22 Feb The Pub Code and MRO five years on
The Pub Code has now been in existence for over five years so surely the path has become a bit clearer?
Publican’s have campaigned for the freedom to purchase beer from whomever they want for many years, and thanks to the Pub Code introduced in July 2016 they got their wish. But information in the major trade press and wider press indicates a smaller take up than anticipated. Why is this?
The press reports underhand tactics by the pub companies (pubco’s) and over complicated and costly procedures to be the most off-putting reasons for Landlords to not follow their dreams of a tie free existence. The Pub Code has now been in existence for over five years so surely the path has become a bit clearer?
The notice to request the option to go free of tie can be given by the tenant following four specific MRO (Market Rent Only) events:
● Tenancy renewal
● Following receipt of a rent assessment proposal as part of a rent review process
● A significant increase in a tied product or service
● An event has occurred that significantly impacts on trade.
Please note: The PCA (Pubs Code Adjucator) has already confirmed that COVID 19 could not be an MRO event due to the governments closure order applied to all pubs tied or free of tie.
- Once the tenant has received or been subject to one of the above, they have 21 days to serve the pubco notice.
- The notice has to include certain information to be valid.
- Once the notice has been sent to the pubco a strict timescale is triggered that must be adhered to by both parties otherwise rights will be lost.
Yes the procedure is complicated and hard to follow, but once the MRO notice has been served the dates can be fairly easily diarised to ensure that the tenants MRO rights are maintained. There are a lot of guides available through the www.gov.uk/pca or we are more than happy to talk this through with you, the process can be intimidating but once broken down to smaller parts is relatively manageable.
One of the criticisms is that the pub companies are providing deals to tenants on rent and discount to prevent them taking the MRO option, but surely if profitability is the main reason why should this be a problem? If the tenant seeking to go free of tie and the pubco offers a deal that provides advantages beyond those anticipated, then surely the code has worked in forcing the pubco to offer an enhanced deal to the tenant. Unless the reason to pursuing MRO is political.
Although the Pub Code and Market Rent Only process can be challenging and complicated, we believe it is manageable when broken down and shouldn’t be a barrier to taking the option. Our advice would be to seek support from a suitably qualified surveyor, those who are members of the AVLP https://www.avlp.com/our-members/individual would be able to assist. If a tenant really wants to pursue the MRO option there is a clear pathway, they might just need a bit of support.
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