Legislation

Pubs code published with changes to MRO

By James Evison contact

- Last updated on GMT

Related tags: Mro option, Pubs code, Landlord, Greg mulholland, Leeds north west

Pubs code published with changes to MRO
The government's response to the consultation on the pubs code has been published with the Department for Business, Innovation and Skills making a number of changes to the code

It follows a debate set up by Leeds North West MP Greg Mulholland on the issue, in which BIS minister Anna Soubry announced that the code would be published today (14 April).

The main changes to the pubs code are around the MRO option - and around the issue of tenancy length and the right to exception of MRO through 'significant investment' by the pubco in the tied business.

BIS minister Anna Soubry said: "I have had to take some tough decisions, and I am certain that parties on different sides of the debate will find they disagree with some of the conclusions. However, it is my job to strike a balance which ensures that tied tenants of the largest pub-owning businesses are no worse off than free-of-tie tenants, that there is fair and lawful dealing between pubowning businesses and their tied tenants and that all this takes place without placing undue burdens on businesses.

"I hope all parties will agree that, on balance, this package of measures works to the benefit of our pubs sector and represents a fair outcome for all. I ask everyone in the pub business to get behind the Pubs Code, and work with the Pubs Code Adjudicator, so we can ensure that this country’s pubs continue to thrive.

The principal changes are:

  • to remove the proposed restriction that the MRO option should become available only when an increased rent was proposed but to allow it regardless of the level of rent proposed;
  • deliver the effect of a Parallel Rent Assessment to enable tied tenants to consider a free-of-tie rent offer alongside a tied rent review proposal;
  • refine and improve the basis on which a ‘significant price increase’ would be calculated for the purpose of triggering an MRO option;
  • to change the basis on which a ‘significant price increase’ would be calculated for the purpose of triggering an MRO option;
  • to cut back the weight of information requirements on pub-owning businesses in ways that would still offer similar protections to tied pub tenants;
  • to clarify that pub-owning businesses would be permitted to carry out routine checks – though not to negotiate terms – before providing stipulated information to prospective tenants;
  • Conditions for allowing an exception to the right to an MRO option in exchange for a significant investment in the tied pub through an agreement between the pubowning business and tied tenant – including the minimum size of such an investment and the maximum period for the exception;
  • The maximum length of short agreement which should be exempted from most Pubs Code provisions (12 months); and which provisions should still apply to these short agreements;
  • The definition of those tied pub franchises which would be exempt from some parts of the Code;
  • To make some Code provisions non-arbitrable: relating to the role and duties of compliance officers and the training of business development managers; and
  • Issues about the level of fees and charges and also the financial penalty following an investigation by the Pubs Code Adjudicator.

Click here for the consultation response

Related topics: Legislation

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