A major change is now in effect for Scottish pub operators. The Tied Pubs (Scotland) Act 2021 and the Scottish Pubs Code introduce the most significant reforms in a generation, reshaping the legal landscape for breweries and companies leasing tied pubs. This guide highlights key landlord obligations. Adapting to comply is essential for strong tenant relationships, avoiding disputes, and sustaining your business. MDE Pub Consultants offers expert support to help you navigate these changes.
1. Upholding a Legal Duty of Fair Dealing
The Code’s core principles are now legally binding. All dealings with tenants must be guided by fair and lawful dealing, ensuring that no tied tenant is worse off than if they were free-of-tie. This principle applies to every interaction, from setting prices to negotiating rent. Fair treatment is no longer a matter of goodwill; it’s a legal requirement, and failure to comply can lead to disputes and enforcement action from the Adjudicator.
2. Offering and Responding to Market Rent Only (MRO) Requests
One of the biggest new responsibilities for landlords is to manage the Market Rent Only (MRO) process correctly. If an eligible tenant requests an MRO lease, the landlords must follow a strict timeline:
- Initial Response: There is a 4-week deadline to provide the tenant with a compliant MRO proposal, unless a specific exemption applies. The MRO offer typically will be either a new lease or a deed of variation that converts the tenancy to free-of-tie, stating the proposed market rent for the pub.
- Negotiation Period: Once the offer is made, both parties enter an 8-week negotiation period to agree on the terms of the MRO lease.
- Dispute Resolution: If no agreement is reached, an independent rent assessor may be appointed to determine a fair market rent, which must then be offered.
Being prepared for the MRO process is a key part of fair dealing. This requires compliant lease templates, evidence-based rent calculations, and a strategy for good-faith negotiation within the legal deadlines. MDE Pub Consultants helps manage this MRO process smoothly, ensuring offers are code-compliant and negotiation strategies protect commercial interests while fulfilling your legal obligations.
3. Providing Pre-Contract Information
Before a new tenant signs a tied pub lease, landlords are legally required to provide a comprehensive information pack. This ensures the tenant makes a fully informed decision. The pack must include:
- A full draft lease.
- Any existing dilapidations reports on the property.
- A template rent assessment.
- Other prescribed information about the pub’s history and terms.
- Ensure tenants fully understand their commitments through careful due diligence.
Landlords must also advise the incoming tenant to undertake pre-entry training (like the BII’s Pre-Entry Awareness Training course) and prepare a robust business plan. MDE Pub Consultants team can help develop pre-entry packs that are fully compliant and present the pub opportunity professionally.
4. Conducting Transparent Rent Assessments
When conducting a rent review, landlords must provide the tenant with a Rent Assessment Statement at least 6 months before the proposed change. This statement now requires full transparency and must include:
- The proposed new rent and the detailed methodology used to calculate it.
- A projected 12-month profit and loss (P&L) forecast for the pub.
- Data on the pub’s purchases (e.g., total beer volume) over the past 3 years.
This allows the tenant to fairly assess the proposal. MDE Pub Consultants can assist pub-owning businesses in creating well-documented, evidence-based rent assessments to reduce the risk of disputes. We also keep you updated on appeal rules on rent since tenants can now challenge rent assessments within 14 days, so accuracy is key.
5. Handling Guest Beer Requests
The Code requires landlords to accommodate tenant requests for a guest beer agreement. If a tenant asks to stock a beer from a small brewer (producing 5,000 hectolitres or less per year), the landlords must provide them with a written agreement within 4 weeks. The landlords cannot arbitrarily veto a request or penalise the tenant. The tenant is free to source the beer from any supplier of their choosing. The landlords may only charge a reasonable service equipment fee if special tapping or maintenance is required. Pub companies must shift from a blanket “no outside products” stance to an efficient guest beer approval process. Our pub consultants can help design a compliant guest beer policy that also addresses quality and equipment concerns.
6. Eliminating Unfair Tie Requirements
Certain historic tie clauses are now forbidden. Landlords must review their lease agreements to ensure they do not contain:
- A gaming machine tie that forces a tenant to use a nominated supplier.
- Any other service tie (e.g., for line cleaning) where the tenant is worse off than if they were free-of-tie.
Pub companies should review lease templates for code conflicts. MDE Pub Consultants can conduct a full compliance audit your leases and operations to identify and resolve issues before they lead to complaints.
7. Managing Disputes and the Adjudicator
The Scottish Pubs Code Adjudicator is the watchdog enforcing these rules. Tenants can escalate disputes if they feel a landlords is not complying, and the Adjudicator has the power to impose significant financial penalties for breaches. To avoid this, it is vital for landlords to train their teams and maintain clear documentation of all communications ragarding MRO discussions, guest beer reponses, meeting notes, etc. If a dispute does arise, MDE Pub Consultants can provide expert representation or behind-the-scenes advice to help find an efficient and commercially sensible resolution.
8. Understanding and Using Exemptions Correctly
Finally, pub-owning businesses should familiarise themselves with the specific exemptions in the Code. An MRO lease offer is not required in certain limited cases, such as for very short-term agreements or when a significant investment is made in the property (if the tenant agrees to waive their MRO right for up to 5 years). Understanding these nuances helps you plan effectively. MDE guides pub companies in applying exemptions legally and transparently, ensuring compliance while supporting business’s goals.
Achieving Pubs Code Readiness with MDE Pub Consultants
The Scottish Pubs Code has transformed the regulatory landscape. Adapting to these new responsibilities is crucial, not just for compliance, but for building fair and sustainable relationships with tenants. At MDE Pub Consultants, we specialise in helping landlords navigate this new environment with confidence. Our expert team offers comprehensive Scottish Pubs Code consultancy services, including full code audits, MRO preparation, rent review documentation, trainings in management and BDMs, dispute resolution, and turning pub-owning business obligations in Scotland into operational strengths.
Book a free consultation today with us to ensure you’re Pubs Code-ready!
Email: info@mdepc.co.uk
Phone: 0330 088 3133
