In order to refer the MRO rental to an IA, notice must be served to the POB in line with regulation 35(3) of the Pubs Code. The notice should be made in writing, and once again we can assist with this.
The serving of notice opens a 28 day window in which the identity of the IA must be agreed between the parties. There is a list of criteria that the IA must meet, such as a minimum level of experience along with accreditation from the Royal Institute of Chartered Surveyors (RICS). A list of approved candidates is available to download from the PCA’s website.
Given that the list of suitably qualified candidates is quite short, generally we have been able to agree to an IA with the POB, but if agreement is not possible the parties can jointly request that the PCA determine the IA on the parties’ behalf. Once again this must be done within the 28 days window.
Once instructed, subject to the usual conflict of interest checks, the IA will issue directions setting out the process. In line with the Pubs Code, both parties are obliged to comply with the ‘Schedule 3’ requirements to furnish the IA with certain information. This is defined as documents held by the TPT that provide evidence of the pub’s level of trade for the last 3 years. Generally as a minimum this would be interpreted as the business’ submitted accounts and VAT returns. The TPT must also provide a reasonable forecast of trade for the next 3 years.
Beyond the minimum level, the TPT may also wish to provide a report by an expert to provide an opinion as to the correct MRO rental. Generally the POB will instruct an expert to provide such a report on their behalf – who may ask to conduct a site inspection.
We strongly advise you seek advice to ensure as strong an argument is made on your behalf to support a fair valuation of the MRO rental. It’s also very important to ensure that the legislation is fully complied with, to avoid a referral on procedural matters.
We can assist with this process, and offer our advice.
In terms of costs, the IA’s fees are determined by RICS on a sliding scale based on your pub’s passing rent. Generally expect the fee to be in the region of £2,000 – £3,000 exclusive of VAT.
Once both the partied have complied with the IA’s directions, the IA will have a period of 21 days in which to issue a rental determination. Prior to this the IA will arrange a time to conduct a site inspection and may request additional information as part of his / her investigations.
Once the IA has issued the rental determination, there follows a period of 14 days in which either party can appeal the outcome if they believe the MRO rental determination is incorrect, or if the IA has erred in his / her duties.
Assuming no appeal is lodged, within 21 days the TPT may accept the determined rental. The POB are then obliged to re-issue the agreed MRO lease with the revised rental for legal completion.
Should either party appeal the determined rental to the PCA, this sets in motion a new process that I shall outline below.
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