The Small Business, Enterprise and Employment Act 2015 introduced a statutory Pubs Code (the Pub Code etc Regulations 2016) to regulate the relationship between tied pub tenants and the large pub-owning businesses which rent the pubs to them and sell them tied products and services. For the first time in English history if you are a qualifying pub tenant you will have the legal right to pay your landlord a market rent and be free to purchase previously tied beer, other alcohol, other products and services on the open market. The new rules are extremely complicated and the process involves surveyors, independent assessors, accountants, possibly the new Pubs Adjudicator and of course experienced specialist lawyers if you want to serve the appropriate legal notices.
The Pubs Advisory Service has released a calculator on its website to assist you in determining whether you are worse off going free of tie. This is helpful but your best bet is to employ a specialist accountant to carry out a costs assessment.
You must be a tied pub tenant. Your landlord must be a pub owning business with at least 500 tied pubs. Admiral, Enterprise Inns, Greene King, Marstons, Punch, Star Pubs and Bars are currently recorded as having this at least these many tied pubs.
There are four basic circumstances introduced by the Pubs Code etc Regulations 2016. The first event is called a trigger event� and is when you receive an invoice and the price of one of the tied products or services you are contracted to purchase from your landlord has significantly increased. Be careful however because there are further qualifications which apply including whether the price increase has been forced upon on your landlord in which case the price increase would not justify your requesting the MRO. This trigger event actually is very rarely (if ever) triggered by the pubco.
The other three events are much more often relied upon by the tied pub tenant;-
Lease renewal – So when your lease is due for renewal and you either receive a s25 notice or serve a s26 notice regarding protected lease renewal under the Landlord and Tenant Act 1954. Unprotected tenancies also qualify for the MRO the minimum term being 12 months or a chain of tenancies for more than 12 months.
Rent Review – Also when you have not had a rent review (a rent assessment proposal) concluded in the last five years.
Pub site change in circumstance – Where you can show there has been a substantial change in circumstances which will have a significant effect on your level of trade (or the level of trade of local pubs in your area).
You will need to serve a notice on your landlord under section 35 (3) of the Pubs Code etc Regulations 2016.
There are very strict timelines (see below) so it is important that you obtain advice from us about your tenancy not just when an event occurs but as soon as possible so you can prepare yourself in good time for an event or even put together your case for the MRO.
Except for in the case where you believe there has been an event which has a significant impact on trade on your pub or other local pubs the times for you to serve your MRO request are “triggered” (meaning you have a 21 day window of opportunity to serve your mro notice). We can advise and guide you on the relevant process. What follows is a general guidance and should not be relied upon as every event will have different facts and circumstances;
If you or the Landlord disputes the Independent Assessors actions or decision, then both you and your landlord will have 14 days from the date the Independent Assessor communicates the market rent determination to refer to the Pubs Adjudicator.
The grounds for dispute are if either you or your landlord dispute that the Independent Assessor has carried out its function in accordance with the new Pub Regulations e.g one of you assert that the Independent Assessor has incorrectly determined the market rent; that the Independent Assessor failed to communicate the determination to either party; that the Independent Assessor has not had regard to the information supplied; or that the Independent Assessor did not conduct the market rent determination in accordance with the guidance issued by the Pubs Adjudicator.
You will lose your right to refer the determination to the Pubs Adjudicator if you fail to refer within 14 days of receiving the Independent Assessors market rent determination.
You will lose your right to the MRO. This is critical and where TP Legal solicitors can assist you serving and responding to notices and procedural documents on time and in preparing your strongest case for the MRO and getting your application right the first time round.
The costs of employing the necessary professionals will be the same regardless of the size of the pub business. You may also wish to employ a specialist consultant or surveyor to assist you putting together the case for your breaking free of tie.
The Regulations provide that you will be responsible to pay an equal share of the cost of the Independent Assessor. Your should be suitably specialist in Landlord and Tenant law to ensure that you are advised as to the merits of successfully breaking free of your tie and the legal implications for you and your pub business. You may need to pay your accountant for statutory required information.
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