Pub tenancy or lease? What actually changes with each agreement, using one pubco's published terms

A pub tenancy is usually shorter, cheaper to get into and mostly internal repairs, but you normally can't sell it, and many are contracted out of the Landlord and Tenant Act 1954, so it just ends when the term ends. A lease runs ten years or more, makes you responsible for every repair, and in return you can sell it on and you get the right to renew. Both are usually tied, and with the six biggest pubcos the Pubs Code covers both.

The words get used loosely. People say "my lease" about a five-year tenancy all the time, and adverts mix them up too. The difference matters more than the name, because it decides what you're paying for: a cheap way in with no exit value, or an asset you can sell that comes with the roof as your problem. The easiest way to show it is with one pubco's published terms side by side, so that's what I've done.

One pubco's agreements, side by side

Star Pubs, Heineken's tenanted arm, publishes its agreement terms and templates in full, which most don't. This is from its 2025 Working with Star Pubs guide and its agreements page for England and Wales. Other pubcos use different names and different numbers, so treat it as a worked example of how the two models differ, not as everyone's terms.

Star Pubs agreements in England and Wales, as published. Checked 19 October 2026.

	Foundation Tenancy	Investment Tenancy	Fully repairing and insuring (FRI) lease
Term	5 years fixed	5 years, rolling	10 years minimum
1954 Act renewal rights	Contracted out	Protected	Protected
Rent review	None, rent fixed for the term	Every five years if it rolls on	Every five years
Annual RPI increases	No	No	No
Repairs	Mainly internal	Mainly internal	All of it
Can you sell it on?	No	No	Yes, after two years
How you can leave	3 months' notice at any time	6 months' notice, only on each fifth anniversary	90-day cooling off at the start if there's no big investment
Extra landlord termination right	3 months' notice for significant rent arrears or tie breaches	None	None
Repairs fund	£1,300 a year	£1,300 a year	Optional, £3,120 a year
Deposit	Minimum three months' rent on all of them

All of Star's leased and tenanted agreements are tied for beer, cider, alcopops and soft drinks, and free of tie on wine and spirits. Its own rough guide to getting in is £10,000 for a smaller pub or a first-timer, £30,000 for a medium one and £50,000 or more for a large pub. On top of that it recharges its own legal fees on your first rent invoice, and you pay your own solicitor and any stamp duty land tax.

What "contracted out" actually costs you

The Landlord and Tenant Act 1954 gives most business tenants the right to a new tenancy when theirs ends, unless the landlord can prove one of a short list of grounds. That's what "protected" means in the table. It's real security: you can stay on, at a market rent, and the landlord has to justify getting you out.

A contracted-out tenancy has had those renewal rights switched off by agreement under section 38A. To do that properly, the landlord has to serve you a warning notice in a set form before you're bound, and you sign a declaration that you've read it. If the notice comes less than 14 days before you sign, that has to be a formal statutory declaration, made in front of a solicitor. If you're shown that notice, that's the moment you're agreeing to leave at the end of the term with no automatic right to stay. Plenty of people sign it with the rest of the pile.

For a first pub that can be the right trade. You can walk away on three months' notice if it isn't working, which is a lot of protection on the downside. What you give up is the upside: build the trade for five years and you have no right to keep the pub you built.

Repairs: where the money really goes

On a tenancy the landlord keeps most of the building, and you put money into a repairs fund that pays for the inside bits. On an FRI lease every repair is yours, the roof, the drains, the car park, and the dilapidations bill at the end is yours too. The Pubs Code Adjudicator's 2026 survey found only 12% of tied tenants got advice from a qualified surveyor before taking on their pub, while 95% said professional advice was important. On a full repairing lease that's the most expensive gap in the whole process. I've written up what happens at the end in dilapidations at the end of a tied lease. Get a schedule of condition with photos on day one, whichever agreement you're on.

Selling up: the reason to take a lease

The big thing a lease gives you is something to sell. Star's FRI lease can be assigned after two years, and whoever takes it over can pay you a premium on top of the fixtures, fittings and stock. Star charges an admin fee on every assignment. A tenancy that can't be assigned is worth nothing to anyone else when you leave. You hand back the keys and the stock gets valued out.

The Pubs Code makes the pubco tell you before you sign whether your agreement can be assigned and how. What it has to do once you want to sell, and the guarantee that can follow you out of a lease granted since 1996, are in selling a tied pub lease.

Where the Pubs Code comes in

The Code covers tied tenants in England and Wales of the companies with 500 or more tied pubs: Stonegate, Greene King, Admiral Taverns, Star Pubs, Marston's and Punch. Its definition of a tenancy includes a lease of any length, so tenants and leaseholders get the same rights, including the market rent only option at the right trigger points. Tenants of family brewers and smaller pubcos aren't covered.

One agreement in the table is different, and it's worth knowing why. Star's Investment Tenancy is the one it uses where it's putting big money into the pub under a qualifying investment waiver, regulation 56 of the Pubs Code. Sign one of those and you lose the right to ask for a market rent only deal at renewal or rent assessment for the period of the waiver. The conditions on that are in my investment exception guide, and the MRO steps are in MRO step by step.

Before you sign either, the pubco has to give you a whole pack of information and a rent proposal with a forecast. What's in it and what to check is in before you sign a tied pub, and how the rent gets set on review is in rent assessments.

Which suits who

If you are	I'd lean towards	Because
Running your first pub	A short tenancy with an easy exit	Lower ingoing cost, internal repairs only, and you can leave on short notice if the trade isn't there
Experienced, staying put, wanting to build value	An FRI lease	Renewal rights and a lease you can sell, if you can carry the repairs
Being offered a big refurb in return for a longer deal	Read the investment waiver before anything else	It can switch off your MRO rights for years
Not sure you want the risk at all	Ask about a management or franchise agreement	Star, for one, offers a management agreement with lower ingoing costs, and others run similar models

The bit nobody puts in the brochure: the stock

On any tied agreement you buy the tied products at the pubco's price, so the margin you can control is the one between what came in the cellar door and what went over the bar. That's your stocktake, and on Star's agreements it's not optional: its Innside Track package of EPOS, trade accountants and stocktakers is a condition of new substantive agreements, though experienced operators can opt out if their own accountant and stocktaker provide a similar service. Whoever does the counting, you're paying for it, so read it and use it.

Stock changes hands at the start and the end too. You'll buy the ingoing stock at valuation, and on an assignment the buyer takes yours on the day. Agree who counts and what's in, in writing, before the day. The method is in taking over a pub: the first stocktake. And if you're weighing up tied against free of tie altogether, the price gap per keg is in tied vs free trade beer prices.

My take

Don't choose on the word on the front. Choose on four lines in the agreement: how long, whether you can renew, who fixes the building, and whether you can sell it. A tenancy is a job with a business attached, cheaper to start and easier to leave. A lease is a business you own for a while, with the building's problems thrown in. Both can work. What doesn't work is signing one thinking it's the other. Get a solicitor and a surveyor before you sign, not after the first bill. And none of this is legal advice, I'm a licensee, not a lawyer.

Common questions

What is the difference between a pub tenancy and a pub lease?

A tenancy is usually shorter, around five years, with mostly internal repairs, a lower ingoing cost and no right to sell it on. A lease is usually ten years or more, fully repairing, assignable, and protected by the Landlord and Tenant Act 1954, so you can renew. Both are normally tied to the pubco for beer.

Can I sell a pub tenancy?

Usually not. Most tenancies can't be assigned, so they have no value to sell when you leave. Leases usually can be. Star's FRI lease, for example, is assignable after two years, and the buyer can pay a premium for it.

What does contracted out of the 1954 Act mean for a pub?

It means your tenancy has no statutory right of renewal. When the term ends, it ends, unless the landlord offers a new one. The landlord has to serve a warning notice under section 38A before you're bound, and you sign a declaration that you've read it.

Who pays for repairs in a tied pub?

It depends on the agreement. On a tenancy the tenant usually covers mainly internal repairs, often through a repairs fund. Star's is £1,300 a year. On a fully repairing and insuring lease, the tenant is responsible for all repairs, inside and out.

Does the Pubs Code apply to both tenancies and leases?

Yes. In England and Wales the Pubs Code covers tied tenants of companies with 500 or more tied pubs, and its definition of tenancy includes a lease. An investment waiver under regulation 56 can remove the market rent only option at renewal or rent assessment for the period it covers.