The Tied Pubs (Scotland) Act 2021 heralds significant changes for tied pub tenants, potentially impacting their rights, leases, and profitability. Understanding these changes is crucial for navigating the evolving landscape of pub tenancies in Scotland. Here’s what tenants need to know about Scottish Pubs Code.
What Is the Tied Pubs (Scotland) Act 2021?
The Tied Pubs (Scotland) Act 2021 is a new legislative framework designed to foster a fairer relationship between tied pub tenants and their pub-owning landlords. It establishes a system for equitable trading, rent transparency, and dispute resolution.
Scotland previously lacked a dedicated pubs code and adjudicator, unlike England and Wales, which have had these provisions since 2016. This Act addresses that disparity, aiming to protect tied tenants from disadvantageous lease agreements.
While the detailed Scottish Pubs Code was initially expected in 2024, it has been delayed and is now set to come into effect on 31 March 2025. Nonetheless, the Act has already established the legal groundwork for its implementation.
Key Things Tenants Need to Know about Scottish Pubs Code:
1. The Right to Request a Market Rent Only (MRO) Lease
- This pivotal change allows tenants to pursue a “free-of-tie” arrangement, paying a fair market rent only while selecting their own suppliers.
- Eligibility for an MRO lease negotiation commences at the halfway point of the current lease term. For example, if the lease has been active for 10 years of a 20-year term, tenants are now eligible.
- Landlords must respond with an offer and initiate the lease conversion process, barring limited exemptions.
2. Stocking Guest Beers
- Even within a tied agreement, tenants may stock at least one guest beer from a chosen supplier. This offers an opportunity to diversify your offerings and potentially increase profitability by catering to customer preferences for local or specialty brews.
- However, certain restrictions apply: The guest beer must be a non-mainstream product, typically sourced from a small or independent brewery.
3. Rent Transparency and Justification
The new legislation mandates that landlords provide a clear Rent Assessment Statement when proposing rent changes. This document must detail the rent calculation method, forecasts and sales data, enabling tenants to assess the fairness of the proposed rent.
4. Independent Adjudicator
- If tenants believe their rights under the forthcoming Code have been violated, they can escalate their case to the Scottish Pubs Code Adjudicator. This newly established independent office is empowered to resolve pub rent disputes and enforce the law.
- The adjudicator can compel landlords to modify their behaviour, facilitate dispute resolution, and impose penalties in severe cases.
5. Scope of The Act
- The regulations apply universally to all tied pub tenants in Scotland, irrespective of the size of the pub-owning business.
- This distinguishes the Scottish system from that of England and Wales, where only tenants of large pub companies (with 500 or more tied pubs) are covered.
- In Scotland, the protections and rights afforded by the Tied Pubs (Scotland) Act 2021 extend to all tied tenants, whether their landlord owns five pubs or fifty. Therefore, understanding your rights and the potential impact of the new legislation on your lease and business is crucial.
What Should You Do Now?
With the full Code due in March 2025, now is the time to prepare:
- Review your current lease: Determine when you will reach the halfway point and whether you will soon qualify for a market rent only agreement.
- Plan ahead for rent reviews: Be aware of the dates and understand what to expect when rent changes are proposed.
- Maintain thorough records: Document all communications with your landlord and retain copies of rent assessments or lease amendments.
- Seek expert advice: Consult with pubs code consultants specialising in pub leases, such as MDE Pub Consultants. They can assist with negotiations, rent assessments, and understanding your rights under the Act.
Final Thoughts
The Tied Pubs (Scotland) Act 2021 represents a significant stride toward equitable treatment for tied pub tenants. Whether remaining tied or pursuing a free-of-tie MRO lease, understanding tenants’ rights are paramount. Seeking professional advice from pub code consultants is highly recommended.
At MDE Pub Consultants, we are committed to helping tenants maximise their lease agreements through negotiation, rent review guidance, pub lease support, and navigation of the new Code.
📞 Need help understanding your lease or preparing for an MRO? Contact us today for expert support:
Email: info@mdepc.co.uk
Phone: 0330 088 3133
