London pub successfully avoids ‘turgid’ MRO process

By Liam Coleman contact

- Last updated on GMT

Free of tie: the site operators invoked a tie release clause
Free of tie: the site operators invoked a tie release clause
A central London pub has gone free of tie without invoking the “turgid” market-rent-only (MRO) option available through the pubs code.

Greene King-owned pub, the Royal Oak in Marylebone, will reopen today (11 May) under a new free-of-tie lease, the site’s tenants said.

Patrick Marling, the director of the Golden Age Public Houses, which leases the pub from Greene King, told The Morning Advertiser ​(MA​) that it had always been Golden Age’s intention to run the site free of tie.

Commercial approach

Marling said: “We had a rent review in December 2016 with our landlord Spirit (which is part of the Greene King brand). At that time, we requested terms on an MRO lease and started the MRO process, but it became clear that MRO was going to take a long time to sort out, so I sat down with the chaps at Greene King and both they and us took a very commercial approach.

“We said that we were definitely going to go for a free-of-tie lease so we asked Greene King to invoke the tie release clause that was in our existing lease agreement, which would eliminate the need to go through the turgid MRO process.” he added.

The deal reached means the pub is now 100% free of tie.

Aspects of MRO process ‘off-putting’

The pubs code, which came into force in July 2016, oversees the rights of tenants of the six biggest pub-owning companies, which includes Greene King. One part of the legislation gives tenants of these pubcos a right to negotiate an MRO option at rent reviews and thus effectively break the drinks tie specified by the pubcos.

However, Marling added that there were “off-putting” aspects to the MRO process, such as having to pay three months' rent in advance before going free of tie.

Responding to this criticism, a spokesperson for pubs code adjudicator Paul Newby said that tenants “should make the choices that are correct in their individual circumstances”.

Greene King declined to comment on how many other tenants had used the tie release clause successfully employed by Golden Age.

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