PGB Press Release and report on annual statement 2016

Report on the Pub Company Audit Period 1 May 2015 – 30 April 2016

 

The third annual statement of compliance has been conducted by the Pub Governing Body (PGB). This report highlights the main features of the survey of pub companies which had over 100 lease agreements in England & Wales, in regard to their performance under Version 6 of the Industry Framework Code (IFC).

 

EXECUTIVE SUMMARY

  • In 2015 63% of BDMs had completed training, so that 2016 has bought about a significant and welcome change in that figure, in rising to 86%.
  • The number of waivers applied to the requirements on reaching new agreements has fallen from 36.6% in 2015 to 32.3% in 2016 and of the 551 waivers applied, only 19 were exempt from the need to provide a business plan, down from 36 in 2015. This was a concern raised in the 2015 Report and progress has been made in this area.
  • Conversely, Pre-Entry Awareness Training (PEAT) waivers were applied to 299 agreements, up from 269 in 2015, representing an increase from 15.3% of new agreements reached in 2015 to 17.5% in 2016. The British Institute of Innkeeping has been working with CPL Training on a new and more appropriate PEAT course for all licensees which should be available in September 2016.
  • The completion of rent reviews within 12 months from their due date has fallen from a high of nearly 90% to just 60% during 2016. This could be explained by the changes in the market where pubs are being sold or converted from leases into tenancy agreements, or managed houses.
  • In similar vein, Agreement Renewals also suffered a lower completion rate and is much in line with figures reported in 2015. Nearly 45% of tenancy agreements were not renewed within 12 months of their anniversaries and this rises to 58% of lease agreements that were not renewed in the period. This may be explained by tenants and lessees awaiting the implementation of the new Statutory Code.
  • The number of pub tenants falling under the protection of the Landlord & Tenant Act 1954 has fallen to 6,508 in 2016 (from 7,632 in 2015). The biggest decline has been in the tenanted sector where the number of agreements that are not protected has risen from 64% to 75% of 4,352 tenancies There has also been a rise in the number of contracted-out leasehold agreements, rising from 39 (0.6%) to 144 (2.6%) out of 5,552 leases.
  • As in 2015 there were 21 referrals to PIRRS on rentals and as in 2015 there was one lease renewal referred to PIRRS.
  • At 10.7% of the number of leasehold assignment requests of 595, are a significant reduction from the 15% figure in 2015 and 2014.
  • The 330 complaints made in 2016 was little changed at 3.3% (of licensees), from the levels of earlier years.
  • Resolution of complaints within the timescales set out in their Codes of Practice rose from 67.4% to 70% nearer to the 2014 figure of 74.9%
  • There were 27 enquiries to PICAS from tenants. This equates to 0.3% of agreements covered by the survey. While 8 of the enquiries resulted in referrals to PICAS, down from 13 in 2015, only 2 cases went through to a full Panel hearing. Three of those retain the potential to be passed through to the PICAS Panel.

 

Background Information to the audit

In May 2014 the Pub Governing Body conducted the first annual compliance audit as required under the UK Pub Industry Framework Code of Practice v6 (IFC), paragraph 110. The audit was repeated in May 2015 with all companies operating 100 or more leases being required to participate in the auditing process and to submit their responses to the PGB.

The purpose of this report is to provide all industry stakeholders with the PGB findings arising from the survey, focusing on the following elements:

  • Areas where the PGB has identified good levels of compliance with the IFC;
  •  Areas where the PGB wish to see further improvement in the forthcoming auditing year; and
  • A reminder to all parties within the industry of their obligations under the IFC and ensuring their compliance with this.

Who was audited as part of the process?

Participating companies for the 2015 – 2016 Report were:

  1. Admiral Taverns;
  2. Enterprise Inns;
  3. Greene King;
  4. Marston’s;
  5. Punch Taverns;
  6. Star Pubs & Bars.

The PGB can report that all six companies participated in the audit and their responses were received in advance of the deadline set by the board.

What content was audited by the PGB?

The audit was carried out by way of a questionnaire developed by the PGB board. The questionnaire covered the same ground as for the first audit period but included an additional question, asking companies to state how many rent reviews were outstanding as at the end of the period.  The question was designed to bring further clarity to the position at the end of the year.

The annual statement of compliance was to provide details on a range of indicators from each Landlord Company and specifically made reference to the following topics;

a) The number of new agreements, both lease and tenancy agreements, entered into;

b) Compliance with pre-entry requirements and the use of any waivers in relation to the grant of new agreements;

c) The number of rent reviews and renewals that fell due during the auditing period and within what timescale these     were concluded;

d) The number of complaints recorded by individual companies via their internal grievance procedure and how they      were concluded.

 

The auditing period

The relevant period for the purpose of collecting data from the Landlord Companies for the inaugural audit was 1st May 2015 – 30th April 2016. The next auditing period will require Landlord Companies to supply the necessary data for the period covering 1st May 2016 – 30th April 2017.

 

COMMENTS FROM THE BOARD

This year’s report shows continued engagement by pub companies with the PGB and a welcome boost in the number of BDMs completing training, increasing from 63% in 2015 to 86% in 2016. The report also shows the number of rent reviews completed within 12 months falling to 60% although this could be explained by the changes in the market where pubs are being sold or converted from leases into tenancy agreements or managed houses.

The PGB will continue to oversee the code of practice for those pub companies not meeting the 500 outlet threshold for the Statutory Code.

 
Sir Peter Luff, Chairman of the Pub Governing Body said: “The results of this year’s annual report underlines the crucial role the Pub Governing Body continues to play following the implementation of the Statutory Code for Pubs.

“Two years ago we raised concerns around the issue of BDM training and it is very encouraging to see a considerable boost in the number of BDMs completing training.

 

PIRRS and PICA-Service

In total, there were 21 referrals to the Pubs Independent Rent Review Scheme (PIRRS) regarding rentals and one lease renewal. There were 27 enquiries to the Pubs Independent Conciliation and Arbitration Service (PICAS) from tenants.

It has also been encouraging to see lessees continue to engage with PIRRS and PICAS and an increase in the number of resolved complaints within the set timescale to 70%, closer to the 2014 high of 74.9%. PIRRS and PICAS represent a convenient, cost-effective method is dispute resolution for licensees and the PGB continues to play an active and valuable part in self-regulation of the sector.

Back To List