The Pub Code and MRO five years on

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. 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, overcomplicated and costly procedures by the pub companies (pubco’s). These are the most off-putting reasons for Landlords to not follow dreams of a tie free existence. The Pub Code has 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 Adjudicator) has already confirmed that COVID-19 is not an MRO event as the governments’ closure order applied to all pubs.

The Process

  • Once the tenant has been subject to an MRO event, 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. Both parties must adhere to it, otherwise rights will be lost.

Yes the procedure is complicated and hard to follow. However, once the MRO notice has been served dates can be diarised to ensure the tenant’s MRO rights are maintained. There are a lot of guides available through the 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 criticism of pubco’s is that they are providing deals to tenants on rent to prevent them from using MRO. However,  if profitability is the main reason why should this be a problem? If the tenant is 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 for pursuing MRO is political.

To Conclude

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 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.

If you need any ongoing advice Contact us. 

For more articles like this, go to our Articles page (or click here for our previous article), and also consider signing up to our Newsletter! We also have several other articles concerning rent for landlords and tenants such as; Rent arrears, Negotiating commercial rent, Settling a rent review and Negotiating terms in COVID-19.

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Posted on by JS Reakes

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