Guidance

What Tied Pub Tenants need to Know about Market Rent Only (MRO) rent and Independent Assessors

Updated 30 March 2022

How to use this factsheet:

This factsheet is for tied pub tenants who have received a Market Rent Only (MRO) compliant tenancy and have been unable to agree the MRO rent with the pub-owning business.

It provides information to support tenant understanding. It is not a substitute for the Pubs Code legal framework.

Our website also contains other useful information about accessing your Pubs Code rights.

Terms and abbreviations

Term/abbreviation	What it means
Code	The Pubs Code etc. Regulations 2016
IA	Independent Assessor – someone who meets the criteria the PCA has set for independently determining the market rent
MRO	Market Rent Only
MRO Rent	The rent (or money payable instead of rent) for you to occupy the premises under a MRO-compliant tenancy
Market Rent	The estimated rent it would be reasonable for you to pay to occupy the premises under a MRO-compliant tenancy
MRO Option	The option for you to occupy the tied pub under a MRO- compliant tenancy and to pay a rent you have agreed with the POB in line with the MRO procedure or, failing such agreement, the market rent
MRO Notice	A written notice you give to the POB to request the MRO option when an event occurs that gives you the right to make this request, as set out in the Code
MRO full response	The POB’s response to your MRO notice. If the POB agrees you have the right to pursue the MRO option, this response must include a proposed MRO-compliant tenancy
PCA	Pubs Code Adjudicator
POB	Pub-owning business (often referred to as pub companies)
Pubs Code Framework	The legal framework that regulates the relationship between the large pub-owning businesses and their tied pub tenants
TPT	Tied Pub Tenant

1. Rent under a MRO-compliant tenancy

2. I do not agree with the POB’s proposed MRO rent. What can I do?

You and the Pub-owning Business (POB) must first try to reach an agreement on the MRO rent. Where you cannot agree, you can ask an Independent Assessor (IA) to determine the market rent. You must notify the POB in writing that you intend to do this.

Changes were made to the time limits for making a referral to an IA when the Pubs Code was amended from 1 April 2022. The time limit for referral to an IA will depend on whether your Market Rent Only (MRO) event (the event giving you the right to the MRO option) was before or after 1 April 2022. Please check the relevant What Tied Tenants Need to Know – Market Rent Only Rights factsheet on our website.

You cannot make an arbitration referral about the proposed MRO- compliant tenancy once you have referred the MRO rent to an IA.

Once you have made an arbitration referral to the PCA about the proposed MRO-compliant tenancy, you cannot refer the proposed rent to an IA until the arbitration matter has been determined.

3. I have notified the POB that I intend to refer the MRO rent to an IA. What happens now?

See Pubs Code – Regulation 36

After notifying the POB in writing that you intend to refer the MRO rent to an IA, within 28 days of the POB receiving the notice, you and the POB must:

• jointly appoint an IA; or
• notify the PCA in writing that you have failed to make an appointment. The PCA must then appoint an IA within 14 days and notify you and the POB of this appointment.

Guidance on the PCA process for appointing an Independent Assessor and the notification form are available on our website.

You and the POB must pay, in equal shares, the fees that the IA charges in connection with the determination of the market rent.

An IA must meet the PCA’s criteria (whether appointed by the parties or the PCA). A list of IAs who meet the criteria and guidance on fees is available on The Royal Institution of Chartered Surveyors’ website.

4. Independent Assessor Process

5. The POB and I have jointly appointed an IA. What happens now?

See Pubs Code – Regulation 37

Within 28 days (starting the day after the IA is appointed) you must give the IA:

• the proposed MRO tenancy
• all documents you hold from those listed in Schedule 3 to the Code
• other information you think is relevant to the determination

Within the same 28 days:

• the POB must also provide documents and information in line with b) and c)
• information you and the POB provide to the IA under b) and c) should also be provided to each other

You and the POB must also:

• comply with any reasonable request by the IA for information or documents you hold which the IA considers relevant for the determination; and
• provide any such information or documents to the IA and to each other as soon as reasonably practicable

The IA must communicate their determination to you and the POB within 21 days, starting the day after the 28-day period in which information must be provided to them.

The IA determination must:

• have regard to the documents listed in Schedule 3 to the Code; and
• be conducted in accordance with guidance issued by the PCA

6. What are the documents in Schedule 3 to the Code?

• documents which provide evidence of your pub’s level of trading in the last 3 years
• documents which show a reasonable forecast of your pub’s level of trading for the next 3 years
• documents which describe any special commercial or financial advantages provided to you under the terms of your tenancy or licence

A Reasonable Forecast:

• is based on an assessment of the level of trading at your pub if it were operated by a reasonably efficient tenant; and
• may be based on an assessment of your pub’s level of trading if you were not subject to a product or service tie

7. I have received the IA’s determination of the market rent. What must I do next?

You must accept or reject the IA’s determination of the market rent (and the associated tenancy) in writing to the POB, within 21 days of it being communicated to you^{[footnote 1]}.

If you do not notify the POB of your decision in time, you will be treated as having rejected the IA determination and the associated tenancy.

Note: the above applies unless you or the POB have referred the IA determination for arbitration (see next section).

8. I disagree with the IA’s determination, or I have not received the IA’s determination. What can I do?

See Pubs Code – Regulation 37

You or the POB can make an arbitration referral if either of you think one or more of the following applies:

• the determined rent is not the market rent
• the IA in making their determination has not had regard to the Schedule 3 documents provided to them
• the IA has not conducted the procedure in accordance with the PCA’s guidance for IAs
• the IA has not communicated their determination within 21 days, starting the day after the 28-day period in which information must be provided to them

You (or the POB) must make your referral within 14 days of the date the IA’s determination is communicated to you.

If you have not received the IA’s determination, you must make your referral within 14 days of the date it should have been communicated to you.

You can find information about making an arbitration referral and a helpful Flowchart which shows the IA process on our website.

9. I (or the POB) do not agree with the IA’s determination and have referred it for arbitration. What could happen?

See Pubs Code – Regulations 38 and 59

If the arbitrator decides the alleged failure has occurred:

The arbitrator must explain, in writing, why the failure has occurred. Then, having regard to the nature of the failure, the arbitrator must do one of the following:

• substitute a figure for the market rent and explain why. That substituted figure is final
• direct the IA to make a second determination of the market rent in light of the arbitrator’s explanation as to why the failure has occurred
• make another determination the arbitrator considers appropriate, which may in exceptional cases be for the appointment of another IA to assess the market rent

Where the arbitrator directs the IA to make a second determination of the market rent, the IA must do this within 21 days, starting the day of the arbitrator’s direction.

Where the arbitrator appoints another IA to assess the market rent, the IA must determine the market rent within 21 days of the arbitrator’s appointment.

You must accept or reject any determination or substituted market rent figure (and the associated tenancy) in writing to the POB, within 21 days of it being communicated to you^{[footnote 2]}.

If you do not notify the POB of your decision in time, you will be treated as having rejected the determination or substituted market rent figure, and the associated tenancy.

Note: the above applies unless you or the POB have made another arbitration referral on any IA determination you have received as a result of the first arbitration.

See section: I do not agree with the IA determination that I received as a result of my arbitration referral. What can I do?

If the arbitrator decides the alleged failure has not occurred:

You must accept or reject the original IA determination (and the associated tenancy) in writing to the POB, within 21 days of the arbitrator’s determination being communicated to you^{[footnote 3]}.

If you do not notify the POB of your decision in time, you will be treated as having rejected the IA’s determination and the associated tenancy.

10. The IA has not communicated their determination within 21 days and I (or the POB) have referred it for arbitration. What could happen?

See Pubs Code – Regulations 38 and 59

The arbitrator must do any of the following:

• direct the IA to make their determination of the market rent and specify when they must do this
• appoint another IA to determine the market rent (the arbitrator will make this appointment within 14 days of the matter being referred)
• decide that the IA requires additional information to determine the market rent and require you or the POB to provide this. The arbitrator will then direct the IA to complete the determination and specify when they must do this.

You must accept or reject the IA determination (and the associated tenancy) in writing to the POB, within 21 days of it being communicated to you^{[footnote 4]}.

If you do not notify the POB of your decision in time, you will be treated as having rejected the IA determination and the associated tenancy.

Note: the above applies unless you or the POB have referred the IA determination for arbitration (see next section).

11. I do not agree with the IA determination that I received as a result of my arbitration referral. What can I do?

See Pubs Code – Regulations 38 and 59

You or the POB can make another arbitration referral if either of you think one or more of the following applies:

• the determined rent is not the market rent
• the IA in making their determination has not had regard to the Schedule 3 documents provided to them
• the IA has not conducted the procedure in accordance with the PCA’s guidance for IAs

Either you or the POB must refer the matter back to arbitration within 14 days of the determination being communicated to you.

The arbitrator may then make a final determination of the market rent within 21 days of the referral.

You must accept or reject the arbitrator’s final determination (and the associated tenancy) in writing within 21 days of the determination being communicated to you^{[footnote 5]}.

If you do not notify the POB of your decision in time, you will be treated as having rejected the final determination and the associated tenancy.

More information about Pubs Code Disputes can be found here.

12. Questions about this factsheet

For general queries about the information in this factsheet, you may contact our enquiry service.

Please note, we can provide information about your rights, the Code and our processes. We cannot advise you about your case.

• Complete our online enquiry form
• Email: office@pubscodeadjudicator.gov.uk
• Call 0800 528 8080 to request a call back

This factsheet provides information to support tenant understanding. It is not a substitute for the Pubs Code framework.

You may find it helpful to take independent professional advice before making any decisions that may affect you and your business.

13. Keep up to date

• Sign up to email alerts on our website
• Follow the PCA on Twitter, Facebook and LinkedIn
• Read the Pubs Code Adjudicator, Fiona Dickie’s, regular column in The Morning Advertiser

1. If a rent assessment (or assessment of money payable instead of rent) is still in progress at the end of the 21 days, you have until the date this assessment ends to give the above notification. ↩

2. If a rent assessment (or assessment of money payable instead of rent) is still in progress at the end of the 21 days, you have until the date this assessment ends to give the above notification. ↩

3. If a rent assessment (or assessment of money payable instead of rent) is still in progress at the end of the 21 days, you have until the date this assessment ends to give the above notification. ↩

4. If a rent assessment (or assessment of money payable instead of rent) is still in progress at the end of the 21 days, you have until the date this assessment ends to give the above notification. ↩

5. If a rent assessment (or assessment of money payable instead of rent) is still in progress at the end of the 21 days, you have until the date this assessment ends to give the above notification. ↩