There was a further announcement about the pubs code in the Autumn Budget that the Government intends to legislate to introduce a ‘Guest Beer’ provision to support brewers to continue to access pubs covered by the code in England and Wales.
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The PCA welcomed the Government’s recognition in the report that the PCA has been broadly effective in enforcing the code and that it is operating consistently with the overarching principles of fair and lawful dealing by pub-owning businesses in relation to their tied pub tenants, who should be no worse off than if they were free of tie.
The report notes changes in the composition of the market over the past decade and concerns about tenants’ ability to access the free of tie market rent only (MRO) option, including due to changes in the length and type of tenancies.
Could the MRO change?
As part of the statutory review, the Secretary of State asked for views on take-up of the MRO, including any actual or potential risks of harm to operators.
The MRO option is critical to the delivery of the pubs code principles as it allows tied tenants to compare the tied and free of tie offers side by side, negotiate and choose the best option for their business. This valuable right has enabled some tenants to achieve more favourable tied deals or a free of tie tenancy.
The PCA itself said in evidence to the statutory review that the Secretary of State may wish to consider whether limited and diminishing access to MRO places restrictions on the ability of the code to deliver the “no worse off” principle by this means.
The Government has indicated targeted amendments may be appropriate for the MRO option. But how many tenants have had the right to use it, and how many have done so?
Accessing the MRO
There are four events (or gateways) under the pubs code where tenants have the right to ask for the MRO option and to simultaneously renegotiate their tied rent, but only two are used in practice - a five-yearly rent review and the renewal of an agreement (where no agreed investment exemption applies).
BBPA published data shows that since the introduction of the pubs code in 2016 to April 2026, there have been 1,703 valid MRO requests from tied tenants. That may sound relatively low, but we learn a lot about the appetite for MRO by unpacking the data.
Tenant awareness of the right to serve an MRO notice is fairly high at 70%, as shown in the 2026 PCA tied tenant survey results. But the number of valid MRO requests has fallen annually – there were 88 in 2024/25 and 82 in 2025/26, compared to 216 in 2017/18.
However, it is interesting to note the proportion of tenants who will serve an MRO notice when they do have a rent review or renewal event has been markedly consistent over time – at around 20% annually over the period 2020 to 2026.
On top of this, there will be tenants who negotiate deals because they have the MRO right, without serving an MRO notice. The proportion of those who opt to go free of tie at the end of the MRO process has also been stable over the last two statutory review periods at around 35%. This data suggests it is diminishing MRO gateways which are reducing access to the MRO, not diminishing tenant appetite.
The reduction in MRO events over time can be understood in the context of changes to agreements in the regulated estates over the past 10 years. Tied operating models have changed, as pub companies often offer shorter (e.g. five year) agreements, almost always (except in the case of Star) without statutory renewal rights, protections that were often the norm.
These changes, together with the growth of alternative operational models, are reducing the number of MRO gateways for tied pub tenants.
The PCA recognises the MRO option as a valuable right for eligible tenants, and in its evidence to the Secretary of State, the PCA raised the question of whether limited and diminishing access to MRO may restrict the ability of the code to deliver its no-worse-off principle by this means.
Specifically, the PCA invited the Secretary of State to consider an amendment to simplify the definition in the code for a ‘trigger event’, one of the unused MRO gateways, to make this more accessible for tenants who experience an event that has a significant impact on the trade of their pub.
Changes in the regulated pub co estates
The code has now been in force for over a decade, and we all know that the licensed trade has had a very challenging 10 years.
A cost-of-living crisis, a pandemic, and changing demographics have all had a significant impact on pubs and bars since the pubs code Regulations for England and Wales were introduced in 2016 to address unfairness to tenants in the tied relationship. The industry has had to adapt to survive, and sadly we are used to seeing data in the press about pub closures and the impact on individuals and communities.
The PCA has gathered data insights on changes to the estates of the regulated pub companies since the introduction of the code. We know from compliance data first submitted in 2018 that there were then 10,099 tied pubs covered by the code. At the end of March 2026, the number stood at 8,331– a difference of 17.5%
Over this time, we have also seen the six regulated pub companies expanding their use of alternative business models such as franchises and other profit-sharing agreements; all of which are reshaping how some pubs in England and Wales are being operated.
By the end of March 2026, the number of such agreements had increased to 2,398, with 1,490 of these being reported as regulated under the pubs code. This figure jumped in 2025 largely owing to Stonegate acknowledging changes to their Craft Union agreement to bring them clearly under the pubs code.
In March 2025, the PCA outlined that it is minded to the view that some other profit or turnover share agreements may also fall under the pubs code, but it does not at present consider it appropriate to require compliance in respect of them.
The statutory review report states the Government does not currently propose to amend the pubs code in respect of innovative agreement types and as a result, the PCA may review its published position in relation to those agreement types in due course.
What happens now?
The Government is currently developing proposals to revise the existing MRO gateway provisions in the Code and MRO opt-out criteria, alongside the implementation of the ‘guest beer’ provision announced in the Budget. Any amendments to the Pubs Code will need to be consistent with the two overarching principles.
This article is intended to aid understanding of the Pubs Code and its impact. Nothing in it should be understood to be a substitute for the Pubs Code legal framework.
