The Pubs Code etc. Regulations 2016

PART 1 General

Citation, commencement and extent

1.  These Regulations—

(a) may be cited as the Pubs Code etc. Regulations 2016;

(b) come into force on the day after the day on which they are made; and

(c) extend to England and Wales.

General interpretation

2.—(1) In these Regulations—

“annual percentage change in the consumer price index” means the annual change in the general index of consumer prices (for all items), as published by the Statistics Board(1) with the identifying code D7G7;

“business development manager” has the meaning given in regulation 41(6);

“commencement date” means the date on which these Regulations come into force;

“compliance officer” means a person who is appointed under regulation 42(1);

“fixed share of turnover” has the meaning given in regulation 55(4);

“full response” has the meaning given in regulation 29(5);

“gaming machine” has the meaning given in section 235 of the Gambling Act 2005(2);

“initial or revised rent” has the meaning given in regulation 16(1)(a);

“insurance charge” has the meaning given in regulation 46(1);

“investment agreement” has the meaning given in regulation 56(3);

“MRO notice” has the meaning given in regulation 23(1);

“MRO rent” means the rent or money payable in lieu of rent payable in respect of the tied pub tenant’s(3) occupation of the premises concerned under an MRO-compliant tenancy or licence(4);

“new agreement” means a new tenancy of, or a new licence to occupy, premises which are, or are expected to be, a tied pub but does not include a short agreement or the renewal of a tenancy or licence;

“new rent” has the meaning given in regulation 20(1)(a);

“period of response” has the meaning given in regulation 29(7) to (9);

“protected 1954 Act tenancy” means a tenancy—

(a)

to which Part 2 of the Landlord and Tenant Act 1954(5) applies, and

(b)

which is not a tenancy in relation to which the provisions of sections 24 to 28 of that Act have been excluded by virtue of section 38A(1) of that Act;

“pub franchise agreement” has the meaning given in regulation 55(2);

“pubs entry training” has the meaning given in regulation 9(4);

“relevant share of turnover” has the meaning given in regulation 55(5);

“rent proposal” means a proposal made in accordance with Part 3;

“rent assessment proposal” means a proposal made in accordance with Part 4;

“rent review date” has the meaning given in regulation 21(12);

“revised response” has the meaning given in regulation 33(3);

“SBEEA 2015” means the Small Business, Enterprise and Employment Act 2015;

“Schedule of Condition” means the provisions in a tenancy or licence which specify the condition of the premises to which the tenancy or licence relates;

“short agreement” means—

(a)

a tenancy at will which entitles a tied pub tenant to occupy a tied pub; or

(b)

any other contractual agreement entitling a tied pub tenant to occupy a tied pub for no more than 12 months;

“significant increase”, in relation to the price at which a product or service which is subject to a product or service tie(6) is supplied to a tied pub tenant, has the meaning given in regulations 3 to 6;

“subsequent proposed tenancy or licence” has the meaning given in regulation 35(2);

“the RICS” means the Royal Institution of Chartered Surveyors;

“the RICS guidance” means guidance issued by the RICS, as amended from time to time;

“trigger event” has the meaning given by section 43(9) of SBEEA 2015 and regulation 7.

(2) For the purposes of these Regulations, a tied pub tenant receives notification of a significant increase in the price at which a product or service which is subject to a product or service tie is supplied to the tied pub tenant when the tied pub tenant receives the invoice the issue of which constitutes such an increase.

Significant increase in price: beer

3.—(1) For the purposes of these Regulations, a “significant increase” in the price of a beer product (“the relevant product”) supplied to a tied pub tenant takes place on the issue to the tied pub tenant of an invoice for that product (“the relevant invoice”) where—

(a) the relevant product has previously been supplied to the tied pub tenant,

(b) the unit price of that product on the relevant invoice is higher than its unit price on the most recent previous invoice for that product issued to the tied pub tenant, and

(c) the following two conditions are met.

(2) The first condition is that one or more invoices for the relevant product were issued to the tied pub tenant in the comparison period.

(3) The second condition is that—

where—

• A is the amount that comparison period beer would have cost the tied pub tenant if it had been invoiced at current period prices;

• B is the amount that comparison period beer cost the tied pub tenant at the prices actually invoiced;

• C is the relevant annual percentage change in the consumer price index or, where that is negative, zero.

(4) In this regulation—

(a) “beer product” means a product which is beer and which is supplied under a product tie(7);

(b) “comparison period beer” means all beer products invoiced to the tied pub tenant in the comparison period, in the quantities so invoiced, but excluding any beer product for which no invoice was issued to the tied pub tenant in the current period;

(c) “current period” means the period of 4 weeks ending with the day on which the relevant invoice is issued;

(d) “the comparison period” means the period of 4 weeks ending with the day 12 months before the day on which the relevant invoice is issued;

(e) “current period price”, in relation to a beer product, means the price of that product on the last invoice for that product issued during the current period;

(f) “invoice for a beer product” includes an invoice which covers (in addition to beer products) products other than beer products, or services; and references to a beer product being invoiced are to be read accordingly;

(g) “the relevant annual percentage change in the consumer price index” means the annual percentage change in the consumer price index most recently published before the day on which the relevant invoice is issued, in respect of the most recent month covered by that publication.

(5) The prices to be used in determining the unit price of the relevant product for the purposes of paragraph (1), and in calculating A and B for the purposes of paragraph (3), are prices—

(a) excluding value added tax and excise duty; and

(b) disregarding the effect of any discounts which the pub-owning business was not contractually required to give to the tied pub tenant.

(6) For the purposes of this regulation, beer products invoiced to the tied pub tenant are different beer products if—

(a) they have different names on the invoice or invoices in question, or

(b) they are invoiced in different units (for example, in units of different size or capacity).

Significant increase in price: alcoholic drink other than beer

4.  For the purposes of these Regulations, a “significant increase” in the price of an alcoholic drink product (“the relevant product”) supplied to a tied pub tenant takes place on the issue to the tied pub tenant of an invoice for that product (“the relevant invoice”) where—

(a) the relevant product has previously been supplied to the tied pub tenant,

(b) the unit price of that product on the relevant invoice is higher than its unit price on the most recent previous invoice for that product issued to the tied pub tenant, and

(c) the following two conditions are met.

(2) The first condition is that one or more invoices for the relevant product were issued to the tied pub tenant in the comparison period.

(3) The second condition is that—

where—

• A is the amount that comparison period alcoholic drink would have cost the tied pub tenant if it had been invoiced at current period prices;

• B is the amount that comparison period alcoholic drink cost the tied pub tenant at the prices actually invoiced;

• C is the relevant annual percentage change in the consumer price index or, where that is negative, zero.

(4) In this regulation—

(a) “alcoholic drink product” means a product which—

(i) is an alcoholic drink other than beer, and

(ii) is supplied under a product tie;

(b) “comparison period alcoholic drink” means all alcoholic drink products invoiced to the tied pub tenant in the comparison period, in the quantities so invoiced, but excluding any alcoholic drink product for which no invoice was issued to the tied pub tenant in the current period;

(c) “current period” means the period of 4 weeks ending with the day on which the relevant invoice is issued;

(d) “the comparison period” means the period of 4 weeks ending with the day 12 months before the day on which the relevant invoice is issued;

(e) “current period price”, in relation to an alcoholic drink product, means the price of that product on the last invoice for that product issued during the current period;

(f) “invoice for an alcoholic drink product” includes an invoice which covers (in addition to alcoholic drink products) products other than alcoholic drink products, or services; and references to an alcoholic drink product being invoiced are to be read accordingly;

(g) “the relevant annual percentage change in the consumer price index” means the annual percentage change in the consumer price index most recently published before the day on which the relevant invoice is issued, in respect of the most recent month covered by that publication.

(5) The prices to be used in determining the unit price of the relevant product for the purposes of paragraph (1), and in calculating A and B for the purposes of paragraph (3), are prices—

(a) excluding value added tax and excise duty; and

(b) disregarding the effect of any discounts which the pub-owning business was not contractually required to give to the tied pub tenant.

(6) For the purposes of this regulation, alcoholic drink products invoiced to the tied pub tenant are different alcoholic drink products if—

(a) they have different names on the invoice or invoices in question, or

(b) they are invoiced in different units (for example, in units of different size or capacity).

Significant increase in price: products other than alcoholic drink

5.—(1) For the purposes of these Regulations, a “significant increase” in the price of a non-alcohol product (“the relevant product”) supplied to a tied pub tenant takes place on the issue to the tied pub tenant of an invoice for that product (“the relevant invoice”) where—

(a) the relevant product has previously been supplied to the tied pub tenant,

(b) the unit price of that product on the relevant invoice is higher than its unit price on the most recent previous invoice for that product issued to the tied pub tenant, and

(c) the following two conditions are met.

(2) The first condition is that one or more invoices for the relevant product were issued to the tied pub tenant in the comparison period.

(3) The second condition is that—

where—

• A is the amount that comparison period non-alcohol products would have cost the tied pub tenant if they had been invoiced at current period prices;

• B is the amount that comparison period non-alcohol products cost the tied pub tenant at the prices actually invoiced;

• C is the relevant annual percentage change in the consumer price index or, where that is negative, zero.

(4) In this regulation—

(a) “non-alcohol product” means a product which—

(i) is a product that is not an alcoholic drink, and

(ii) is supplied under a product tie;

(b) “comparison period non-alcohol products” means all non-alcohol products invoiced to the tied pub tenant in the comparison period, in the quantities so invoiced, but excluding any non-alcohol product for which no invoice was issued to the tied pub tenant in the current period;

(c) “current period” means the period of 4 weeks ending with the day on which the relevant invoice is issued;

(d) “the comparison period” means the period of 4 weeks ending with the day 12 months before the day on which the relevant invoice is issued;

(e) “current period price”, in relation to a non-alcohol product, means the price of that product on the last invoice for that product issued during the current period;

(f) “invoice for a non-alcohol product” includes an invoice which covers (in addition to non-alcohol products) products other than non-alcohol products, or services; and references to a non-alcohol product being invoiced are to be read accordingly;

(g) “the relevant annual percentage change in the consumer price index” means the annual percentage change in the consumer price index most recently published before the day on which the relevant invoice is issued, in respect of the most recent month covered by that publication.

(5) The prices to be used in determining the unit price of the relevant product for the purposes of paragraph (1), and in calculating A and B for the purposes of paragraph (3), are prices—

(a) excluding value added tax; and

(b) disregarding the effect of any discounts which the pub-owning business was not contractually required to give to the tied pub tenant.

(6) For the purposes of this regulation, non-alcohol products invoiced to the tied pub tenant are different non-alcohol products if—

(a) they have different names on the invoice or invoices in question, or

(b) they are invoiced in different units (for example, in units of different size or capacity).

Significant increase in price: services

6.—(1) For the purposes of these Regulations, a “significant increase” in the price of a service (“the relevant service”) supplied to a tied pub tenant takes place on the issue to the tied pub tenant of an invoice for that service (“the relevant invoice”) where—

(a) the relevant service has previously been supplied to the tied pub tenant,

(b) the unit price of that service on the relevant invoice is higher than its unit price on the most recent previous invoice for that service issued to the tied pub tenant, and

(c) the following two conditions are met.

(2) The first condition is that one or more invoices for the relevant service were issued to the tied pub tenant in the comparison period.

(3) The second condition is that—

where—

• A is the amount that comparison period services would have cost the tied pub tenant if they had been invoiced at current period prices;

• B is the amount that comparison period services cost the tied pub tenant at the prices actually invoiced;

• C is the relevant annual percentage change in the consumer price index or, where that is negative, zero.

(4) In this regulation—

(a) “service” means a service which is supplied under a service tie(8);

(b) “comparison period services” means all services invoiced to the tied pub tenant in the comparison period, in the quantities so invoiced, but excluding any service for which no invoice was issued to the tied pub tenant in the current period;

(c) “current period” means the period of 4 weeks ending with the day on which the relevant invoice is issued;

(d) “the comparison period” means the period of 4 weeks ending with the day 12 months before the day on which the relevant invoice is issued;

(e) “current period price”, in relation to a service, means the price of that service on the last invoice for that service issued during the current period;

(f) “invoice for services” includes an invoice which covers (in addition to services) products; and references to services being invoiced are to be read accordingly;

(g) “the relevant annual percentage change in the consumer price index” means the annual percentage change in the consumer price index most recently published before the day on which the relevant invoice is issued, in respect of the most recent month covered by that publication.

(5) The prices to be used in determining the unit price of the relevant service for the purposes of paragraph (1), and in calculating A and B for the purposes of paragraph (3), are prices—

(a) excluding value added tax; and

(b) disregarding the effect of any discounts which the pub-owning business was not contractually required to give to the tied pub tenant.

(6) For the purposes of this regulation, services invoiced to the tied pub tenant are different services if—

(a) they have different names on the invoice or invoices in question, or

(b) they are invoiced in different units (for example, in units of time of different lengths).

Trigger events

7.—(1) For the purposes of Part 4 of SBEEA 2015 (and so of these Regulations) an event is a “trigger event”, in relation to a tied pub tenant, only if (in addition to meeting the conditions in section 43(9)(a) to (c) of SBEEA 2015)—

(a) conditions A and B are met; and

(b) either—

(i) the event does not affect pubs other than the tied pub; or

(ii) conditions C and D are met.

(2) Condition A is that the effect of the event is to decrease the level of trade that is reasonably expected to be achieved at the tied pub in each month over a continuous period of 12 months.

(3) Condition B is that the event is not—

(a) connected to the personal circumstances of the tied pub tenant;

(b) a significant increase in the price at which a product or service which is subject to a product or service tie is supplied to the tied pub tenant;

(c) an extrinsic increase in the price at which a product or service which is subject to a product or service tie is supplied to the tied pub tenant;

(d) an event of a kind described in regulation 26 or regulation 27; or

(e) an event which the tied pub tenant could reasonably have prevented, or the effects of which it could reasonably have substantially mitigated.

(4) Condition C is that the event—

(a) affects other pubs in the local area; but

(b) is unlikely to affect all pubs in England or Wales.

(5) Condition D is that the event—

(a) is directly related to a change in the tie imposed by the pub-owning business(9) on the tied pub; or

(b) has an effect which is directly related to changes in the local area such as—

(i) changes to the local infrastructure;

(ii) changes to local employment;

(iii) long-term changes to the local economic environment;

(iv) changes to local environmental factors.

(6) An “extrinsic increase” in relation to a tied product or service means an increase in the price of the product or service due to circumstances beyond the control of the pub-owning business such as—

(a) an increase in the price at which the pub-owning business purchases the product or service;

(b) an increase in any tax or duty payable by the pub-owning business which arises from the pub-owning business’s purchase of the product or service; or

(c) an increase in any other tax or regulatory cost payable by the pub-owning business which affects the costs of the pub-owning business.

Periods of time

8.—(1) This regulation applies where—

(a) a provision of these Regulations refers to a period of time; and

(b) that period is computed by reference to the occurrence of one or more of the following events—

(i) notifying, requesting, sending, providing or communicating changes, determinations, decisions, intentions, responses, proposals or other information;

(ii) the referral of a matter under regulation 59(6)(c) or (8);

(iii) receiving notices (including an MRO notice), notifications or requests.

(2) The time at which the events occur, for the purposes of that provision, is to be determined in accordance with the following table.

Method of notifying, requesting, accepting etc.	Day on which notification, request, acceptance, receipt etc. is deemed to have occurred
First class post (or other service which provides for delivery on the next business day)	The second day after it was posted, left with, delivered to or collected by the relevant service provider, provided that day is a business day; or, if not, the next business day after that day.
Document exchange	The second day after it was left with, delivered to or collected by the relevant service provider, provided that day is a business day; or, if not, the next business day after that day.
Delivering a document to or leaving it at a permitted address	If it is delivered to or left at the permitted address on a business day before 4.30 pm, on that day; or in any other case, on the next business day after that day.
Fax	If the transmission of the fax is completed on a business day before 4.30 pm, on that day; or, in any other case, the next business day after the day on which it was transmitted.
Other electronic method	If the e-mail or other electronic transmission is sent on a business day before 4.30 pm, on that day; or in any other case, on the next business day after the day on which it was sent.
Personal service	If the document is served personally before 4.30 pm on a business day, on that day; or, in any other case, on the next business day after that day.

(3) The reference in paragraph (1)(b)(iii) to receiving notifications does not include receiving notification of a significant increase in the price at which a product or service which is subject to a product or service tie is supplied to a tied pub tenant.

(4) In this regulation, “business day” means any day except—

(a) a Saturday or Sunday;

(b) Good Friday or Christmas Day; or

(c) a day which is a bank holiday in England and Wales under the Banking and Financial Dealings Act 1971(10).

PART 2 Duties of pub-owning businesses in their dealings with their tied pub tenants: general

Pubs entry training

9.—(1) Before—

(a) entering into a new agreement with a tied pub tenant; or

(b) agreeing, with a tied pub tenant, the renewal of a protected 1954 Act tenancy,

a pub-owning business must advise the tied pub tenant to complete the appropriate pubs entry training.

(2) The pub-owning business’s duty in paragraph (1) does not apply if the tied pub tenant meets at least one of the conditions in paragraph (3).

(3) The conditions are—

(a) that the tied pub tenant operates at least one other tied pub, other than a pub which is occupied under a short agreement, on the day on which the new agreement or the renewal is proposed by the pub-owning business or the tied pub tenant;

(b) that the tied pub tenant can demonstrate that the tenant has at least 3 years of relevant business management experience;

(c) that the pub-owning business has, at any time, granted the tenant a tenancy or licence in relation to a tied pub, other than a tenancy or licence in connection with a short agreement.

(4) “Pubs entry training” means training which is designed to raise awareness of the matters involved in operating a pub and entering into product ties and other agreements with landlords(11).

A sustainable business plan

10.—(1) Before a pub-owning business—

(a) enters into a new agreement with a tied pub tenant; or

(b) agrees, with a tied pub tenant, the renewal of a tenancy which is not a protected 1954 Act tenancy,

the pub-owning business must ensure that the tenant has a sustainable business plan.

(2) A “sustainable business plan” is a business plan which—

(a) has been prepared following consideration of independent professional advice, such as business, legal, property and rental valuation advice;

(b) includes financial forecasts for the tenancy or licence period, including—

(i) estimates of income and expenditure;

(ii) a sensitivity analysis;

(iii) the impact of any indexation of rent or of other costs referred to in the new agreement or in the renewal; and

(c) contains a forecast of the income and net profit over the tenancy or licence period which, in the pub-owning business’s opinion, is reasonable for the tenant and realistic.

(3) The pub-owning business must, before the tied pub tenant prepares the business plan—

(a) identify all reports which —

(i) are publicly available;

(ii) analyse the trading costs of tied pubs in the United Kingdom, or any area within it, and the costs of the tenancies and licences under which such pubs are occupied; and

(iii) provide relevant data against which the tenant can compare the performance of the tied pub for the purposes of preparing the business plan;

(b) advise the tenant to consult those reports; and

(c) provide to the tied pub tenant—

(i) the reports identified under sub-paragraph (a); or

(ii) information as to where, and how, the reports can be obtained.

(4) The pub-owning business’s duty in paragraph (3)(c) does not apply in relation to a report which the tied pub tenant has confirmed to the pub-owning business the tenant has read.

(5) A “sensitivity analysis” is an analysis of—

(a) the potential business performance of the tied pub in the case of an increase or decrease in business income; and

(b) the effect of that increase or decrease on the tied pub’s costs and profitability.

(6) The “tenancy or licence period” means the period which—

(a) begins with the day on which the tenancy or licence first confers on the tied pub tenant the right to occupy; and

(b) ends with the earliest of the following days—

(i) the day five years after the day mentioned in sub-paragraph (a);

(ii) the last day on which the tenancy or licence confers on the tied pub tenant the right to occupy;

(iii) the rent review date.

(7) Where a protected 1954 Act tenancy is renewed, the pub-owning business must—

(a) identify the reports mentioned in paragraph (3)(a), as if a sustainable business plan were being prepared;

(b) advise the tenant to consult those reports; and

(c) provide to the tied pub tenant, before the tenancy is renewed—

(i) the reports identified under paragraph (3)(a); or

(ii) information to the tenant as to where, and how, the reports can be obtained.

The required information

11.—(1) A pub-owning business must ensure that the tied pub tenant has received the information specified in Schedule 1 before the tenant considers the advice referred to in regulation 10(2)(a).

(2) The pub-owning business is not required to comply with paragraph (1) in respect of any information specified in Schedule 1 which—

(a) has already been provided to the tied pub tenant by the pub-owning business in connection with the current tenancy or licence; and

(b) has not changed materially since it was provided.

(3) The “current tenancy or licence” means the tenancy or licence in force at the time the tenant prepares the sustainable business plan.

Duty of pub-owning business where tenant intends to assign the tenancy

12.—(1) This regulation applies where the terms of a tenancy in relation to a tied pub permit the tied pub tenant to assign the tenancy to another person.

(2) Where a tied pub tenant notifies the pub-owning business that the tenant intends to assign the tenancy, the pub-owning business must, as soon as reasonably practicable—

(a) explain to the tenant and the proposed assignee the implications of the assignment for both; and

(b) provide the tenant with—

(i) information relating to any fees payable by the tenant in respect of the assignment;

(ii) information relating to any dilapidations which the pub-owning business requires to be remedied before, or as a condition of, the assignment; and

(iii) the information in Schedule 1 or, where that information has already been provided to the tenant under regulation 11(1), any information in that Schedule which has changed materially since it was last provided.

(3) Paragraphs (4) to (7) apply where the tenancy may not be assigned without the pub-owning business’s agreement.

(4) Before agreeing to an assignment, the pub-owning business must be satisfied—

(a) that the proposed assignee has received the information which was provided to the tenant under regulation 11(1) or under paragraph (2)(b)(iii) of this regulation;

(b) that the proposed assignee has been advised to complete pubs entry training; and

(c) that the proposed assignee has been advised to seek independent advice, including advice from a qualified surveyor with professional experience relating to tied pubs.

(5) The pub-owning business’s duty at paragraph (4)(b) does not apply if the assignee meets at least one of the conditions in paragraph (6).

(6) The conditions are—

(a) that the assignee operates at least one other tied pub other than a pub which is occupied under a short agreement on the day on which the notice mentioned in paragraph (2) is given;

(b) that the assignee can demonstrate that the assignee has at least 3 years of relevant business management experience;

(c) that the pub-owning business has, at any time, granted the assignee a tenancy or licence in relation to a tied pub, other than a tenancy or licence in connection with a short agreement.

(7) Where the pub-owning business does not agree to the assignment, the pub-owning business must notify the tenant and the assignee as soon as reasonably practicable.

(8) Paragraph (9) applies where—

(a) the tenancy may not be assigned without the pub-owning business’s agreement;

(b) the pub-owning business and the tied pub tenant have entered into an investment agreement; and

(c) the tied pub tenant proposes to assign the tenancy.

(9) Before agreeing to the assignment, the pub-owning business must be satisfied that the assignee—

(a) has been notified, in writing, of the investment agreement and the effect of that agreement on the assignee’s right to request a rent assessment or an offer of a market rent only option(12); and

(b) has received a copy of that agreement.

Premises

13.—(1) Before entering into a new agreement with a tied pub tenant, a pub-owning business must advise the tenant to—

(a) conduct a thorough inspection of the premises to which the tenancy or licence relates, including any part of the premises intended to be used as the tenant’s home; and

(b) obtain the advice of a qualified surveyor with professional experience relating to tied pubs.

(2) Paragraph (3) applies where—

(a) a tied pub tenant and a pub-owning business—

(i) enter into a new agreement; or

(ii) renew a protected 1954 Act tenancy; and

(b) before the renewal or before entering into the new agreement, the pub-owning business or the tied pub tenant agrees to carry out any maintenance, repair or improvement works to the premises.

(3) As soon as reasonably practicable after the works are completed, the pub-owning business must update the Schedule of Condition, in the light of the works.

(4) Where, under a tenancy or licence, a tied pub tenant is required to maintain or repair the premises, or any part of the premises, to which the tenancy or licence relates, paragraphs (5) and (6) apply.

(5) Before entering into a new agreement or renewing a protected 1954 Act tenancy, the pub-owning business must take the Schedule of Condition into account—

(a) during an assessment of any maintenance or repairs in respect of the premises; and

(b) before any obligations or liabilities in respect of the condition of the premises are agreed between the pub-owning business and the tied pub tenant.

(6) The pub-owning business must ensure that the Schedule of Condition is updated and reviewed—

(a) in accordance with the terms of the tenancy or licence; or

(b) where the tenancy or licence does not require such a review—

(i) following any significant alteration to the structure of the premises; and

(ii) at least 6 months before the end of the tenancy or licence.

(7) A survey of the premises which is carried out by a pub-owning business for the purposes of determining the dilapidations to the premises must be carried out—

(a) in accordance with the terms of the tenancy or licence; and

(b) at least 6 months before the end of the tenancy or licence.

(8) Paragraph (9) applies where a pub-owning business, or a person acting on its behalf, proposes to enter a tied pub for the purposes of —

(a) assessing repairs or maintenance required under the tenancy or licence;

(b) carrying out such repairs or maintenance; or

(c) assessing dilapidations in respect of the premises.

(9) The pub-owning business, or the person acting on its behalf, must not, except in an emergency, enter the pub without giving the tied pub tenant reasonable notice.

Short agreements

14.—(1) Before entering into a short agreement, the pub-owning business must provide the following information to the tied pub tenant—

(a) the amount of rent, or money payable in lieu of rent, which is to be paid under the short agreement;

(b) the information specified in paragraphs 12 to 17, 19, 20, 28, 32 and 34 of Schedule 1;

(c) the arrangements for the payment of utility bills.

(2) The pub-owning business must advise the tenant to complete pubs entry training before entering into a short agreement unless the tenant meets at least one of the conditions in paragraph (3).

(3) The conditions are—

(a) that, on the day on which the short agreement is proposed, the tied pub tenant operates at least one other tied pub other than a tied pub occupied under a short agreement;

(b) that the tied pub tenant can demonstrate that the tenant has at least 3 years of relevant business management experience;

(c) that the pub-owning business has, at any time, granted the tenant a tenancy or licence in relation to a tied pub, other than a tenancy or licence in connection with another short agreement.

PART 3 Duties of pub-owning businesses in their dealings with their tied pub tenants: rent proposals

Duty to provide a rent proposal

15.—(1) Where any of paragraphs (2) to (7) apply, the pub-owning business must provide a rent proposal to the tied pub tenant.

(2) This paragraph applies where—

(a) the tenant receives a notice from the pub-owning business under section 25(1)(13) of the Landlord and Tenant Act 1954;

(b) the tenant requests a rent proposal within the period of 21 days beginning with the day on which the notice is received; and

(c) the pub-owning business has not—

(i) within the time ordinarily allowed, opposed under section 24(1)(14) of the Landlord and Tenant Act 1954, the tenant’s application for a new tenancy; and

(ii) within the time ordinarily allowed, applied to the court, under section 29(2)(15) of that Act, for an order for the termination of the tenancy.

(3) This paragraph applies where—

(a) the tenant receives a notice from the pub-owning business under section 25(1) of the Landlord and Tenant Act 1954;

(b) the tenant requests a rent proposal within the period of 21 days beginning with the day on which the notice is received; and

(c) the pub-owning business—

(i) opposes the tenant’s application under section 24(1) of that Act for a new tenancy; or

(ii) applies to the court, under section 29(2) of that Act, for an order for the termination of the tenancy.

(4) This paragraph applies where—

(a) the tenant makes a request for a new tenancy under section 26(16) of the Landlord and Tenant Act 1954;

(b) the tenant requests a rent proposal within the period of 21 days beginning with the day on which the request for a new tenancy is made; and

(c) the pub-owning business has not—

(i) within the time ordinarily allowed, opposed the tenant’s application for a new tenancy under section 24(1) of that Act; and

(ii) within the time ordinarily allowed, applied to the court, under section 29(2) of that Act.

(5) This paragraph applies where—

(a) the tenant makes a request for a new tenancy under section 26 of the Landlord and Tenant Act 1954;

(b) the tenant requests a rent proposal within the period of 21 days beginning with the day on which the request for a new tenancy is made; and

(c) the pub-owning business —

(i) opposes, under section 24(1) of that Act, the tenant’s application for a new tenancy under section 26 of the Landlord and Tenant Act 1954; or

(ii) applies to the court under section 29(2) of that Act.

(6) This paragraph applies where—

(a) there is a change in the amount of rent or money payable in lieu of rent payable by the tenant under the tenancy or licence except where the change is due to an annual or other periodic indexation of rent which was agreed by the tenant when the tenancy or licence was entered into; and

(b) the tenant requests a rent proposal within the period of 21 days beginning with the day on which the change is notified to the tenant.

(7) This paragraph applies where the pub-owning business notifies the tenant of a proposal to negotiate a new agreement with the tenant.

(8) A pub-owning business is not required to provide a rent proposal where—

(a) the event in paragraph (6) occurs; and

(b) regulation 19(1) applies in connection with the initial or revised rent.

Contents of the rent proposal

16.—(1) A rent proposal provided under regulation 15 must contain—

(a) a proposal for, or information about the change in, the rent, or money payable in lieu of rent, which is to be paid under the tenancy or licence (“the initial or revised rent”);

(b) where a new tenancy or licence is proposed, any other terms of the tenancy or licence being proposed;

(c) the information specified in Schedule 2; and

(d) any other information which—

(i) the tenant requires to understand or negotiate the initial or revised rent in an informed manner; and

(ii) the pub-owning business would reasonably be expected to give to the tenant.

(2) A pub-owning business is not required to comply with paragraph (1)(c) in respect of any information in Schedule 2—

(a) which—

(i) has already been provided to a tied pub tenant in connection with the tenancy or licence; and

(ii) has not changed materially since it was provided; or

(b) which is not reasonably available to the pub-owning business.

(3) The pub-owning business must prepare the rent proposal in accordance with the RICS guidance, and the rent proposal, when provided, must be accompanied by written confirmation, from a member or fellow of the RICS, that the proposal has been so prepared.

When the rent proposal must be provided

17.  A rent proposal provided under regulation 15 must be provided—

(a) where regulation 15(2) applies, within the period of 21 days beginning with the day on which the tenant requests the proposal;

(b) where regulation 15(3) applies, within the period of 21 days beginning with the day on which the court makes an order for the grant of a new tenancy;

(c) where regulation 15(4) applies, within the period of 2 months beginning with the day on which the tenant makes the request for a new tenancy under section 26 of the Landlord and Tenant Act 1954;

(d) where regulation 15(5) applies, within the period of 21 days beginning with the day on which the court makes an order for the grant of a new tenancy;

(e) where regulation 15(6) applies, within the period of 21 days beginning with the day on which the request is made;

(f) where regulation 15(7) applies, before the tenant considers the advice referred to in regulation 10(2)(a).

Further information and advice in relation to the rent proposal

18.—(1) The pub-owning business must—

(a) comply with any reasonable request which is made by the tied pub tenant, or a person acting on behalf of the tenant, for information which—

(i) is relevant to the negotiation of the initial or revised rent; or

(ii) may help the tenant to understand that rent, or

(b) provide to the tied pub tenant, within the period of 7 days beginning with day on which the request was received, a reasonable explanation why the information requested is not provided.

(2) The pub-owning business must advise the tied pub tenant to obtain independent professional advice in connection with the initial or revised rent before the tenant agrees that rent.

PART 4 Duties of pub-owning businesses in their dealings with their tied pub tenants: rent assessments

Duty to conduct a rent assessment or an assessment of money payable in lieu of rent

19.—(1) A pub-owning business—

(a) must conduct a rent assessment or an assessment of money payable in lieu of rent in connection with a rent review which is required under the terms of a tenancy or licence of a tied pub of which it is the landlord; and

(b) must conduct a rent assessment or an assessment of money payable in lieu of rent where a tied pub tenant of such a pub requests it under paragraph (2).

(2) A tied pub tenant may request a rent assessment or an assessment of money payable in lieu of rent if —

(a) such an assessment has not ended within the period of 5 years ending with the date of the request;

(b) there is a significant increase in the price at which a product or service which is subject to a product or service tie is supplied to the tied pub tenant; or

(c) the tied pub tenant demonstrates that a trigger event has occurred by means of a written analysis of the level of trading which is forecast for a period of 12 months or more beginning with the day on which the tenant makes the request.

(3) A request under paragraph (2) must be made in writing and—

(a) in the case of a request made under paragraph (2)(b), must be received by the pub-owning business within the period of 14 days beginning with the day on which the tied pub tenant receives notification of the significant increase; and

(b) in the case of a request made under paragraph (2)(c), must be received by the pub-owning business within the period of 14 days beginning with the day on which the tied pub tenant sends the written analysis referred to in that paragraph to the pub-owning business.

(4) The following are not rent reviews for the purposes of paragraph (1)(a)—

(a) an annual or other periodic indexation of rent;

(b) a change in rent in connection with the receipt of a corresponding benefit from the pub-owning business;

(c) a change in rent in connection with the freeing of the tied pub tenant from a product or service tie;

(d) any discussions in respect of changes in rent which are carried out within a review of the business provided for under the terms of the tenancy or licence.

The rent assessment proposal

20.—(1) Where a pub-owning business is required to conduct a rent assessment or an assessment of money payable in lieu of rent under regulation 19(1), the pub-owning business must send the tied pub tenant a document (“the rent assessment proposal”) containing—

(a) a proposal for the rent or money payable in lieu of rent which is to be paid under the tenancy or licence at the end of the assessment (the “new rent”);

(b) the information specified in Schedule 2, if it is reasonably available to the pub-owning business;

(c) such other information as may be required to ensure that the tenant is able to negotiate, in an informed manner, the new rent.

(2) The rent assessment proposal must be provided to the tied pub tenant—

(a) in the case of an assessment conducted under regulation 19(1)(a), at least 6 months before the rent review date;

(b) in the case of an assessment conducted under regulation 19(1)(b), within the period of 21 days beginning with the day on which the tied pub tenant requests the assessment.

(3) The pub-owning business must prepare the rent assessment proposal in accordance with the RICS guidance and the rent assessment proposal, when provided, must be accompanied by written confirmation from a member or fellow of the RICS that the rent assessment proposal has been so prepared.

Conduct of the rent assessment or the assessment of money payable in lieu of rent

21.—(1) For the purposes of these Regulations, a rent assessment or an assessment of money payable in lieu of rent begins on the day on which a pub-owning business provides a rent assessment proposal to the tied pub tenant in accordance with regulation 20.

(2) A rent assessment or an assessment of money payable in lieu of rent must be conducted in accordance with the RICS guidance.

(3) During the rent assessment or assessment of money payable in lieu of rent, the pub-owning business must—

(a) comply with any reasonable request for further information which is relevant for the negotiation of the new rent and which is made by the tied pub tenant or by a person acting on behalf of the tied pub tenant; or

(b) provide to the tied pub tenant, as soon as reasonably practicable, a reasonable explanation why the information requested is not provided.

(4) Where a pub-owning business is required to conduct an assessment under regulation 19(1)(a), it must ensure that a person who is involved in the preparation of the rent assessment proposal on its behalf visits the tied pub within the period of 3 months ending on the day on which the rent assessment proposal is provided to the tied pub tenant for the purpose of gathering information about the location and layout of the pub.

(5) The pub-owning business must advise the tied pub tenant to obtain independent professional advice in connection with the new rent before the tenant agrees that rent.

(6) Paragraph (7) applies at the end of the assessment where—

(a) the rent, or money payable in lieu of rent, payable under the tenancy or licence is adjusted as a result of the assessment; and

(b) either—

(i) the rent review date has passed; or

(ii) more than 6 months have elapsed since the day on which the rent assessment proposal was provided to the tied pub tenant.

(7) Before the new rent is agreed by the tied pub tenant, the tied pub tenant and the pub-owning business must agree, in writing—

(a) that, where the recoverable rent is a positive amount, it is to be paid by the pub-owning business to the tied pub tenant;

(b) that, where the recoverable rent is a negative amount, it is to be paid by the tied pub tenant to the pub-owning business, and

(c) arrangements for making any payment under sub-paragraph (a) or (b).

(8) The tied pub tenant’s agreement to the new rent must be given in writing.

(9) A member or fellow of the RICS must confirm that the rent assessment or the assessment of money payable in lieu of rent has been conducted in accordance with guidance issued by that institution.

(10) The “recoverable rent” means—

(a) the amount of the rent, or money payable in lieu of rent, which is payable as a result of regulation 22(1)(a) in respect of the rent recovery period; less

(b) the amount of the rent, or money payable in lieu of rent, which would have been payable in respect of that period if (instead of the rent or money payable in lieu of rent mentioned in sub-paragraph (a)) the new rent had been payable in respect of that period.

(11) The “rent recovery period” is the period which—

(a) begins—

(i) in the case of an assessment conducted under regulation 19(1)(a), with the rent review date;

(ii) in the case of an assessment conducted under regulation 19(1)(b), with the day after the period of 6 months beginning with the day on which the rent assessment proposal was provided to the tied pub tenant; and

(b) ends with the day on which the assessment ends.

(12) In these Regulations, the “rent review date” is the date from which the terms of the tenancy or licence require the rent, or money payable in lieu of rent, to be payable following a rent review.

Effect of the rent assessment or the assessment of money payable in lieu of rent

22.—(1) Where a pub-owning business conducts an assessment under regulation 19(1)—

(a) the rent, or money payable in lieu of rent, which is payable under the tenancy or licence at the beginning of the assessment remains payable until the end of the assessment; and

(b) the new rent is payable with effect from the day after the end of that assessment.

(2) For the purposes of these Regulations, a rent assessment or an assessment of money payable in lieu of rent ends—

(a) in the case of an assessment which is conducted under regulation 19(1)(a)—

(i) on the rent review date;

(ii) if later, on the date on which the tied pub tenant and the pub-owning business agree the new rent in writing;

(b) in the case of an assessment which is conducted under regulation 19(1)(b)—

(i) at the end of the period of 6 months beginning with the day on which the rent assessment proposal was provided to the tied pub tenant; or

(ii) if later, on the date on which the tied pub tenant and the pub-owning business agree the new rent in writing.

(3) But where—

(a) the tied pub tenant gives an MRO notice; and

(b) before the assessment is agreed, the tied pub tenant and the pub-owning business enter into a tenancy or licence,

the assessment ends on the day on which the tenancy or licence is entered into.

PART 5 Market rent only option: MRO notice

The MRO notice

23.—(1) A tied pub tenant may give a notice (an “MRO notice”) to the pub-owning business where—

(a) the event specified in regulation 24 or 25 occurs; or

(b) the event specified in regulation 26 or 27 occurs and the investment exception does not apply (see regulation 56).

(2) The MRO notice must be—

(a) in writing; and

(b) received by the pub-owning business within the period of 21 days beginning with the day on which the event mentioned in paragraph (1) occurred.

(3) The MRO notice must include—

(a) the tenant’s name, postal address, email address (if any) and telephone number;

(b) the date on which the notice is being sent;

(c) the name of the tied pub in relation to which the request for an offer of a market rent only option is being made and its address;

(d) the date on which the event mentioned in paragraph (1) occurred; and

(e) a description of that event which, in the tenant’s opinion, demonstrates that it is an event specified in regulation 24, 25, 26 or 27.

(4) A tied pub tenant may not give an MRO notice to the pub-owning business where—

(a) the tenant has already given an MRO notice under paragraph (1); and

(b) the MRO procedure(17) which relates to that notice has not ended.

A significant increase in the price of a product or service

24.  The event specified in this regulation is that the tied pub tenant receives notification of a significant increase in the price at which a product or service which is subject to a product or service tie is supplied to the tied pub tenant.

A trigger event

25.—(1) The event specified in this regulation is that the tied pub tenant sends the pub-owning business, during the relevant period, a relevant analysis which demonstrates that a trigger event has occurred.

(2) In paragraph (1)—

(a) “the relevant period” means the period of 56 days beginning with the day after that on which the trigger event occurred;

(b) “a relevant analysis” means a written analysis of the level of trading which is forecast for a period beginning with the day on which the trigger event occurred and ending at least 12 months later.

The renewal of a pub arrangement

26.—(1) The event specified in this regulation is that a pub arrangement is renewed.

(2) For the purposes of section 43(6) of SBEEA 2015 (and so of this regulation), a protected 1954 Act tenancy is renewed between the tied pub tenant and the pub-owning business—

(a) on the day on which the tied pub tenant receives the pub-owning business’s notice under section 25(1) of the Landlord and Tenant Act 1954; or

(b) on the day on which the landlord receives the tied pub tenant’s request under section 26 of that Act.

(3) For the purposes of section 43(6) of SBEEA 2015 (and so of this regulation), a tenancy which is not a protected 1954 Act tenancy is renewed between the tied pub tenant and the pub-owning business on the first day on which the tenancy may be renewed under the terms of the tenancy.

A rent assessment or an assessment of money payable in lieu of rent

27.  The event specified in this regulation is that the tied pub tenant receives a rent assessment proposal sent by the pub-owning business under regulation 20(1) in respect of the tenancy or licence.

PART 6 Market rent only option: procedure to be followed in connection with an offer

Arrangements during the MRO procedure: rent etc

28.—(1) Where a tied-pub tenant gives an MRO notice, the pub-owning business must not—

(a) exercise any right to recover any rent, or money payable in lieu of rent, which subsequently becomes payable under the tenancy or licence if and to the extent that it is payable at a higher rate than was payable when the notice was given; or

(b) exercise any right to—

(i) make subject to a product or service tie any product or service that was not subject to such a tie at when the notice was given, or

(ii) disapply a product or service tie from a product or service that was subject to such a tie when the notice was given.

(2) Paragraph (1) does not apply where—

(a) the MRO notice states that the event specified in regulation 26 has occurred; and

(b) the tied pub is occupied under a protected 1954 Act tenancy.

(3) Paragraph (1) ceases to apply at the end of the MRO procedure if the tied pub tenant and the pub-owning business have not by then agreed a market rent only option.

Effect of tenant’s notice

29.—(1) This regulation applies where a pub-owning business has received an MRO notice.

(2) The pub-owning business must send a written acknowledgement to the tied pub tenant as soon as reasonably practicable.

(3) Where the pub-owning business agrees with the tied pub tenant’s opinion under regulation 23(3)(e), the pub-owning business must send the tenant—

(a) a statement confirming its agreement;

(b) where the MRO notice relates to a tenancy, a proposed tenancy which is MRO-compliant;

(c) where the MRO notice relates to a licence, a proposed licence which is MRO-compliant.

(4) Where the pub-owning business disagrees with the tied pub tenant’s opinion under regulation 23(3)(e), it must send the tenant—

(a) a statement confirming its disagreement; and

(b) its reasons for disagreeing.

(5) A response under paragraph (3) or (4) is a “full response”.

(6) The pub-owning business must send a full response within the period of response.

(7) The “period of response” is, subject to paragraphs (8) and (9), the period of 28 days which begins with the day on which the pub-owning business receives an MRO notice.

(8) Where—

(a) the tenant gives an MRO notice that the event specified in regulation 26 has occurred;

(b) the event is a renewal by virtue of regulation 26(2)(a); and

(c) the pub-owning business—

(i) opposes the tenant’s application for a new tenancy under section 24(1) of the Landlord and Tenant Act 1954; or

(ii) applies to the court under section 29(2) of that Act, for an order for the termination of the tenancy,

the “period of response” is the period of 28 days which begins with the day on which the court makes an order for the grant of a new tenancy.

(9) Where the tenant gives an MRO notice that the event specified in regulation 26 has occurred, and the event is a renewal by virtue of regulation 26(2)(b), the “period of response” is the period of 28 days which begins —

(a) at the end of the period of two months after the day on which the tenant makes a request for a new tenancy under section 26 of the Landlord and Tenant Act 1954; or

(b) where the pub-owning business opposes the tenant’s application for a new tenancy under section 24(1) of that Act, or applies to the court under section 29(2) of that Act, on the day on which the court makes an order for the grant of a new tenancy.

Terms and conditions required in proposed MRO tenancy

30.—(1) Paragraph (2) applies where—

(a) a tied pub tenant is subject to a tenancy (“the existing tenancy”) granted by the pub-owning business;

(b) the tied pub tenant gives an MRO notice to the pub-owning business; and

(c) the pub-owning business sends a proposed tenancy (“the proposed MRO tenancy”) to the tied pub tenant as part of a full response under regulation 29(3) or a revised response under regulation 33(2) or otherwise during the negotiation period(18).

(2) Where the MRO notice states that the event specified in regulation 24, 25 or 27 has occurred, the proposed MRO tenancy is MRO-compliant only if it contains provision the effect of which is that its term is for a period that is at least as long as the remaining term of the existing tenancy.

Terms and conditions regarded as unreasonable in relation to proposed MRO tenancy etc

31.—(1) Paragraph (2) applies where—

(a) a tied pub tenant is subject to a tenancy (“the existing tenancy”) granted by the pub-owning business;

(b) the tied pub tenant gives an MRO notice to the pub-owning business; and

(c) the pub-owning business sends a proposed tenancy (“the proposed MRO tenancy”) to the tied pub tenant as part of a full response under regulation 29(3) or a revised response under regulation 33(2) or otherwise during the negotiation period.

(2) The terms and conditions of the proposed MRO tenancy, taken together with any other contractual agreement entered into by the tied pub tenant with the pub-owning business in connection with the tenancy, are to be regarded as unreasonable for the purposes of section 43(4) of SBEEA 2015 if they—

(a) include a break clause in relation to the MRO tenancy which is exercisable only by the pub-owning business;

(b) impose a service tie in respect of insurance other than buildings insurance in connection with the premises to which the proposed MRO tenancy relates; or

(c) are terms which are not common terms in agreements between landlords and pub tenants who are not subject to product or service ties.

(3) Paragraph (4) applies where—

(a) the conditions in paragraph (1)(a) to (c) are met, and

(b) the existing tenancy is a protected 1954 Act tenancy.

(4) The terms and conditions of the proposed MRO tenancy, taken together with any other contractual agreement entered into by the tied pub tenant with the pub-owning business in connection with the tenancy, are to be regarded as unreasonable for the purposes of section 43(4) of SBEEA 2015 if they exclude the provisions of sections 24 to 28 of the Landlord and Tenant Act 1954 in relation to the proposed MRO tenancy.

(5) Paragraph (6) applies where—

(a) a tied pub tenant is subject to a licence granted by the pub-owning business;

(b) the tied pub tenant gives an MRO notice to the pub-owning business; and

(c) the pub-owning business sends a proposed licence (“the proposed MRO licence”) to the tied pub tenant as part of a full response under regulation 29(3) or a revised response under regulation 33(2) or otherwise during the negotiation period.

(6) The terms and conditions of the proposed MRO licence, taken together with any other contractual agreement entered into by the tied pub tenant with the pub-owning business in connection with the licence, are to be regarded as unreasonable for the purposes of section 43(4) of SBEEA 2015 if they impose a service tie in respect of insurance other than buildings insurance in connection with the premises to which the licence relates.

Failure to acknowledge the tenant’s notice, provide a full response etc.

32.—(1) This regulation applies where a pub-owning business has received an MRO notice.

(2) Where—

(a) the pub-owning business does not send a full response under regulation 29(3) or (4) within the period of response;

(b) the tied pub tenant considers that the pub-owning business’s full response does not comply with other requirements of regulation 29; or

(c) the tied pub tenant disagrees with the pub-owning business’s statement under regulation 29(4)(a),

the tenant or the pub-owning business may refer the matter to the Adjudicator(19).

(3) Where the tied pub tenant or the pub-owning business intends to make a referral under paragraph (2), the tenant and the pub-owning business must notify each other, in writing, of their intention to do so before the referral is made.

(4) A referral under paragraph (2) must be made within the period of 14 days beginning with the day after the end of the period of response.

MRO procedure where a matter is referred to the Adjudicator in connection with the full response

33.—(1) Where—

(a) a matter is referred to the Adjudicator under regulation 32(2)(b) or (c); and

(b) the Adjudicator (or a person appointed by the Adjudicator under regulation 58(2)(b) or 60(4)(b)) rules that no failure has occurred in connection with the full response,

the full response provided by the pub-owning business under regulation 29(3) or (4) is deemed to have been received by the tied pub tenant on the day of the Adjudicator’s ruling.

(2) Where—

(a) a matter is referred to the Adjudicator under regulation 32(2)(a) to (c); and

(b) the Adjudicator rules that the pub-owning business must provide a revised response to the tied pub tenant,

the pub-owning business must provide that response within the period of 21 days beginning with the day of the Adjudicator’s ruling or by such a day as may be specified in the Adjudicator’s ruling.

(3) A “revised response” is a response which includes the information mentioned in regulation 29(3)(a) to (c).

The negotiation period

34.—(1) This regulation applies where—

(a) the pub-owning business has provided the tenant with a full response under regulation 29(3) or a revised response under regulation 33(2); and

(b) the tied pub tenant continues to wish to pursue a market rent only option.

(2) The tied pub tenant and the pub-owning business must, until the end of the MRO procedure, seek to agree a tenancy or licence that is MRO-compliant.

(3) Where—

(a) the pub-owning business proposes a tenancy or licence to the tied pub tenant during the negotiation period;

(b) the tied pub tenant does not, during that period, communicate to the pub-owning business, in writing, a decision to accept or reject the proposal;

(c) the tenant does not make a reference under regulation 35 in relation to the proposed tenancy or licence; and

(d) the time allowed under that regulation for making such a reference has expired,

the proposal lapses on the day after that on which the time so allowed expires.

(4) The negotiation period is the period of 56 days beginning with the day on which the tied pub tenant receives—

(a) a full response under regulation 29(3); or

(b) if later, a revised response under regulation 33(2).

Failure to agree: right to refer to the Adjudicator or independent assessor

35.—(1) Where—

(a) the pub-owning business sends a subsequent proposed tenancy or licence to the tied pub tenant during the negotiation period; and

(b) the tenant considers that the tenancy or licence is not MRO-compliant,

the tenant may refer the matter to the Adjudicator within the period of 14 days beginning with the day after the day on which the subsequent proposed tenancy is received.

(2) A “subsequent proposed tenancy or licence” means a tenancy or licence which the pub-owning business has proposed to the tied pub tenant during the negotiation period.

(3) Where the pub-owning business sends a proposed tenancy or licence to the tied pub tenant (whether as part of a full response under regulation 29(3) or a revised response under regulation 33(2) or otherwise during the negotiation period) the tied pub tenant may refer the proposed MRO rent to an independent assessor(20) by sending a notice to the pub-owning business, in writing, of the tenant’s intention to do so within the period—

(a) beginning with the day 28 days after the day on which the negotiation period begins; and

(b) ending with the day 7 days after the day on which that period ends.

(4) Where the tied pub tenant refers a matter to the Adjudicator under paragraph (1), no reference to an independent assessor may be made under paragraph (3) in relation to the same tenancy or licence until the matter has been determined.

(5) Where the tied pub tenant refers the proposed MRO rent under a tenancy or licence to an independent assessor under paragraph (3), no reference may subsequently be made under paragraph (1) in relation to the same tenancy or licence.

(6) No referral may be made under this regulation at any time after the end of the MRO procedure.

PART 7 Market rent only option: independent assessor

Appointment of the independent assessor

36.—(1) The Adjudicator must specify the criteria which a person must satisfy in order to be appointed as an independent assessor.

(2) The following provisions of this regulation apply where a tied pub tenant has sent a notice to the pub-owning business under regulation 35(3).

(3) The tenant and the pub-owning business must, within the period of 28 days beginning with the day on which the pub-owning business receives the tied pub tenant’s notice under regulation 35(3) —

(a) jointly, appoint an independent assessor; or

(b) notify the Adjudicator in writing of their failure to make the appointment.

(4) Where the Adjudicator receives notification under paragraph (3)(b), the Adjudicator must, within 14 days of the notification—

(a) appoint an assessor; and

(b) notify the tenant and the pub-owning business of the appointment.

(5) The pub-owning business and the tied pub tenant must pay, in equal shares, the fees charged by the independent assessor in connection with the determination of the market rent(21).

Independent assessor: procedure

37.—(1) The tied pub tenant must, within the period of 28 days beginning with the day after the day on which an independent assessor is appointed under regulation 36, provide to the independent assessor the proposed tenancy or licence to which proposed MRO rent relates.

(2) Within the period mentioned in paragraph (1)—

(a) the tenant must provide to the independent assessor all documents listed in Schedule 3 which the tenant holds;

(b) the pub-owning business must provide to the independent assessor all documents listed in Schedule 3 which the pub-owning business holds.

(3) The independent assessor must—

(a) determine the market rent associated with the tenancy or licence provided under paragraph (1); and

(b) communicate that determination to the tenant and the pub-owning business.

(4) The independent assessor’s determination of the market rent—

(a) must have regard to the documents listed in Schedule 3; and

(b) must be conducted in accordance with guidance issued by the Adjudicator, as amended from time to time.

(5) The tenant and the pub-owning business must provide to the independent assessor any other information which they consider relevant to the determination within the period of 28 days beginning with the day after the day on which the independent assessor is appointed.

(6) The independent assessor may require the tenant and the pub-owning business to provide any other documents or information held by them which the independent assessor considers relevant for the determination.

(7) The tenant and the pub-owning business must comply with any reasonable request made under paragraph (6) as soon as reasonably practicable.

(8) Where the tenant or the pub-owning business—

(a) provides information under paragraph (2) or (5); or

(b) complies, under paragraph (7), with a request for other documents or information,

they must also provide any such information to each other within the periods specified in those paragraphs.

(9) The independent assessor must communicate a determination of the market rent to the tied pub tenant and the pub-owning business within the period of 21 days beginning with the day after the end of the period described in paragraph (5).

(10) Where the pub-owning business or the tied pub tenant considers that—

(a) the rent determined under paragraph (3) is not the market rent; or

(b) the independent assessor has failed to comply with paragraph (4),

either of them may refer the matter to the Adjudicator within the period of 14 days beginning with the day on which the determination was communicated to them.

(11) Where the independent assessor has not communicated the determination within the period required by paragraph (9), the tenant or the pub-owning business may refer the matter to the Adjudicator within the period of 14 days beginning with the day after the end of that period.

(12) Paragraph (13) applies where—

(a) the independent assessor communicates a determination within the period required by paragraph (9); and

(b) neither the tied pub tenant nor the pub-owning business refers the matter to the Adjudicator under paragraph (10).

(13) The tied pub tenant must, by notice in writing to the pub-owning business, accept or reject the determination communicated under paragraph (12)(a) and the associated tenancy or licence provided to the assessor under paragraph (1) within the period of 21 days beginning with—

(a) the day on which the determination was communicated to the tied pub tenant; or

(b) if later, the day on which any rent assessment, or assessment of money payable in lieu of rent, being carried out in respect of the tenancy or licence ends.

(14) If the tied pub tenant does not comply with paragraph (13), the tenant is treated as having rejected the determination and the associated tenancy or licence on the final day of the period mentioned in that paragraph.

MRO procedure where a referral is made to the Adjudicator in connection with the independent assessor

38.—(1) This regulation applies where a matter is referred to the Adjudicator in connection with the independent assessor’s determination of the market rent.

(2) Where the Adjudicator (or a person appointed by the Adjudicator under regulation 58(2)(b) or 60(4)(b))—

(a) directs the independent assessor under regulation 59(3)(b)(ii) to make a second determination of the market rent; or

(b) appoints another independent assessor under regulation 59(3)(b)(iii) or (6)(c) to determine the market rent,

the independent assessor must communicate the determination of the market rent to the tied pub tenant and the pub-owning business within the period of 21 days beginning with the day on which the direction or the appointment, as the case may be, occurred.

(3) Paragraphs (4) and (5) apply where—

(a) the Adjudicator (or a person appointed by the Adjudicator under regulation 58(2)(b) or 60(4)(b)) makes a determination by virtue of regulation 59(3)(b)(ii) or (iii), (6)(b) or (c) or (7)(b); and

(b) the independent assessor determines the market rent in accordance with that determination.

(4) Where the pub-owning business or the tied pub tenant considers that—

(a) the rent determined is not the market rent; or

(b) the independent assessor has failed to comply with regulation 37(4),

either of them may refer the matter to the Adjudicator within the period of 14 days beginning with the day on which the determination was communicated to them.

(5) But if the tenant or the pub-owning business does not refer the matter under paragraph (4), the tied pub tenant must, by notice in writing to the pub-owning business, accept or reject the independent assessor’s determination and the associated tenancy or licence provided to the assessor under regulation 37(1) within the period of 21 days beginning with—

(a) the day on which the determination of the independent assessor is communicated to the tenant; or

(b) if later, the day on which any rent assessment, or assessment of money payable in lieu of rent, being carried out in respect of the tenancy or licence ends.

(6) If the tied pub tenant does not comply with paragraph (5), the tenant is treated as having rejected the determination and the associated tenancy or licence on the final day of the period mentioned in that paragraph.

PART 8 End of the MRO procedure

End of the MRO procedure

39.—(1) This regulation applies where a tied pub tenant has given an MRO notice.

(2) Where the tied pub tenant communicates to the pub-owning business, in writing, a decision to accept a tenancy or licence proposed by the pub-owning business (including where the tenant accepts a tenancy or licence under regulation 37(13), 38(5), 59(2), (5) or (9)), the tenant and the pub-owning business must, as soon as reasonably practicable, enter into the tenancy or licence.

(3) Where the tied pub tenant and the pub-owning business fail to enter into a tenancy or licence in compliance with paragraph (2), either of them may refer the matter to the Adjudicator.

(4) The MRO procedure ends on the earliest of the following days—

(a) where the tied pub tenant and the pub-owning business enter into a tenancy or licence, on the day on which the tenancy or licence is entered into;

(b) where the tenancy or licence under which the tied pub is occupied at the time the MRO notice is given ends, on the day on which the tenancy or licence ends;

(c) where—

(i) the negotiation period ends;

(ii) the tied pub tenant does not, during that period, communicate to the pub-owning business, in writing, a decision to accept a tenancy or licence proposed by the pub-owning business;

(iii) the tenant does not make a reference under regulation 35 in relation to a tenancy or licence proposed by the pub-owning business during that period; and

(iv) the time allowed under that regulation for making such a reference has expired,

on the day on which the negotiation period ends or, if later, on the day after that on which time expires as mentioned in paragraph (iv);

(d) where the tied pub tenant rejects a proposed tenancy or licence under regulation 37(13) or (14), 38(5) or (6), or 59(2), (5), (9) or (10), on the day on which the tenant rejects that proposal;

(e) where—

(i) a matter is referred to the Adjudicator under regulation 32(2); and

(ii) the Adjudicator (or a person appointed by the Adjudicator under regulation 58(2)(b) or 60(4)(b)) does not consider that the circumstances are such that the pub-owning business must offer the tenant a market rent only option,

on the day of the Adjudicator’s ruling;

(f) where—

(i) a matter is referred in connection with any other aspect of the MRO procedure; and

(ii) the Adjudicator rules that the MRO procedure ends on a specified day,

on the day so specified;

(g) where the pub-owning business conducts a rent assessment or an assessment of money payable in lieu of rent, on the day on which the tenant agrees, in writing, the new rent.

Disputes about rent etc payable during MRO procedure

40.  Where the tied pub tenant and the pub-owning business disagree as to whether an amount has become recoverable by the pub-owning business at the end of the MRO procedure as a result of regulation 28(3), either of them may refer the matter to the Adjudicator.

PART 9 Business development managers and compliance officers

Business development managers

41.—(1) The pub-owning business must ensure that each of its business development managers—

(a) receives a copy of these Regulations before the business development manager liaises with tied pub tenants over any matters relating to the Regulations;

(b) is provided with appropriate training in relation to the requirements of these Regulations at least once every 12 months; and

(c) deals with tied pub tenants in a manner that is consistent with the principle referred to in section 42(3)(a) of SBEEA 2015.

(2) A pub-owning business must provide to its tied pub tenants information about—

(a) the role of the business development manager; and

(b) the support and guidance which the business development manager will provide to the tenants.

(3) Where a business development manager is responsible for conducting rent assessments or assessments of money payable in lieu of rent, the pub-owning business must ensure that the business development manager receives appropriate training before conducting any such assessment.

(4) A pub-owning business must ensure that the business development manager—

(a) makes appropriate notes of any discussions with tied pub tenants in connection with—

(i) rent proposals;

(ii) rent assessments or assessments of money payable in lieu of rent;

(iii) repairs to the tied pub premises;

(iv) matters relating to the tied pub tenants’ current or future business plans;

(b) provides tied pub tenants with a record of any such discussions within the period of 14 days beginning with the day on which the discussion occurred; and

(c) requests that the tenant respond to the business development manager if the tenant does not agree with any aspect of the record within the period of 7 days beginning with the day on which the record was received.

(5) A pub-owning business must specify, in a document published by the pub-owning business—

(a) its commitment towards the continuous professional development and improvement of its business development managers; and

(b) how it proposes to fulfil such a commitment, referring where appropriate to relevant qualifications and training.

(6) A “business development manager” means—

(a) a person who is employed as such by a pub-owning business; or

(b) any other person who represents the pub-owning business in negotiations with tied pub tenants in connection with the matters listed in paragraph (4)(a).

Duty to appoint a compliance officer

42.—(1) A pub-owning business must appoint a suitably qualified employee to be the compliance officer, whose role is to verify the pub-owning business’s compliance with these Regulations.

(2) The pub-owning business must ensure that the compliance officer—

(a) is provided with the resources necessary to carry out his or her role, including information relating to the pub-owning business’s obligations under these Regulations;

(b) is entitled to contact the business development managers to discuss matters relating to those obligations;

(c) makes himself or herself reasonably available to tied pub tenants and any other persons acting on their behalf who may have a query relating to these Regulations;

(d) is independent of, and is not managed by, the business development managers;

(e) is entitled to discuss with tied pub tenants the reasons for any decisions made by the pub-owning business under these Regulations;

(f) is entitled to discuss with the Adjudicator matters relating to the pub-owning business’s compliance with these Regulations;

(g) for the purposes of the annual compliance report, maintains records of the training received by the business development managers.

Annual compliance report

43.—(1) A pub-owning business must ensure that the compliance officer submits an annual compliance report to the Adjudicator relating to each financial year(22).

(2) The annual compliance report must be submitted to the Adjudicator within the period of 4 months beginning with the day after the end of the financial year to which the report relates.

(3) Paragraph (4) applies in relation to a person who, immediately before these Regulations come into force, is the landlord of 500 or more tied pubs.

(4) The person must ensure that the first annual compliance report required under paragraph (1) relates to the period—

(a) beginning with the day on which these Regulations come into force; and

(b) ending on the last day of the first subsequent full financial year.

(5) Before the annual compliance report is submitted to the Adjudicator under paragraph (2), the report must be approved—

(a) by the Chair of the Audit Committee; or

(b) if the pub-owning business does not have an Audit Committee, by the non-executive director of the pub-owning business responsible for carrying out the functions normally associated with an Audit Committee, or, in the absence of any such non-executive director, by the pub-owning business’s Chief Executive Officer, Managing Director or equivalent.

(6) The annual compliance report must include a detailed and accurate account of —

(a) the pub-owning business’s compliance with these Regulations in the period to which the report relates;

(b) any instances where a breach or alleged breach of these Regulations has been identified by a tied pub tenant;

(c) the steps taken in relation to any such breach, or alleged breach; and

(d) any steps taken during the period to which the report relates to ensure compliance with these Regulations, including details of training and guidance offered to employees in connection with the Regulations.

(7) The pub-owning business must ensure—

(a) that the compliance officer provides such other reports as are necessary to ensure that the pub-owning business’s Audit Committee has an understanding of the pub-owning business’s compliance with these Regulations; or

(b) that, if the pub-owning business does not have an Audit Committee, the compliance officer reports directly to the non-executive director of the pub-owning business responsible for carrying out the functions normally associated with an Audit Committee, or, in the absence of any such non-executive director, to the pub-owning business’s Chief Executive Officer, Managing Director or equivalent.

(8) A summary of the annual compliance report must be included in the pub-owning business’s annual report.

(9) If the pub-owning business does not produce an annual report, the summary of the annual compliance report must be published clearly and prominently on the pub-owning business website (if any) within the period of 4 months beginning with the day after the end of the financial year to which the report relates.

Provisions of these Regulations which are not arbitrable

44.  For the purposes of section 48 of SBEEA 2015 (referral for arbitration by tied pub tenants) the following provisions are not arbitrable—

(a) regulation 41(1)(b), (3) and (5);

(b) regulation 42;

(c) regulation 43.

PART 10 Miscellaneous

Pub-owning business to notify Adjudicator and tied pub tenants of status under these Regulations

45.—(1) A person who, immediately before the commencement date, is the landlord of 500 or more tied pubs, must notify that fact to—

(a) the Adjudicator; and

(b) its tied pub tenants,

as soon as reasonably practicable after the commencement date.

(2) A person who, at any time on or after the commencement date, becomes the landlord of 500 or more tied pubs must, as soon as reasonably practicable after that date, notify the Adjudicator and its tied pub tenants, of that fact.

(3) A person who—

(a) gives notice under paragraph (1) or (2); and

(b) subsequently ceases to be the landlord of 500 or more tied pubs,

must, as soon as reasonably practicable, notify the Adjudicator and its tied pub tenants, of that fact.

Insurance

46.—(1) Paragraphs (2) to (4) apply where a pub-owning business intends to charge a tied pub tenant an amount (“the insurance charge”) in respect of premiums for insurance in respect of the premises to which the tenancy or licence relates.

(2) The pub-owning business must inform the tied pub tenant whether—

(a) the insurance charge exceeds the amount payable by the pub-owning business in respect of premiums for insurance in respect of the premises under the insurance policy and, if so, the amount of that excess; and

(b) the pub-owning business, or any group undertaking(23) in relation to the pub-owning business, receives, or expects to receive, any commission or rebate in connection with that policy.

(3) Before the pub-owning business purchases, or renews, an insurance policy in respect of the premises, the pub-owning business must—

(a) provide to the tenant full details of that policy, including the cover which is provided, the charges payable and any contributions towards a claim which the tenant is required to make;

(b) provide to the tenant any additional information required to allow the tenant to compare the policy with other suitable, comparable policies which may be available; and

(c) where the tied pub tenant notifies the pub-owning business that it has identified a suitable and comparable alternative policy (the “tenant’s alternative policy”), consider that policy.

(4) Where the pub-owning business is required to provide information under paragraph (3), the pub-owning business must do so—

(a) at least 21 days before the day on which the policy has effect; or

(b) if earlier, at least 21 days before the day on which the pub-owning business enters into the insurance.

(5) Paragraph (6) applies where the insurance charge is higher than the amount which it would be if the pub-owning business entered into the tenant’s alternative policy (the “alternative insurance charge”).

(6) The pub-owning business must—

(a) purchase the tenant’s alternative policy; or

(b) agree, in writing, that any difference between the insurance charge and the alternative insurance charge is not payable by the tenant.

Gaming machines

47.  A pub-owning business—

(a) must not enter into a new tenancy or licence; and

(b) must not renew a tenancy or a licence,

which requires a tied pub tenant to purchase or rent gaming machines.

Blank template for profit and loss account

48.  Where the tied pub tenant so requests, the pub-owning business must provide to the tenant a blank template for completing the tied pub’s profit and loss account.

Sale of freehold or long leasehold

49.—(1) Where the pub-owning business is aware that the holder of the freehold, or the superior landlord, of the premises to which the tenancy or licence relates has—

(a) taken any steps to advertise the sale of the freehold or the leasehold;

(b) placed the freehold or the leasehold on the market;

(c) employed an agent to sell the freehold or the leasehold; or

(d) entered into an agreement to sell the freehold or the leasehold,

the pub-owning business must comply with paragraph (2) as soon as reasonably practicable.

(2) The pub-owning business must provide to the tied pub tenant—

(a) details of any arrangements which have been made of the kind mentioned in paragraph (1)(a) to (c); and

(b) where an agreement of the kind mentioned in paragraph (1)(d) has been entered into, the name and address of the buyers.

(3) The pub-owning business is not required to provide the information under paragraph (2)(a)—

(a) if the sale is part of a sale and leaseback transaction; or

(b) if a disclosure under that paragraph would breach any obligation under or by virtue of any Act.

Tied pub tenant not to suffer detriment

50.  A pub-owning business must not subject a tied pub tenant to any detriment on the ground that the tenant exercises, or attempts to exercise, any right under these Regulations.

Flow monitoring devices

51.—(1) A pub-owning business must not subject a tied pub tenant to any detriment, or impose any liabilities on the tenant, as a result of any reading taken from a flow monitoring device, without additional evidence in connection with the purchase and stock of alcohol at the tied pub.

(2) A “flow monitoring device” means a device which is at the tied pub at the direction of the pub-owning business—

(a) to measure the amount of alcohol(24) being sold by the tied pub tenant; and

(b) for the purposes of verifying that the tenant does not sell alcohol at the tied pub in contravention of the terms of the tenancy or licence.

PART 11 Extended protection under these Regulations

Extended protection to last until the end of a tenancy

52.  Where a protected 1954 Act tenancy is renewed, the tenancy ends, for the purposes of section 69(5)(a) of SBEEA 2015—

(a) on the date on which the tenancy is renewed; or

(b) if earlier, on the date on which the tenancy was due to expire before it was renewed.

Extended protection to last until a rent assessment is concluded

53.  For the purposes of section 69(5)(b) of SBEEA 2015, a rent assessment or assessment of money payable in lieu of rent is concluded when the tenant and the landlord who is no longer a pub-owning business agree the new rent in writing under regulation 22(3).

PART 12 Exemptions from these Regulations

Short agreements

54.  Where a pub-owning business and a tied pub tenant—

(a) enter into a short agreement (whether before, on or after the commencement date); and

(b) that agreement, together with all other short agreements (if any) previously entered into between the pub-owning business and the tied pub tenant entitle the tenant to occupy the tied pub for a total period of less than 12 months,

regulations 9 to 13 and Parts 3 to 10 of these Regulations do not apply to the dealings of the pub-owning business and the tenant in connection with that agreement.

Pub franchise agreements

55.—(1) The following provisions of these Regulations do not apply to the dealings of a pub-owning business with a tied pub tenant under a pub franchise agreement—

(a) Parts 3 and 4 to 8;

(b) regulation 47; and

(c) paragraphs 20(a) and (b) and 25 of Schedule 1.

(2) A “pub franchise agreement” means an agreement between a pub-owning business and a tied pub tenant for the tenant to occupy the tied pub which—

(a) grants the tied pub tenant a fixed share of turnover or a relevant share of turnover;

(b) requires the pub-owning business to offer marketing, training and other business support to the tied pub tenant;

(c) grants the tied pub tenant a right to use the relevant business model and may require the tenant to pay a fee in respect of the use of that model;

(d) does not require the tied pub tenant to pay to the pub-owning business any other amount in respect of the tenant’s occupation of the tied pub;

(e) does not require the tied pub tenant to make any other payments to the pub-owning business in connection with the supply of products to the tied pub tenant or the services offered to the tenant unless the circumstances in paragraph (3) arise after the parties have entered into the pub franchise agreement; and

(f) grants the tied pub tenant a right to sell the business to a third party at market value.

(3) The circumstances mentioned in paragraph (2)(e) are that—

(a) the tied pub tenant accepts the pub-owning business’s offer to supply, at cost price, a tied product or service which the business has not already agreed to supply under the pub franchise agreement; and

(b) the pub franchise agreement does not require the tenant to accept such an offer.

(4) A “fixed share of turnover” means a percentage of the tied pub’s turnover, being a percentage which is fixed for the duration of the franchise agreement.

(5) A “relevant share of turnover” means a percentage of the tied pub’s turnover which —

(a) is a percentage (“the original percentage”) specified in the agreement; or

(b) is, where the tied pub’s turnover increases beyond one or more thresholds specified in the agreement, the original percentage increased by an amount or amounts specified in the agreement.

(6) “Relevant business model” means a model for doing business at a pub which—

(a) the pub-owning business has used at two or more pubs for a period of 12 months or more;

(b) the pub-owning business can demonstrate has the potential to succeed when applied to the tied pub; and

(c) includes details of intellectual property rights held by the pub-owning business and methods, procedures and other technical and industrial know-how required for its use.

(7) For the purposes of paragraph (6)(b), a relevant business model has the potential to succeed if it has the potential to generate, from the tied pub, a reasonable profit for the tied pub tenant and the pub-owning business.

The investment exception

56.—(1) The investment exception applies where—

(a) a pub-owning business has made a qualifying investment;

(b) the pub-owning business and the tied pub tenant have entered into an investment agreement in relation to the qualifying investment; and

(c) the investment period has not ended.

(2) A “qualifying investment” is an investment in the premises of a tied pub—

(a) which is made in connection with a project which, when the investment agreement is signed, would be reasonably expected to—

(i) change the trading environment, the nature or the capacity of the premises; and

(ii) increase the trade and profit of the tied pub;

(b) which is not made in pursuance of any duty under the terms of the tenancy or licence under which the tied pub is occupied; and

(c) the amount of which is equal to or greater than—

(i) where the tenant was in occupation of the tied pub throughout the last complete financial year preceding the date on which the investment agreement was signed, twice the rent, or the money payable in lieu of rent, payable under the tenancy or licence in respect of that period;

(ii) where paragraph (i) does not apply but the tenant was in occupation of the tied pub throughout the period of 12 months preceding the date on which the investment agreement was signed, twice the rent, or the money payable in lieu of rent, payable under the tenancy or licence in respect of that period;

(iii) otherwise, twice the rent, or the money payable in lieu of rent, payable under the tenancy or licence in respect of the period of 12 months beginning with the date on which the tenancy or licence first confers on the tied pub tenant the right to occupy the tied pub.

(3) An “investment agreement” is a written agreement between the tied pub tenant and the pub-owning business which includes—

(a) a description of the proposed investment which demonstrates that it is a qualifying investment;

(b) a term specifying any proposed change to the terms of the tenancy or licence;

(c) a list of the works to be carried out in the premises as a result of the investment which includes—

(i) the dates on which those works are to be completed;

(ii) the estimated costs of the works; and

(iii) confirmation that the tied pub tenant has had an opportunity to obtain alternative estimates for the works;

(d) a term specifying the dates on which the investment period is to begin and end;

(e) a term specifying—

(i) that at least one rent review will be conducted during the investment period; and

(ii) the date of that review; and

(f) confirmation that the tied pub tenant has obtained independent professional advice in relation to the agreement.

(4) Before the investment agreement is signed by the pub-owning business and the tied pub tenant, the pub-owning business must provide to the tenant information which, in the pub-owning business’s opinion, is necessary to demonstrate to the tenant how the investment would be reasonably expected to achieve the outcomes described in paragraph (2)(a)(i) and (ii), such as a reasonable forecast profit and loss statement for the tied pub for a period of 2 years.

(5) For the purposes of paragraph (1) the investment agreement—

(a) is of no effect unless the pub-owning business complies with paragraph (4); and

(b) ceases to have effect if the works mentioned in paragraph (3)(c) are not completed—

(i) within the period of 12 months beginning with the day on which the investment agreement is signed by the pub-owning business and the tied pub tenant; or

(ii) if later, by the date agreed by the parties in the investment agreement.

(6) But paragraph (5)(b) does not apply where, after the investment agreement has been signed by both parties—

(a) an event occurs which is beyond the reasonable control of the pub-owning business;

(b) the event is likely to delay the date on which the works are completed;

(c) the pub-owning business notifies the tenant, in writing, within the period of 14 days beginning with the day on which the event occurs, of a new date by which the works are to be completed; and

(d) that new date is reasonable, given the nature of the event.

(7) In that case, the investment agreement ceases to have effect if the works mentioned in paragraph (3)(c) are not completed by the new date mentioned in paragraph (6)(c).

(8) For the purposes of paragraphs (5)(b) and (6), the works are completed when the pub-owning business provides the tenant with a practical completion notice.

(9) Where a tied pub tenant considers that the investment agreement is of no effect for the purposes of paragraph (1) because the pub-owning business has not complied with paragraph (4), the tenant may refer the matter to the Adjudicator.

(10) Where a tied pub tenant considers that the investment agreement has ceased to have effect for the purposes of paragraph (1)—

(a) because the works specified in that agreement are not completed within the period, or on the date, specified in paragraph (5)(b) or (6)(c); or

(b) because the new date mentioned in that paragraph is not reasonable,

the tenant may refer the matter to the Adjudicator.

(11) Where a tied pub tenant and a pub-owning business have entered into an agreement but disagree as to whether it is an investment agreement, either of them may refer the matter to the Adjudicator.

(12) The “investment period” is the period which—

(a) begins with the day on which the investment agreement is signed by the pub-owning business and the tied pub tenant; and

(b) ends with a date agreed between the tenant and the pub-owning business, being a date—

(i) which is reasonable in the light of the value of the qualifying investment;

(ii) which is no later than 7 years from the day on which the investment agreement is signed.

(13) For the purposes of paragraph (4)(a) a “reasonable forecast” is a forecast which is based on an assessment of the level of trading at the tied pub after the investment if it were operated by a reasonably efficient tenant.

PART 13 Void or unenforceable terms

Void or unenforceable terms of a tenancy or licence

57.—(1) A term of a tenancy or other agreement between a tied pub tenant and a pub-owning business (whether entered into before or after the commencement date) is void if it purports to—

(a) penalise the tenant for requiring the pub-owning business to act, or not act, in accordance with Parts 2 to 10 of these Regulations; or

(b) provide that a rent review or a review of money payable by the tenant in lieu of rent in relation to the tied pub—

(i) may be initiated only by the pub-owning business; or

(ii) may only determine that the rent or money payable in lieu of rent is to be increased.

(2) A dispute in relation to a term which is unenforceable, in that it purports to exclude, limit or otherwise modify the processes or the obligations of pub-owning businesses required under Parts 2 to 10 of these Regulations, may be arbitrated in accordance with an arbitration agreement(25).

PART 14 Disputes

Referrals to the Adjudicator in connection with the MRO procedure

58.—(1) Paragraph (2) applies where a matter has been referred to the Adjudicator under—

(a) regulation 32(2) (disputes in connection with the full response);

(b) regulation 35(1) (disputes in connection with the negotiation period);

(c) regulation 37(10) or (11) or 38(4) (disputes in connection with the independent assessor);

(d) regulation 39(3) (disputes in connection with a tenancy or licence after proposal agreed);

(e) regulation 40 (disputes in connection with recovery of rent etc after MRO procedure);

(f) regulation 56(9), (10) or (11) (disputes in connection with the investment agreement).

(2) The Adjudicator must either—

(a) arbitrate the dispute; or

(b) appoint another person to arbitrate the dispute.

(3) Except where this Part makes different provision, the arbitration must be conducted in accordance with —

(a) the rules regarding arbitrations issued from time to time by the Chartered Institute of Arbitrators; or

(b) the rules of another dispute resolution body nominated by the arbitrator.

Referrals to the Adjudicator in connection with the independent assessor

59.—(1) Where—

(a) a matter is referred to the Adjudicator under regulation 37(10); and

(b) the Adjudicator (or a person appointed by the Adjudicator under regulation 58(2)(b) or 60(4)(b)) rules that the alleged failure has not occurred,

paragraph (2) applies.

(2) The tied pub tenant must, by notice in writing to the pub-owning business, accept or reject the determination provided under regulation 37(9) and the associated tenancy or licence provided under regulation 37(1) within the period of 21 days beginning with—

(a) the day on which the determination is communicated to the tenant; or

(b) if later, the day on which any rent assessment or assessment of money payable in lieu of rent being carried out in respect of the tenancy or licence ends.

(3) Where a matter is referred to the Adjudicator under regulation 37(10), and the Adjudicator (or a person appointed by the Adjudicator under regulation 58(2)(b) or 60(4)(b)) rules that the alleged failure has occurred, the Adjudicator (or a person appointed under regulation 58(2)(b) or 60(4)(b)) must—

(a) give an explanation, in writing, as to why the failure has occurred; and

(b) having regard to the nature of the failure—

(i) substitute a figure for the market rent himself or herself and provide an explanation for that substitution;

(ii) direct the independent assessor to make a second determination of the market rent in the light of that explanation within 21 days beginning with the day on which the direction is made; or

(iii) make such other determination as the Adjudicator (or a person appointed by the Adjudicator under regulation 58(2)(b) or 60(4)(b)) considers appropriate.

(4) When making a determination under paragraph (3)(b)(iii), the Adjudicator (or a person appointed by the Adjudicator under regulation 58(2)(b) or 60(4)(b)) may, in exceptional circumstances, appoint another independent assessor to conduct an assessment of the market rent; and where such an appointment is made, the appointee must determine the market rent within the period of 21 days following the appointment.

(5) A substitution of the market rent made by the Adjudicator (or a person appointed by the Adjudicator under regulation 58(2)(b) or 60(4)(b)) under paragraph (3)(b)(i) is final and, once it has been communicated to the tied pub tenant, the tenant must, by notice in writing to the pub-owning business, accept or reject the substitution and the associated tenancy or licence provided under regulation 37(1), within the period of 21 days beginning with—

(a) the day on which the substitution made by the Adjudicator (or a person appointed by the Adjudicator under regulation 58(2)(b) or 60(4)(b)) is communicated to the tenant; or

(b) if later, the day on which any rent assessment or assessment of money payable in lieu of rent being carried out in respect of the tenancy or licence ends.

(6) Where a matter is referred to the Adjudicator under regulation 37(11), the Adjudicator (or a person appointed by the Adjudicator under regulation 58(2)(b) or 60(4)(b)) must—

(a) determine that the independent assessor requires additional information to complete the determination of the market rent;

(b) direct the independent assessor to make the determination within a period of time specified by the Adjudicator (or a person appointed by the Adjudicator under regulation 58(2)(b) or 60(4)(b)); or

(c) appoint another independent assessor within the period of 14 days beginning with the day of the referral to make the determination.

(7) Where the Adjudicator (or a person appointed by the Adjudicator under regulation 58(2)(b) or 60(4)(b)) makes a determination under paragraph (6)(a), the Adjudicator must—

(a) require the tied pub tenant or the pub-owning business to provide any additional information to the independent assessor; and

(b) direct the independent assessor to complete the determination within a period of time specified by the Adjudicator (or a person appointed by the Adjudicator under regulation 58(2)(b) or 60(4)(b)).

(8) Where a matter is referred to the Adjudicator under regulation 38(4) the Adjudicator (or a person appointed by the Adjudicator under regulation 58(2)(b) or 60(4)(b)) may, within the period of 21 days beginning with the day on which the referral is made, make a further determination of the market rent which is final.

(9) Where the Adjudicator (or a person appointed by the Adjudicator under regulation 58(2)(b) or 60(4)(b)) makes a final determination of the market rent, the tied pub tenant must, by notice in writing to the pub-owning business, accept or reject the final determination and the associated tenancy or licence provided under regulation 37(1) within the period of 21 days beginning with—

(a) the day on which the determination is communicated to the tenant; or

(b) if later, the day on which any rent assessment or assessment of money payable in lieu of rent being carried out in respect of the tenancy or licence ends.

(10) If the tied pub tenant does not comply with paragraph (2), (5) or (9), the tenant is treated as having rejected the determination and the associated tenancy or licence on the final day of the period mentioned in that paragraph.

Arbitration commenced by pub-owning business

60.—(1) This regulation applies where—

(a) there is an arbitration agreement between a tied pub tenant and a pub-owning business;

(b) the pub-owning business commences arbitral proceedings about a matter which is, or which includes, an MRO dispute between the pub-owning business and the tied pub tenant; and

(c) the tied pub tenant would have been able to refer the MRO dispute to the Adjudicator (were it not for the commencement of arbitral proceedings by the pub-owning business) under —

(i) regulation 32(2) (disputes in connection with the full response);

(ii) regulation 35(1) (disputes in connection with the negotiation period);

(iii) regulation 37(10) or (11) or 38(4) (disputes in connection with the independent assessor);

(iv) regulation 39(3) (disputes in connection with a tenancy or licence after proposal agreed);

(v) regulation 40 (disputes in connection with recovery of rent etc after MRO procedure);

(vi) regulation 56(9), (10) or (11) (disputes in connection with the investment agreement).

(2) The tied pub tenant may, by giving notice in writing to the pub-owning business and the Adjudicator, appoint the Adjudicator to arbitrate the MRO dispute.

(3) A notice under paragraph (2) must be given—

(a) where the arbitration agreement provides for the arbitrator to be appointed by a person other than the pub-owning business or the tied pub tenant, within the period of 21 days beginning with the day on which that person notifies the tied pub tenant of the person proposed to be appointed as arbitrator;

(b) otherwise, within the period of 21 days beginning with the day on which arbitral proceedings commenced.

(4) Where the Adjudicator is appointed to arbitrate the MRO dispute (whether under paragraph (2) or otherwise) the Adjudicator must—

(a) arbitrate the MRO dispute; or

(b) appoint another person to arbitrate that dispute.

(5) Section 14 of the Arbitration Act 1996(26) makes provision about the commencement of arbitral proceedings.

(6) An “MRO dispute” is a dispute relating to the offer of a market rent only option.

Information required by the Adjudicator

61.—(1) If the Adjudicator appoints another person as arbitrator under regulation 58(2)(b) or 60(4)(b), the Adjudicator may require the arbitrator, or the pub-owning business and the tied pub tenant concerned, to provide information to assist the Adjudicator in carrying out functions under this Part.

(2) The Adjudicator may enforce any requirement to provide information under this Part by bringing civil proceedings to obtain an injunction.

PART 15 Group undertakings

Adjudicator’s determination during referral of a dispute

62.—(1) This regulation applies where—

(a) a tied pub tenant has referred a dispute between the tenant and a pub-owning business (“P”) to the Adjudicator under section 48 of SBEEA 2015; and

(b) there is evidence before the Adjudicator which suggests that a group undertaking (“U”) in relation to the pub-owning business—

(i) discharges, has discharged, exercises or has exercised, influence over any of P’s obligations under the tenancy or licence to which the dispute relates; or

(ii) is responsible for, or exercises influence over, the terms of that tenancy or licence, the financial arrangements, the charging policies or any other administrative, managerial or executive decisions of P, which affect the tied pub tenant,

in a way which is relevant to the dispute.

(2) Where this regulation applies, the Adjudicator may determine that U is to be treated as a pub-owning business, as well as or instead of P, for the purposes of the arbitration.

(3) Before the Adjudicator makes a determination under paragraph (2), the Adjudicator must consider representations from U.

(4) The Adjudicator may disregard a request from a tied pub tenant for U to be treated as a pub-owning business, where—

(a) U is not identified by the tenant in such a way that the Adjudicator is able to establish U’s name, business address and its relationship with P;

(b) the tied pub tenant has not notified U in writing of the dispute; or

(c) the tenant has not forwarded a copy of the request to U.

Investigations by the Adjudicator

63.—(1) This regulation applies where—

(a) the Adjudicator is conducting an investigation of a pub-owning business (“P”) under section 53 of SBEEA 2015; and

(b) in the course of that investigation, evidence becomes available to the Adjudicator which suggests that a group undertaking in relation to P—

(i) discharges, has discharged, exercises, or has exercised, influence over any of P’s obligations under the tenancy or licence to which the investigation relates; or

(ii) is responsible for, or exercises influence over, that tenancy or licence, the financial arrangements, the charging policies or any other administrative, managerial or executive decisions of P, which affect the tied pub tenant,

in a way which is relevant to the investigation.

(2) Where this regulation applies, the Adjudicator may determine that the group undertaking is to be treated as a pub-owning business, as well as, or instead of P, for the purposes of an investigation under sections 53 to 61 of SBEEA 2015.

Adjudicator’s determination in relation to UK businesses only

64.  The Adjudicator may not determine that a person who is a group undertaking in relation to a pub-owning business is to be treated as a pub-owning business unless the person—

(a) carries on a trade or business in the United Kingdom; or

(b) is a UK-registered company within the meaning of section 1158 of the Companies Act 2006(27).

PART 16 Transitional provisions

Rent proposals

65.—(1) A pub-owning business is not required to provide a rent proposal under regulation 15(1) by virtue of the application of regulation 15(2), unless the event mentioned in regulation 15(2)(a) occurs on or after the commencement date.

(2) A pub-owning business is not required to provide a rent proposal under regulation 15(1) by virtue of the application of regulation 15(3), unless the event mentioned in regulation 15(3)(a) occurs on or after the commencement date.

(3) A pub-owning business is not required to provide a rent proposal under regulation 15(1) by virtue of the application of regulation 15(4), unless the event mentioned in regulation 15(4)(a) occurs on or after the commencement date.

(4) A pub-owning business is not required to provide a rent proposal under regulation 15(1) by virtue of the application of regulation 15(5), unless the event mentioned in regulation 15(5)(a) occurs on or after the commencement date.

(5) A pub-owning business is not required to provide a rent proposal under regulation 15(1) by virtue of the application of regulation 15(6), unless the event mentioned in regulation 15(6)(a) occurs on or after the commencement date.

(6) A pub-owning business is not required to provide a rent proposal under regulation 15(1) by virtue of the application of regulation 15(7), unless the notification mentioned in regulation 15(7) occurs on or after the commencement date.

Rent assessments

66.—(1) The reference in regulation 19(1)(a) to a rent review which is required under the terms of a tenancy or licence does not include—

(a) a rent review where the rent review date falls before the commencement date; or

(b) a rent review which is concluded before the commencement date.

(2) A tied pub tenant may request, on or before the 5-year anniversary date, a rent assessment or an assessment of money payable in lieu of rent under regulation 19(2)(a) if, and only if—

(a) no rent assessment or assessment of money payable in lieu of rent has been concluded before the date of the request; and

(b) no rent review has been concluded within the period of 5 years ending with the date of the request.

(3) A tied pub tenant may not request a rent assessment or an assessment of money payable in lieu of rent under regulation 19(2)(b) unless the tenant first receives notification of the significant increase on or after the commencement date.

(4) A tied pub tenant may not request a rent assessment or an assessment of money payable in lieu of rent under regulation 19(2)(c) unless the tenant sends the written analysis mentioned in that paragraph on or after the commencement date.

(5) Paragraphs (6) and (7) apply where—

(a) a pub-owning business is required to conduct a rent assessment or an assessment of money payable in lieu of rent under regulation 19(1)(a); and

(b) the rent review date falls before the end of the period of 6 months beginning with the commencement date.

(6) Regulation 20(2)(a) does not apply; instead, the pub-owning business must provide the rent assessment proposal to the tied pub tenant before the end of the relevant period.

(7) In paragraph (6) “the relevant period” means—

(a) where the rent review date falls before the end of the period of 3 months beginning with the commencement date, the period of 6 weeks beginning with the commencement date;

(b) otherwise, the period of 12 weeks beginning with the commencement date.

(8) For the purposes of this regulation—

(a) a rent review is concluded when the rent, or money payable in lieu of rent, is agreed in writing between the pub-owning business and the tied pub tenant;

(b) a rent assessment is concluded when it ends (see regulation 22).

(9) In this regulation, the “5-year anniversary date” means the date which is 5 years after the commencement date.

Market rent only option: the MRO notice

67.—(1) References in regulation 23(1) to an event occurring do not include an event which occurred before the commencement date.

(2) The reference in regulation 25(1) to a relevant analysis which demonstrates that a trigger event has occurred does not include a relevant analysis which demonstrates that a trigger event has occurred before the commencement date.

PART 17 Review

Review of Parts 11 to 16

68.—(1) The Secretary of State must, for each review period, carry out a review of Parts 11 to 16(28) (and of Part 1 so far as it applies for the purposes of those Parts).

(2) As soon as practicable after a review period, the Secretary of State must publish a report of the findings of the review for that period.

(3) The first review period is the period beginning on the commencement date and ending 2 years after the following 31 March.

(4) Subsequent review periods are each successive period of 3 years after the first review period.

Margot James

Parliamentary Under Secretary of State

Department for Business, Energy and Industrial Strategy

20th July 2016