Regulation 15 Requirement to offer an MRO lease

(1)

A pub-owning business must offer their tied-pub tenant an MRO lease at the tenant’s request.

(2)

But a pub-owning business need not offer an MRO lease where—

(a)

the term of the tenant’s lease is one year or less,

(b)

the term of the tenant’s lease is for a period longer than one year and less than one half of the term of the lease has passed at the date on which the tenant requests an MRO lease,

(c)

the tenant has requested an MRO lease within the past two years,

(d)

the tenant or the pub-owning business has served a notice to bring the lease to an end, or

(e)

the investment exception applies.

(3)

Paragraph (2)(a) does not apply where a pub has been occupied for a period of more than one year under successive leases of one year or less.

(4)

If a pub-owning business relies upon an exemption under paragraph (2) to refuse an offer of an MRO lease, the pub-owning business must inform their tenant.

(5)

The investment exception applies for 5 years from the date an investment agreement was agreed, where the pub-owning business is investing in capital improvement works to the pub which is equal to or higher than the greater of—

(a)

£35,000, or

(b)

150% of the annual rent of the pub.

(6)

The investment exception does not apply unless—

(a)

the investment agreement has been entered into voluntarily by the tenant outside of any obligation arising under their lease,

(b)

the tenant has, before entering into the investment agreement, been given the opportunity to obtain alternative estimates for the works, and

(c)

the pub-owning business has, before entering into the investment agreement, informed their tenant in writing about how the investment agreement may affect the tenant’s right to an MRO lease.

(7)

Paragraph 6(c) does not apply where the pub-owning business has entered into an investment agreement preceding the date these Regulations come into force.

(8)

The investment exception ceases to apply where capital improvement works arranged under an investment agreement have, without reasonable excuse—

(a)

not started within 12 months of the date agreed in the investment agreement, or

(b)

stopped for 12 months or more.

(9)

For the purposes of paragraph (8), “reasonable excuse” includes where the works do not start, or stop, due to circumstances beyond the control of the pub-owning business or the tenant.

(10)

In this regulation—

“investment agreement” means a written agreement between the pub-owning business and their tenant for the pub-owning business to invest in capital improvement works to the pub,
“capital improvement works” does not include routine maintenance, works carried out under landlord repairing obligations, works carried out under dilapidations requirements, or works to make a pub safe and compliant with health and safety requirements before letting it to the tenant.