Market Rent Only (MRO) in Scotland: A Step-by-Step Guide for Tied Pub Tenants

The Scottish Pubs Code, established by The Tied Pubs (Scotland) Act 2021 and detailed in the Scottish Pubs Code Regulations 2024, came into force on 31 March 2025. This code regulates the relationship between tied pub tenants and pub-owning companies, ensuring fair and lawful dealing. A key feature is the introduction of Market Rent Only (MRO) leases – a mechanism for tied tenants to go free-of-tie. An MRO lease is essentially a free-of-tie lease where you pay a market rent but have no product or service ties to the landlord, effectively ending all tied-pub obligations in your agreement. In other words, you stop being obligated to buy beer or other supplies from your landlord and just pay an agreed fair rent like an independent tenant.

Under the Scottish Pubs Code MRO rights, tied tenants have the right to request an MRO lease in certain circumstances so they can operate free-of-tie if they wish. Importantly, these rights were not available until recently – the provisions on rent assessment and MRO requests only become available from 30 June 2025. From that date onward, eligible tenants in Scotland can start the process to change to a free-of-tie lease (often referred to as MRO Scotland rights). This guide provides MRO notice guidance (Scotland) and a clear roadmap on how to go free of tie in Scotland through the MRO process.

Once you’ve confirmed you’re eligible to request an MRO, it’s important to follow the process correctly and within the required timelines. Below is a step-by-step guide to exercising your Scottish Pubs Code MRO rights:

The first step is to request an MRO lease in writing from your pub-owning company. This written request (often called an MRO notice) should state that you are requesting a Market Rent Only lease under the Scottish Pubs Code. There isn’t a fixed format required by law, but be clear and explicit – include your name, pub details, current lease reference, and state that you are requesting an offer for a Market Rent Only lease as per the Pubs Code. It’s wise to reference the code and date (for example, “This notice is served under Regulation 16 of the Scottish Pubs Code Regulations 2024”). Timing is critical: ensure you send it no earlier than 6 months before your lease’s halfway point and ideally by the time you reach that halfway date (or any later trigger event), as discussed above. If you serve the notice too early (before the eligible window) or when an exemption applies, the landlord can reject it as invalid. Always keep proof of service (e.g. send via recorded delivery or email to the designated address) and mark the date—deadlines will start counting from when the landlord receives your notice.

Once the landlord receives your MRO notice, the clock starts for their response. By law, the pub-owning business must reply with a proposed MRO offer within 4 weeks (28 days) of receiving your request. This means they should send you either: (a) a formal MRO proposal, or (b) a refusal with reasons if they believe you are not eligible (for example, citing one of the code exemptions). Assuming you are eligible, the landlord’s MRO offer will include a proposed new rent (set at market value) and either a draft deed of variation to your current lease or a draft new lease document. Essentially, they must show you the terms on which they’d continue your tenancy without ties. The Code prevents pub companies from sneaking in unreasonable terms – the MRO lease cannot contain terms that are worse than your existing lease except as necessary to go free-of-tie. For instance, they shouldn’t shorten your lease term or add new onerous conditions just because you requested MRO. Carefully review the offer when it arrives (it should come within 4 weeks starting the day after they got your notice). If you don’t hear back in time or the landlord refuses improperly, you can escalate the issue to the Pubs Code Adjudicator.

After you receive the MRO proposal, you enter the negotiation phase. The code grants up to 8 weeks for you and the landlord to negotiate the terms of the free-of-tie lease. Both parties are expected to use their best efforts to reach an agreement as soon as possible on the rent and any lease amendments. In many cases, this will involve negotiating the rent figure: you want it as low as a truly market rent should be (remember, without ties, your rent is usually higher than a tied rent, but you’ll no longer be paying premium prices for beer). Other terms might also need agreement, such as whether the MRO will be implemented by altering your current lease or by granting a new lease altogether – this can depend on technical factors and your consent. The negotiation period can be extended by mutual agreement once, by up to 4 additional weeks. That means if both sides agree more time is needed, the total negotiation window can stretch to a maximum of 12 weeks from receipt of the offer. It’s essential to keep track of this timeline. If an agreement is reached within this period, great – you and the landlord will sign the MRO lease (or deed of variation) and you become free-of-tie. If no agreement is reached by the end of the negotiation period, the process moves to the next stage.

Don’t be disheartened if you and the landlord cannot agree on the MRO rent or terms during negotiation – the code has a built-in resolution mechanism. This next phase focuses on getting an independent assessment of the market rent:

• Appointing a Rent Assessor (3 Weeks): Once the negotiation period ends without a deal, the pub company has 3 weeks to appoint an independent rent assessor, with your consent. This assessor must be truly independent and knowledgeable (a chartered surveyor experienced in pub rents). The idea is that a neutral expert will determine what the true market rent for your pub should be, if free-of-tie. If you and the landlord can agree on a particular assessor, that person is appointed.
• Adjudicator Referral (if no Assessor): If the parties cannot agree on an assessor within those 3 weeks, or the landlord fails to appoint one in time, either party has 2 additional weeks to refer the matter to the Scottish Pubs Code Adjudicator. The Adjudicator (a government-appointed independent official overseeing the code) can then appoint a rent assessor or otherwise facilitate the process. This referral to the Adjudicator is essentially a safety net to ensure the landlord cannot stall and that an assessor will be chosen fairly.
• Rent Assessment: Once the assessor is in place, both parties will have an opportunity to submit a report, evidence of trade and opinion of the correct market rent. They will evaluate the pub and lease terms and produce an independent rent assessment report. The code specifies that the rent assessor must report their determination within 4 weeks following receipt of documents. The assessor will calculate the “market rent”– basically, the reasonable annual rent for your pub on a free-of-tie basis (using factors like trading potential, location, pub conditions, and assuming standard market conditions with no tie). Both you and the landlord will get a copy of this report stating what the rent should be.
• Final MRO Offer (4 Weeks): After the rent assessment is complete, the pub company then has 4 weeks to issue a revised final MRO lease offer consistent with the assessor’s determined rent. In other words, the landlord must prepare the actual MRO contract (lease or variation) using the independent rent figure and terms that comply with the code. They can’t deviate from that rent now – it’s effectively set. When you receive this final offer, it should reflect the neutral rent assessment and be a code-compliant free-of-tie agreement ready to sign.
• Tenant’s Decision (2 Weeks): Now it’s decision time for you. You have 2 weeks to review and either accept or reject the proposed MRO lease after receiving the final offer. This is essentially a final decision deadline for the MRO process. If you’re happy with the terms (and hopefully, with expert advice, you determine the lease and rent are fair), you would accept and sign, converting your pub to an MRO (free-of-tie) agreement. If you are not satisfied – for example, you believe some terms are still unfair or the process wasn’t followed – you can choose to reject the offer.

If you accept the MRO lease, congratulations – you will soon be operating under a free-of-tie lease in Scotland can buy products from any suppliers, with rent set at a market rate. The whole process from notice to a signed MRO agreement can take several months (often around 4 to 6 months in total, given the various stages and deadlines). If you do not accept the final offer, or if negotiations break down on issues beyond rent, you still have recourse: the matter can be referred to the Pubs Code Adjudicator as a dispute for arbitration. The Adjudicator can make a binding decision on any unresolved issues or whether the proposed terms comply with the code. Keep in mind, going down this route will extend the timeline and involve a formal dispute process. In many cases, tenants aim to reach an agreement before needing the Adjudicator, but it’s good to know this backstop exists to ensure fairness.

Throughout this MRO process, time is of the essence. Missing a deadline can mean your MRO request is deemed withdrawn or you lose certain rights, so mark all dates carefully. The code’s timeline is designed to prevent either party from dragging things out endlessly – roughly speaking, from the date of your notice, an outcome (MRO lease signed or not) should be achieved in about 5 to 6 months at most if you follow the steps diligently. Always respond promptly and keep communication documented.

The MRO process can be complex and high-stakes, so getting professional advice is highly recommended at every stage. Here’s why engaging experts (such as pub lease advisors, chartered surveyors, or solicitors familiar with the pubs industry) can make a huge difference:

• Ensuring Your MRO Notice is Valid: The initial notice might seem simple, but many technical pitfalls can make it invalid. For example, quoting the wrong dates, sending it to the wrong entity, or requesting MRO when you’re not actually eligible could all derail your attempt. If your notice is invalid, the pub company may reject it – and because the code prevents frequent re-submissions, you might not get another chance for two years. A professional advisor can provide MRO notice guidance (Scotland-specific) to draft the notice correctly and at the right time, so that it’s taken seriously by the landlord.
• Navigating Tight Deadlines: As outlined above, the MRO timeline is full of strict deadlines (28 days for an offer, 8-week negotiation period, 3-week appointment window, etc.). Both tenants and landlords must act within these timeframes. If you miss a deadline or fail to respond in time, you could lose your MRO opportunity or default to remaining tied under the status quo. An experienced consultant will help you track these dates and even handle communications on your behalf to ensure nothing slips through the cracks. They can also press the landlord if the landlord is dragging their feet or missing their obligations.
• Interpreting and Negotiating Terms: When the pub company makes an MRO offer, it will come in the form of legal documents (lease agreements or deed variations) that can be lengthy and complicated. You’ll want to confirm that the terms are no less favourable than your current tied deal, aside from the tie. Sometimes clauses in the draft could subtly disadvantage you (e.g. higher repair obligations, new service charges, or shorter tenure). A pub-specialist consultant or solicitor can review the terms line-by-line to flag any unfair conditions. They know what “unreasonable terms” are forbidden under the code and can challenge them. Similarly, during negotiation, having a professional negotiator on your side (someone who knows pub rents and the MRO process) can significantly improve your outcome – they can counter the landlord’s rent proposals with evidence and ensure the market rent is truly fair.
• Assessing the Market Rent: One of the biggest questions in going free-of-tie is what the fair market rent for your pub should be. Landlords might propose an inflated rent hoping to offset the loss of tied profits. An independent chartered valuation surveyor working for you can estimate a reasonable free-of-tie rent for your pub and help you argue for that figure in negotiations (even before any official rent assessor is called in). Remember, once you go free-of-tie, you’ll have freedom in purchasing but also full responsibility for your costs – a rent that is too high could wipe out the benefit. Professional advice ensures you don’t agree to an unrealistic rent.
• Avoiding Unfavourable Agreements: Going free-of-tie is a major decision. If done correctly, it can be very positive for a tenant’s business (you gain price flexibility, product choice, and potentially better profit margins). But if done poorly, you might end up with a high rent or onerous lease that leaves you worse off. Experts will help project your post-MRO financials (considering you’ll buy beer at open market prices but without discounts, etc.) so you can judge if the MRO deal truly makes you better off. They will also remind you of things like stocking requirements, remaining lease length, or impact on pub resale value. In short, they help you weigh the risks and rewards before you sign anything.

Even the pub companies themselves acknowledge the value of independent advice. For example, Star Pubs & Bars (Heineken UK) “always recommends that you take independent advice” to decide your best options. There are various sources of help: industry consultants (like MDE Pub Consultants), chartered surveyors who specialise in pub rentals, solicitors experienced in commercial leases, and organisations like the BII (British Institute of Innkeeping) which offer initial guidance to tied tenants. By assembling the right team, you can approach the MRO process with confidence, knowing your notice will be properly served, your negotiations well-informed, and your rights protected at each step.

Embarking on an MRO lease conversion is a significant move, and you don’t have to do it alone. MDE Pub Consultants are here to help tied pub tenants in Scotland navigate this new landscape. We are specialists in the Scottish Pubs Code and have first-hand experience with MRO negotiations, rent assessments, and lease transitions. Whether you need one-off advice on serving an MRO notice or full support through negotiations and beyond, our team can provide tailored, clear guidance to suit your situation.

Take action now: If you’re considering going free-of-tie – or even just curious about your options under the Pubs Code – get in touch with MDE Pub Consultants. We can review your lease, help determine your eligibility and optimum timing, and guide you step-by-step so that you don’t risk invalid notices or missed deadlines. Our goal is to ensure you get a fair deal and make the most of your new rights under the Scottish Pubs Code. Going free-of-tie can unlock better profits and more freedom for your pub, but the process must be handled carefully.

Contact MDE Pub Consultants today for a friendly, no-obligation chat about your pub and the MRO process. With professional support on your side, you can approach MRO Scotland with confidence and secure the free of tie lease Scotland tenants have been fighting for – on the best possible terms. Let us help you protect your business and thrive under a fair, free-of-tie agreement.