Pubs code delay

Punch licensee denied MRO and hit with 40% rent increase

By Oli Gross contact

- Last updated on GMT

Punch licensee denied MRO and hit with 40% rent increase

Related tags: Rent review, Mro option, Public house, Mro

A Punch tenant has been hit by a potential 40% rent increase and denied the opportunity of employing the market rent only (MRO) option, despite her rent review falling after the original start date of the new pubs code.

Today (26 May) was supposed to mark the implementation of the code, but drafting errors​ have forced ministers to delay its introduction.

And despite calls from campaigners for the ‘big six’ pubcos to honour the original date, Trish Mason of the Millwright Arms, Warwick, will not be offered the MRO option at her rent review on 6 June.

Mason had been waiting eagerly for the code, and was planning to take the MRO option. Instead she has been offered a new five-year tied lease with a 40% rent increase.

She told the Publican’s Morning Advertiser​ (PMA​): “We wouldn’t survive the increase. [Punch] knew it was coming in, so should offer us MRO. We’ve had a Punch pub six years and we’ve turned it around. There’s no loyalty there.”

Mason said, despite her best efforts, she had little contact with Punch ahead of her rent review, but was now being pressed for a decision. “They have now given us 21 days to agree to a 40% increase in rent otherwise they will send it to arbitration,” she said.

Apology

Punch has since apologised for the delay in responding to Mason, and postponed its application for arbitration pending further discussion, with a view to finding a “fair outcome for all concerned”. A spokesman said the company had followed the correct procedures and RICS guidelines.

“In March of this year our publican raised the prospect of MRO, which was prior to any regulations being re-leased and the subsequent withdrawal,” the spokesman added.

The PMA​ asked all big six pubcos — Punch, Enterprise, Admiral Taverns, Greene King, Star Pubs & Bars and Marston’s — if they planned to honour the original date and voluntarily offer MRO to tenants, as demanded by tenant campaign groups, but none committed.

Hundreds affected

The Pubs Advisory Service said it was in contact with licensees in a similar position to Mason, and the British Pub Confederation said 200 could be affected a week.

Secretary Simon Clarke said there was “a great deal of concern” among tenants about the delay. “With the timescale of the parliamentary processes and various recesses there is little chance of implementation by mid-June,” he warned.

However, a senior pubco insider told the PMA​ the Government was right to delay the code’s introduction to rectify “drafting errors”. Writing for the PMA​ online, he also criticised the MRO investment waiver clause in the code.

Investment

“Pubcos have fought for the right of publicans to be allowed to waive the MRO trigger beyond five years in return for significant investment in their pub. Everyone but the foolhardy accept that investment in pubs is critical to them continuing to thrive.

“We are baffled that the ‘waiver for investment clause’ is essentially worthless and will restrict the kind of transformational projects that have rejuvenated pubs and created thousands of jobs.”

Punch's response

Punch's full response to the Millwright Arms' complaints stated: "

“The rent review process began with our Publican in October of last year following the normal procedure and RICS guidelines. In March of this year our Publican raised the prospect of MRO which was prior to any regulations being released and the subsequent withdrawal.

"There was a delay in response from our member of staff to our publican and so we apologise for any undue concern this has caused and will delay any application for arbitration until such time as we have had further conversations with our Publican to find a fair outcome for all concerned.

"In line with our previous comments on MRO, we cannot make a commitment of honouring any date until we get sight of the new regulations and are able to understand and digest what they mean to our publicans and the Punch business.“

Related topics: Legislation

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