Pubs Code etc. Regulations 2016
What this means for your business
- Applies to
- United Kingdom
- On this page
- 30 compliance obligations, 1 practical guide
What you must do
30 compliance obligations under this legislation.
Appointments 2
Appoint a compliance officer and give them required resources
If you run a pubâowning business you must name a suitably qualified employee to act as your compliance officer. You must give them the time, information and support they need, let them speak to business development managers and tiedâpub tenants, keep them independent, and let them keep records of manager training for the annual compliance report.
Appoint an independent rent assessor within 28 days
If you own a pub that is tied to a tenant and the tenant asks for a market rent review, you and the tenant must together appoint an independent assessor within 28 days of receiving their notice, or tell the Adjudicator you couldnât. You also have to split the assessorâs fees equally.
Risk assessment 1
Conduct rent assessment for tied pub when required or tenant requests
If you own a tied pub and act as the landlord, you must carry out a rent assessment whenever a rent review is triggered by the tenancy or licence, or when the tenant asks for one under the codeâs conditions. The tenantâs written request has to be received within 14âŻdays of their notice of a price increase or of sending a tradingâforecast analysis. You need to keep a record of the assessment and the supporting documents.
Insurance 1
Inform and manage insurance charges for tied pub tenants
If you run a pubâowning business and intend to charge a tied tenant for building insurance, you must tell them how much youâre charging, whether it exceeds the actual premium and any commission or rebate you receive. You also have to give the tenant full policy details at least 21 days before the policy starts, consider any cheaper policy they propose, and either switch to that policy or agree in writing that the tenant will not pay the extra cost.
Management duties 14
Conduct rent assessment and agree payment terms with tied pub tenant
When you propose a new rent for a tied pub, you must start the rent assessment on the day you send the proposal and run it according to RICS guidance. You must answer the tenantâs reasonable information requests, visit the pub within three months to gather layout details, advise the tenant to seek independent advice, and put any payment arrangements in writing before the tenant signs the new rent.
Coâoperate with independent assessor to determine market rent
Fine up to ÂŁ2,000,000When a market rent assessor is appointed for your tied pub, you must give the assessor all the required documents and any other information they ask for, within the timeâlimits set out. You also need to share that information with the other party and respond to the assessorâs rent determination within the prescribed periods.
Do not penalise tied pub tenants for exercising their rights
Fine up to ÂŁ2,000,000If you own a pub and lease it to a tied tenant, you must not treat that tenant unfavourably â such as reducing rent, imposing extra charges or threatening tenancy â because they are exercising any right under the Pubs Code Regulations. Any attempt to punish a tenant for asserting their statutory rights could lead to a criminal fine.
Do not penalise tied tenants based solely on flowâmonitor readings
If you own a pub and have a flowâmonitoring device installed at a tied tenantâs premises, you cannot impose any detriment or liability on the tenant just because of the deviceâs reading. You must have other proof â such as purchase invoices or stock records â before taking any action that could affect the tenant.
Ensure tenants have a sustainable business plan
If you own a pub and are about to sign a new tenancy agreement or renew an existing one (unless itâs a protected 1954 Act tenancy), you must make sure the tenant has a âsustainable business planâ. That means giving them the right public reports, advising them to use those reports, and checking that their plan includes professional advice, financial forecasts, a sensitivity analysis and a realistic profit outlook.
Finalise tenancy or licence promptly after tenant accepts
If a tiedâpub tenant gives you an MRO notice and then writes to accept the tenancy or licence you have offered, you must sign the new agreement as quickly as is reasonably possible. If you cannot reach an agreement, you must refer the dispute to the Adjudicator.
Maintain and update the Schedule of Condition and manage premises inspections, repairs and entry notices
When you own a tied pub you must make sure the tenant checks the property before a new or renewed tenancy, get a qualified surveyorâs advice, keep the Schedule of Condition upâtoâdate after any works, use it when planning repairs or dilapidations, review it regularly and give the tenant reasonable notice before you enter the premises (unless itâs an emergency). This helps avoid disputes over the condition of the pub.
Manage business development managers and keep tenant records
Fine up to ÂŁ2,000,000If you own pubs, you must give each business development manager (BDM) a copy of the Pubs Code Regulations, train them at least once a year and before they do any rent assessments, and make sure they deal with tenants fairly. You also need to tell tenants what the BDM does, record any talks about rent, repairs or business plans, send those notes to the tenant within 14 days and get a response within 7 days, and publish a statement of how youâll keep your BDMs professionally developed.
Provide complete rent proposal with RICS confirmation
When you need to give a tiedâpub tenant a rent proposal, you must include the rent details, any new tenancy terms, the ScheduleâŻ2 information (unless already supplied or unavailable), and any other information the tenant needs. The proposal must be prepared using RICS guidance and include a written RICS memberâs confirmation that the guidance was followed.
Provide information and training advice before short agreements
Before you sign a shortâterm tenancy with a tiedâpub tenant, you must give them clear details of the rent (or rentâinâlieu), the specific information set out in the Pubs Code ScheduleâŻ1, and how utility bills will be paid. You also need to tell the tenant to complete Pubs entry training unless they meet one of the listed exemption conditions.
Provide rentâproposal information and advice to tied pub tenant
When you own a tied pub and your tenant asks for information about the rent youâre proposing (or a revised rent), you must give them any relevant data within 7 days, or explain why you canât. You also have to tell the tenant to get independent professional advice before they agree to any rent figure.
Provide rent proposal within the required time
When a tenant asks for a new rent proposal (or a court order or other trigger under the Pubs Code) you must send the proposal within the period set out in the Regulations â usually 21 days, or two months in certain cases. The clock starts from the tenantâs request, the court order, or the point the tenant makes a new tenancy request, depending on the situation.
Provide required ScheduleâŻ1 information to tied pub tenant
Your pubâowning business must give the tenant the information set out in ScheduleâŻ1 before they start preparing their sustainable business plan or consider the advice under regulationâŻ10(2)(a). You only need to repeat this if the information has not already been supplied and unchanged since the current tenancy or licence began.
Refer proposed MRO rent to independent assessor within 21 days
If you receive a proposed rent for a tied pub, you can challenge it by sending a written notice to the pubâowner that you will refer the rent to the independent assessor. You must send this notice within the 21âday referral period, and after that you cannot take the matter to the adjudicator.
Notifications 2
Notify Adjudicator before transferring a tied pub with extended protection
If you run a pub business and plan to sell the ownership of a tied pub that will give the tenant extended protection, you must inform the Pub Code Adjudicator first. Send the tenantâs details, the buyerâs name and address (and company number if itâs a UK company) and the expected completion date before the sale goes through.
Notify the group undertaking of any dispute referred to the Adjudicator
If you run a tied pub and refer a dispute to the Pubs Code Adjudicator, you must tell the relevant group company (U) about the dispute in writing and send them a copy of your request. Without this notice the Adjudicator can ignore your request to treat the group as a pubâowning business.
Other requirements 2
Do not enter or renew tenancies requiring gaming machines
Fine up to ÂŁ2,000,000If you run a pub that lets a tenant occupy it (a tied pub), you must not sign a new lease or renew an existing lease that forces the tenant to buy or rent gaming machines. You need to check any new or renewed tenancy agreements to be sure they donât contain that requirement.
Provide blank profit and loss template to tenant on request
If your business owns a tied pub and the tenant asks for it, you must give them a blank profit and loss account template to fill in. This helps the tenant record the pubâs financial performance and ensures transparency between you and the tenant.
Reporting and filing 8
Notify and refer MRO nonâcompliance to the Adjudicator within 21 days
If you are a tiedâpub tenant or the pubâowning business and you believe the other sideâs response about the tenancy licence does not meet the Minimum Revenue Obligation, you must first put the other party in writing that you intend to refer the matter. You then have to send the referral to the Adjudicator within 21 days after the response period ends.
Provide a revised MRO response within 21 days when ordered
If an Adjudicator decides that your response about marketârentâonly (MRO) compliance is not satisfactory, you must send a new (revised) response that contains the required information. You have 21 days from the Adjudicatorâs ruling â or the later date they specify â to send it. Failing to do so may lead to further referrals and possible enforcement action.
Provide information to the Adjudicator when requested
If the Pubs Code Adjudicator asks your pubâowning business or a tiedâpub tenant for information (for example during arbitration), you must supply it. The Adjudicator can take court action to force you to comply, so you need to be ready to hand over the requested data promptly.
Provide rent assessment proposal to tied pub tenant
When you need to review the rent on a tied pub, you must prepare a written rent assessment proposal that includes the new rent, the information set out in ScheduleâŻ2 (if available), and any other details the tenant needs to negotiate. The proposal must be prepared using RICS guidance and signed off by a RICS member or fellow, and you must give it to the tenant either 6âŻmonths before the rent review date or within 21âŻdays of the tenantâs request.
Provide rent proposal to tied pub tenant when requested
If a tied pub tenant asks for a rent proposal â for example after you give them a notice under the Landlord and Tenant Act, after a rent change, or when they request a new tenancy â you must supply a written rent proposal. The duty only arises when the tenant makes the request within the 21âday window and you have not already opposed the renewal or applied to end the tenancy.
Respond to MRO notice within 28 days
If your pubâowning business receives a Market Rent Only (MRO) notice from a tiedâpub tenant, you must acknowledge it in writing as soon as reasonably possible and then send a full written response â agreeing or disagreeing and providing the required tenancy/licence and rent details â within the 28âday response period.
Submit annual compliance report to the Adjudicator
You must have your compliance officer prepare an annual compliance report for each financial year, get it approved by the chair of the Audit Committee (or the appropriate senior executive if no committee exists), and send it to the Adjudicator within four months of the yearâend. A summary of this report must appear in your annual report, or if you donât produce one, be published clearly on your website.
Tell tiedâpub tenants about any sale of the freehold or leasehold
If you run a pub that is tied to a landlord and you learn that the freeholder or superior landlord is trying to sell the property (by advertising, listing it, using an agent or signing a sale agreement), you must let your tenant know. Provide details of the sale steps taken and, if a buyer has been agreed, give the buyerâs name and address, as soon as reasonably practicable.
Penalties for non-compliance
4 penalties under this legislation.
Coâoperate with independent assessor to determine market rent
Fine up to ÂŁ2,000,000
Do not penalise tied pub tenants for exercising their rights
Fine up to ÂŁ2,000,000
Manage business development managers and keep tenant records
Fine up to ÂŁ2,000,000
Do not enter or renew tenancies requiring gaming machines
Fine up to ÂŁ2,000,000
Practical guidance
Our guides explain how to comply with the requirements above.
Sections and provisions
73 classified provisions from this legislation.
Duties 31
- s.10 A sustainable business plan the pub-owning business
- s.11 The required information A pub-owning business
- s.13 Premises The pub-owning business
- s.14 Short agreements
- s.15 Duty to provide a rent proposal
- s.16 Contents of the rent proposal
- s.17 When the rent proposal must be provided
- s.18 Further information and advice in relation to the rent proposal
- s.19 Duty to conduct a rent assessment or an assessment of money payable in lieu of rent
- s.20 The rent assessment proposal
- s.21 Conduct of the rent assessment or the assessment of money payable in lieu of rent it
- s.29 Effect of tenantâs notice
- s.35 Right to refer proposed MRO rent to the independent assessor
- s.36 Appointment of the independent assessor
- s.37 Independent assessor: procedure
- s.39 End of the MRO procedure
- s.41 Business development managers matters relating
- s.42 Duty to appoint a compliance officer The pub-owning business
- s.43 Annual compliance report A pub-owning business
- s.46 Insurance group undertaking in relation
- ... and 11 more duties
Definitions 14
- s.2 General interpretation annual percentage change in the consumer price index commencement date compliance officer
- s.3 Significant increase in price: beer beer product comparison period beer current period
- s.4 Significant increase in price: alcoholic drink other than beer alcoholic drink product comparison period alcoholic drink current period
- s.5 Significant increase in price: products other than alcoholic drink non-alcohol product comparison period non-alcohol products current period
- s.6 Significant increase in price: services service comparison period services current period
- s.7 Trigger events
- s.25 A trigger event the relevant period a relevant analysis
- s.26 The renewal of a pub arrangement
- s.27 A rent assessment or an assessment of money payable in lieu of rent
- s.30 Terms and conditions required in proposed MRO tenancy
- s.32 MRO response: procedural or event dispute
- s.33 MRO procedure: referrals in respect of procedural or event disputes required full response
- The resolution period The resolution period resolution period
- The updated full response The updated full response updated period of response updated full response
Exemptions 10
- s.9 Pubs entry training
- s.12 Duty of pub-owning business where tenant intends to assign the tenancy
- s.23 The MRO notice
- s.28 Arrangements during the MRO procedure: rent etc
- s.54 Short agreements
- s.55 Pub franchise agreements
- s.56 The investment exception
- s.59 Referrals to the Adjudicator in connection with the independent assessor
- s.64 Adjudicatorâs determination in relation to UK businesses only
- s.66 Rent assessments