New Code of Practice for tied tenants will begin next month:
Download the pubs code regulation and fees information below.
If you need help interpreting the code please email or call the office here .
The government will introduce a new Code of Practice for tied tenants of pub companies with more than 500 pubs that takes effect next month.
The provisions of the Code of Practice have been unveiled after a consultation process.
In a briefing note sent to members last night, Association of Licensed Multiple Retailers chief executive Kate Nicholls said: “The new Code will be introduced on 26 May 2016 and will be effective immediately – any rent review which takes place from 27 May 2016 will be governed by the new provisions and will give tenants the right to have detailed tied rent assessments, request a Market Rent Only (MRO) alternative and take a case to the Adjudicator for any behaviour or rent event after that date.
The government has also confirmed that all the code provisions, aside from MRO will carry over should be a tied pub be sold to a landlord not covered by the statutory code until the lease ends of the first rent review, whichever is sooner.
Tied tenants will have a right to request an alternative MRO free-of-tie rent assessment at rent review, renewal (contracted in agreements only) or if there is a significant increase in price or substantial change in circumstances.
The original proposal that an MRO option would only be available at rent review where the rent increases has been abandoned, tenants will have a right to request an MRO assessment irrespective of whether the rent increases, decreases or stays the same.
An MRO request can also be triggered outside the rent review process where there is a significant increase in price. This is assessed by reference to the relevant ONS Price Index and for beer, it must be more than 3% above the index, for other alcoholic drinks it is 6% above (both are inclusive of duty) and for other tied products and services, a price increase of more than 20% above the relevant ONS Price Index.
The price comparison period is over 12 months on a like-for-like cost basis and referring to prices actually paid by the tenant. MRO may also be triggered if there is an event which has a significant impact on trade.
The requirement for this to be an event which only affects that particular pub has been removed, but the change has to be one of long term change to local economic, environmental or employment factors or as a direct consequence of changes in the tie imposed by a pub owning business (such as) removal or a particular tied product.
The tenant will have to provide a written analysis of the forecast impact on trade for the next 12 months.” Introducing the Code, Minister for Small Business 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 pub-owning businesses and their tied tenants and that all this takes place without placing undue burdens on businesses.”