Regulatory Compliance Handbook: Market Rent Only Proposals

The Pubs Code Adjudicator and Deputy PCA have published a further chapter to the PCA’s Regulatory Compliance Handbook setting out steps that a pub-owning business (POB) must take each time it prepares and issues a proposal for a Market Rent Only (MRO) tenancy to one of its tied pub tenants (TPT).


Regulatory Compliance Handbook: Market Rent Only proposals

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TPTs must freely be able to exercise their MRO option to satisfy themselves, as Parliament intended, that they are no worse off under their tied agreement than they would be if they were free of tie.

Based on the PCA’s MRO experiences in both arbitrations and its regulatory capacity, the statutory advice is the latest intervention by the Adjudicators designed to ensure that Parliament’s intention is fulfilled.

It builds on earlier statutory advice, operational changes already introduced by the PCA to the way in which MRO arbitrations are handled that incentivise POBs to avoid disputes, and the publication of decisions on disputes referred to the PCA for arbitration. These initiatives have collectively reduced the number, range and length of MRO disputes, and the PCA will be closely monitoring POB approaches to MRO compliance to consider whether any additional regulatory steps may be necessary.

TPTs are urged to provide feedback to the PCA on their experiences at the end of the MRO procedure by completing the MRO questionnaire.

The new chapter makes clear the minimum steps the PCA will expect a POB to take in satisfying itself that its proposed MRO terms meet the Pubs Code tests on commonality and reasonableness. The chapter includes a ‘MRO Compliance Record and Declaration’ to be completed in respect of every MRO proposal that must be signed by the POB’s Code Compliance Officer. This full information about how the POB justifies its MRO proposal, which will be its primary evidence of compliance and which the TPT can obtain, is aimed at reducing disputes and making any negotiations fair.

The chapter also contains advice on how the MRO proposal must be served and presented. It does not presuppose the offer of a new tenancy.

The chapter is statutory advice issued by the Adjudicator and Deputy PCA under section 60 of the Small Business, Enterprise and Employment Act 2015. This will apply to MRO full responses issued in respect of a MRO Notice served on or after 21 November 2019.

Published 20 November 2019