Market Rent Only
If certain events occur, the Pubs Code allows a tied tenant to request from their pub company an offer of a free of tie tenancy at a commercial rent - this is called the Market Rent Only (MRO) option
The MRO option gives tied tenants the right in certain circumstances to compare and choose whether they wish to stay tied to their pub company or become free of tie. This can give tenants strength in their negotiations with their pub company and help them make the best choice for their business.
A core principle of the Pubs Code is that tied tenants should be no worse off than if they were trading free of tie. The ability to compare the tied and free of tie options is an important element in delivering this right.
Under an MRO tenancy, a tenant is free to buy alcohol and other products and services on the open market and will pay an agreed or independently determined market rent.
The terms of the MRO tenancy offered by the pub company must be reasonable and compliant with the Pubs Code.
The MRO option is the right for you to:
choose to occupy the tied pub under a free of tie tenancy that is MRO-compliant
and pay either:
- The rent agreed between you and the POB in line with the MRO procedure; or
- The market rent (which can be independently determined if you cannot agree the rent)
There are four circumstances under the Pubs Code where you have the right to ask for the MRO option. The Code calls these 'MRO events' (also known as MRO gateways). They are:
- You receive a Rent Assessment Proposal (RAP). This will usually be at contractual rent review - the Code says you must have one of these at least every 5 years.
- Renewal of your pub arrangement (e.g. your lease). This will apply if your agreement is protected under the Landlord and Tenant Act 1985 (or you have a contractual right to renew).
- You are notified of a significant increase in the price at which a tied product or tied service is supplied to you. The Code sets out what this means.
- You show that a trigger event, as defined in the Code, has occurred.
If your pub company agrees that there has been an MRO event, it must give you an offer of an MRO compliant tenancy and the proposed MRO rent. You then have the right to seek to negotiate on the proposed terms and rent before deciding whether to accept.
If you do not agree that the proposed terms are compliant, or you cannot agree whether an MRO event has occurred, you can refer the matter to the PCA for arbitration. Where the MRO rent cannot be agreed, an Independent Assessor (IA) can be appointed to determine the market rent.
Strict timescales apply to requesting an MRO option, to each step in the MRO procedure, and to referring the matter to arbitration or to an IA. It is important that you are aware of these timescales. The PCA has produced an MRO factsheet setting out what you need to know.
You must make your MRO request in writing, within the timescales, and include certain information (check the MRO factsheet for details).
You can find a template MRO notice here.
Under the MRO procedure, you and your pub company 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.
There are strict time limits that apply to making a referral to an IA, and to the subsequent steps once a referral is made.
Read our factsheet which explains the process for making a referral to an IA, the information that must be provided to an IA, and the rights available if you do not receive an IA’s determination in time or disagree with the IA’s determination.
A person must satisfy certain criteria set by the PCA in order to be appointed as an Independent Assessor for the purposes of the Pubs Code.
If you need to give notice to the PCA of a failure of the parties to agree on the appointment of an Independent Assessor (to determine the market rent as part of the MRO option), please complete this form and send it to [email protected]
The PCA wants to hear from tenants who have used the MRO process and what they think about it.
If you are a tenant who has received an MRO proposal from your pub company and the MRO process is now over, please complete this questionnaire to let us have your views.