New pubs code consultation to clarify PRA stance

Claire Dodd

Claire Dodd

07 December 2015

The Government is seeking views on its second ‘pubs code’ consultation, in which it sets out how it plans to reintegrate Parallel Rent Assessments (PRA) back into the upcoming Small Business, Enterprise and Employment Act 2015.

The PRA mechanism was excluded from the first consultation published by the Government on 29 October. It was feared it would be too time consuming and burdensome to operate. However following backlash from the trade, Minister for Small Business, Industry and Enterprise Anna Soubry announced in early November that it was to be reinstated.

But in a new consultation launched on Friday, Soubry said the Department for Business, Innovation and Skills plans to merge the function of the PRA into its Market Rent Only procedure (MRO). The MRO will give licensees belonging to pub companies with 500 or more pubs the option to go free of tie, and pay rent calculated on open market rates. The PRA mechanism was intended to ensure tenants with tied rent are no worse off than if they were free of tie, through calculating projected rents and earnings.

However as part of the second consultation, Soubry said the two functions should be streamlined as part of the same process. 'Our intention is for the MRO procedure to also deliver the effect of a PRA,' she said, confirming that Ministers in both Houses were of the view that MRO and PRA would need to be streamlined 'to minimise bureaucracy'.

Under the new proposals, 'the MRO procedure permits the tied tenant to use the MRO offer to make an informed choice between two options – a tied rent figure and a free-of-tie figure – that are both subject to independent third party scrutiny. These are available to the tenant "in parallel" at the triggers points at which rent assessments and the MRO option are available'.

The Government is also now seeking views on repair and maintenance obligations; types of agreement outside the scope of some or all of the code, such as genuine franchises and some short-term agreements and tenancies at will; and adjudicator fees and the maximum financial penalty for breaches of the code. Comments are invited by 18 January 2016.

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