Notice

Declaration by Pub-Owning Businesses on Preserving Tied Pub Tenants’ Pubs Code Rights During the COVID-19 Emergency (January 2021)

Published 12 January 2021

Applies to England and Wales

Following the Government’s announcement about a new national lockdown in England from 06 January in addition to the national restrictions in Wales, the PCA has been contacted collectively by the Pub-Owning Businesses (POBs).^{[footnote 1]}

The POBs have advised that due to the impact of the lockdown and their furlough arrangements that they either cannot or may not be able to comply with all of their Pubs Code duties in respect of serving compliant Rent Proposals, Rent Assessment Proposals (RAPs) and Market Rent Only (MRO) full responses during the closure period. These duties are vital in ensuring that rents are fairly set and that tenants are no worse off than if they were free of tie.

In light of this, the PCA has agreed to restore the Declaration agreement initially for the period covered by the restrictions until 31 March 2021, in order to ensure that certain important tenants Code rights are protected and preserved during this further period if POBs are unable to meet Code deadlines. The Declaration does not however prevent a tenant taking any Code step during this period if they so wish, including making a referral for arbitration.

As was the case in March and November 2020, this declaration has been signed by a Director of each of the POBs and the text is published on the PCA website. This Declaration mirrors the previous Declarations agreed in March and November 2020. To help tenants here is a summary of what it means in practice. Tenants should contact their Code Compliance Officer for further information.

This Declaration applies from 06 January 2021, and will run until 31 March 2021, subject to further review. The PCA will ensure that clear notice is given to tenants about the end of the period to which this declaration operates, so that they can understand by when they have to act. To ensure you receive any updates please sign up to the PCA alerts.

The Adjudicator is actively monitoring the impact of the coronavirus (COVID-19) emergency on the regulated tied sector and will take further steps to support and maintain tenants’ Pubs Code rights as and when these become necessary.

1. Non-MRO Rights

The time limit for bringing a referral for arbitration in respect of all Pubs Code rights, except those relating to the MRO provisions, is four months. Each of the POBs has made a commitment which has the effect of stopping the clock on that four-month period during the emergency period.

2. Rent Assessment Proposals and Rent Proposals

Failure by a POB to serve a RAP when required to do so would be a breach of the Code. The declaration means that the right of the tenant to refer for arbitration any failure to serve a RAP, or any dispute over the compliance of a RAP which is served, is preserved until after the emergency period. The same applies in respect of default in serving Rent Proposals.

3. MRO Gateways – Serving a MRO Notice

• RAP - The declaration means that the 21-day clock for serving a MRO notice is stopped where a RAP is received before or during the emergency period.

• Renewals - POBs have said that they will not serve section 25 Landlord and Tenant Act 1954 (LTA) notices during the emergency period. Any right of a tenant who has received a section 25 notice to serve a MRO notice is preserved until after the end of the emergency period.^{[footnote 2]}

• Covid-19 cannot in and of itself be a trigger event as it affects all pubs in England and Wales. The days of the emergency period will not count towards the period for serving a relevant analysis showing a trigger event has occurred.

4. MRO Rights

Failure to serve a MRO full response when required to do so would be a breach of the Pubs Code, and where a POB defaults it will itself make a referral for arbitration to the PCA so that the tenant does not have to. The POB will ask for that referral to be stayed and for a ruling that it should serve a revised response after the emergency period. Any objection to that stay can be considered by the arbitrator who will decide what order to make.

Where the tenant is served with a MRO full response, any right to refer it for arbitration within the emergency period will be preserved until after the emergency period ends.

5. Regulation 28

Each POB has committed to ensure that tenants whose service of a MRO notice is delayed in circumstances covered by the declaration will get the benefit of the protection of regulation 28 of the Code from when they would otherwise have been expected to serve their MRO notice. This regulation ensures that rent is not collected at any higher rate (if it becomes applicable under the contract) during the MRO procedure and at the end of the procedure where the tenants takes the MRO option.

6. Market rent determinations

The declaration does not apply to an independent assessment of the market rent in the MRO process, and these may be dealt with on a case by case basis, based on the circumstances of the case and in line with the professional judgement of the Independent Assessor and the existing Code processes.

Further information about the Independent Assessor process during the closure period can be found here.

7. Arbitrations

In addition to the above, where a POB self refers a case for arbitration for failure to serve a MRO full response during the emergency period, the PCA will stay the case until 31 March 2021. However, in such cases either party may ask for the stay to be lifted and the case to proceed. In all other Pubs Code arbitrations, any application for a stay or other appropriate case management directions in light of the second lockdown should be made to the arbitrator in question.

1. Admiral Taverns; Ei Group / Stonegate; Greene King; Marston’s; Punch Pubs; Star Pubs & Bars (Heineken UK). ↩

2. Where a section 26 notice under the Landlord and Tenant Act 1954 (LTA) is served, the tenant should ensure they discuss with their legal advisors whether to serve a MRO Notice under the Code. Where a tenancy is contracted out of the LTA, but the terms provide a right to renew, the tenant should contact their pub company before that right to renew arises. ↩