BRITISH PUB CONFEDERATION
Pubs Code start date and Market Rent Only Day #MRODay arrives but tenants denied their legal right due to BIS mistake
Today, 26th May 2016, is the day laid down in law for pub tenants of the large pubcos to finally have the right to protection and the all-important Market Rent Only option, in the Pubs Code, yet due to mistakes by the Department for Business, Innovation and Skills (BIS) they are being denied this. Today's date is laid down in the Small Business Enterprise and Employment Act 2015 yet extraordinarily, despite having a year to get the Pubs Code right and in place, BIS have missed the date and hundreds of tenants have been left high and dry without the Code and Market Rent Only option they had been entitled to expect, as a new legal right coming in from today.
This means the Government are in breach of the Act, which required the code be in place by 26 May.
The British Pub Confederation are calling on BIS to publish the code before the end of June, and calling on BIS to state when the code will come into force.
The Confederation has estimates that for every month the Code is delayed, 220 tenants will miss out on the chance to choose the Market Rent Only option.
BIS delayed the launch of the code after claiming it contained a drafting error, but the British Pub Confederation has since stated that there was no error in the code.
Commenting, Greg Mulholland MP, Chair of the British Pub Confederation, said:
“BIS missing this deadline is a disgrace, and means that every month over 200 tied tenants will miss out on their chance to choose the Market Rent Only option. These tenants rightly expected the code to come into force by 26 May, but because of BIS’s incompetence this will not happen.
“We now call on BIS make publishing the code a priority, and to tell tenants and pubcos when the code will be published.”
Simon Clarke, Fair Pint Campaigner and Secretary of the British Pub Confederation, said:
"What the delay has done is thrown many tenants with imminent rent reviews and renewals into turmoil. Rather than grasp a fantastic opportunity for positive PR, pub owning companies have refused to offer the MRO opportunity retrospectively to the 26 May. We advise any tenants who have not settled their rent review or lease renewal to put all negotiations on hold pending the Code implementation which may see grounds for retrospective claims and may still yet throw up opportunities for MRO to be considered."
Dave Mountford, Pubs Advisory Service, said:
“This latest delay in a long line of errors by BIS shows the complete disregard the Department has shown for the pubs code and the industry in general. Throughout this process we have felt that the department have failed to understand the background to this issue and instead attempted to balance the necessary changes without impacting on the Pubco model.
“Unsurprisingly they have failed to achieve the will of parliament.”
Note to tenants: with the Code delay we suggest you hold on any rent review/lease renewal negotiations.
The Code is in draft form and may be subject to further changes which could be effective and even be positive to tied tenants. An opportunity may present itself for retrospective opportunity to consider MRO provided no agreement has been concluded, regardless of the delay, either following direction from Government or guidance and interpretation of the Regs.
Our advice is to hold all negotiations pending the Code implementation regardless of the rent review/lease renewal date.
Notes to editors