Are you a tied pub tenant or a pub-owning business in Scotland with questions about the new Scottish Pubs Code in 2025, your Market Rent Only (MRO) rights, or other related concerns? You’re in the right place! We, MDE Pub Consultants, have compiled answers to some of the most frequently asked questions to help you navigate this important legislation.
1. What’s Changed in Scottish Pubs Code 2025 and Why It Matters?
The Scottish Pubs Code is a legal framework that regulates the relationship between tied pub tenants and pub-owning businesses in Scotland. Established under the Tied Pubs (Scotland) Act 2021 and detailed in the 2024 Regulations, it is enforced by the independent Scottish Pubs Code Adjudicator (SPCA). In effect from 31 March 2025, the Code introduces new standards of fairness and transparency. From 30 June 2025, tenants can request a Market Rent Only (MRO) lease, allowing them to go free of tie and pay market-assessed rent. The Code addresses power imbalances in tied agreements through principles of fair dealing, protection from financial disadvantage, and fair sharing of business risks. It sets rules on rent assessments, business information access, and limits on tie terms to promote a more balanced and transparent pub sector.
2. Is My Pub Covered by the Scottish Pubs Code? Understanding the Scope
It’s estimated that the Scottish Pubs Code will benefit tenants in approximately 700 tied pubs across Scotland, ensuring fairer practices for a wide range of businesses.
For Tied Pub Tenants: If you currently lease a pub in Scotland under a “tied” agreement – meaning your contract obligates you to purchase some or all of your beer or other supplies directly from your landlord – then you are covered and protected by the Scottish Pubs Code. This legislation is specifically designed to safeguard your interests and rebalance the landlord-tenant relationship.
For Pub-Owning Businesses (POBs): Any company or brewery that owns and leases pubs under tied agreements in Scotland is considered a “pub-owning business” under the Code. Critically, unlike the English Pubs Code which only applies to larger companies (those owning 500 or more tied pubs), the Scottish Code has no size threshold. This means whether you’re a large national pubco or a small regional brewer with even just one tied pub, you must comply with the Code’s regulations.
What’s Not Covered: It’s important to note that certain types of agreements fall outside the Code’s remit. This includes:
- Franchise agreements: Where your relationship is purely a franchise, not a lease with a tie.
- Free-of-tie leases: If your lease does not include any contractual obligation to purchase products from your landlord, you are already operating free-of-tie and the Code’s provisions regarding ties do not apply to your specific arrangement.
3. Defining a “Pub-Owning Business” under the Scottish Pubs Code
A pub-owning business (POB) is the landlord in a tied pub arrangement. Under the Act, this includes any entity that owns a pub leased to a tenant through a tied agreement. This can be traditional pub companies, a breweries leasing tied pubs, or any landlord who collects rent and supplies tied products or services. If you own even one tied pub, you are legally considered a pub-owning business in Scotland and must follow the Code. The Code does not apply to independent pubs where the operator owns the premises or is not tied to specific products. If a pub-owning business sells all its tied pubs or converts them to free-of-tie, the Code no longer applies to those leases.
4. Market Rent Only (MRO): Explained Simply
Market Rent Only (MRO) allows a tied pub tenant to pay only rent to their landlord, freeing them from obligations on where to purchase supplies. This effectively means going “free-of-tie.” The MRO rent is set at a market level for a non-tied pub, typically based on a valuation of its fair maintainable trade, and all previous contractual ties for products or services are removed. This empowers tenants to negotiate directly with any supplier, potentially securing better deals and a wider product range, thus ensuring they are no worse off than if they were free-of-tie from the outset. While the MRO rent might be higher than a tied rent, as the landlord no longer profits from tied sales, many tenants find the increased flexibility and purchasing power more than compensate for this difference, transforming the arrangement into a direct landlord-tenant relationship.
5. MRO Lease Requests: Timing for Scottish Tenants
In Scotland, a tied pub tenant can typically request a Market Rent Only (MRO) lease at the halfway point of their current tied lease term, provided this date is after June 30, 2025, when MRO rights become active. This means for a 10-year lease, the request can be made at the 5-year mark, or 2.5 years into a 5-year lease; requests cannot be made earlier than the halfway point. This timing allows landlords to recoup initial investments and tenants to understand their business before potentially transitioning to a free-of-tie arrangement. Additionally, to prevent frequent requests, the code generally restricts repeat MRO requests for a period (likely two years in Scotland) if a previous process was undertaken. Tenants must meticulously check their lease schedules and submit MRO notices precisely on or up to six months before the halfway date to avoid missing this critical window, as preparation is key.
Get a Better Deal – Guaranteed by MDE pub Consultants
Navigating the complexities of the Scottish Pubs Code 2025 and securing the best terms for your pub can be challenging. At MDE Pub Consultants, we don’t just offer advice – we guarantee to help you achieve a Better Deal.
Contact us today for a free consultation and let us show you how we can secure a better deal for your business.
Email: info@mdepc.co.uk
Phone: 0330 088 3133
