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Lease Renewal & MRO - Your Opportunity

Updated: Mar 16, 2021

2020/NO.04 - On 3rd April The Pubs Code Adjudicator and the Deputy Pubs Code Adjudicator very helpfully issued an advice note on preserving tied Tenants rights during the COVID-19 emergency. Concerning lease renewals the following was stated….

”Pub Owning Businesses have said that they will not serve Section 25 (s25) Landlord & Tenant Act notices during the emergency period. Any right of a tenant who has received a s25 notice to serve an MRO notice is preserved until the end of the emergency period.”

At the foot of the second page of the advice note there is further comment….

”Where a Section 26 (s26) notice under the Landlord and Tenant Act 1954 is served, the tenant should ensure that they discuss with their legal advisors whether to serve a MRO notice under the code. Where a tenancy is contracted out of the LTA, but the terms provide a right to renew, the tenant should contact the pub company before the right to renew arises.”

So are we crystal clear as to what all that means ? Oh and by the way, this declaration runs until 30th June, but in our view, it could well be extended a good deal further.

Two vital points to initially bear in mind;

(a) When the emergency period finally ends and the retail field staff return back to the fray they will be deluged with a backlog of casework.

(b) What ever the PCA direct by way of general assistance your set lease termination date stays as a fixed lease requirement come what may.

What is a s25 notice? This is a formal notice by way of a statement issued by your Pub Owning Business (POB) confirming that they will renew your lease. The notice will contain the confirmation of the lease term (maximum 14 years but usually the same as the current term if less than 15 years), the rent they require and confirmation that the new lease will be on the same terms as the old lease but subject to modernisation. If they decide not to renew the lease in what is known as a hostile s25 notice they have to give the reasons why.

A s25 notice MUST be served in the period not greater than twelve months nor less than six months prior to the lease termination date. There is no requirement to have to serve the notice bang on twelve months prior and often the notice is served close to the six months deadline. Here lies the problem which has been left unexplained by the Pubs Code Adjudicator office. If you want to preserve your renewal rights you are perfectly at liberty to serve your own lease renewal notice. This is known as a s26 notice, again under the L&T Act 1954. The service of the notice requires the landlord to grant the renewal not more than twelve months nor less than six months after the issuance of the notice. The notice contains the same things as in a s25 notice. If you serve the notice say three months prior to lease termination, you can only request the new tenancy to run from three moths AFTER the termination date - i.e you are giving the landlord the required six months notice.

Now the interesting bit. The service of a s26 notice constitutes a Trigger Notice under the Pubs Code for the request for MRO. Ah hah we hear you cry, nobody told us about that one! Well it is hidden away in the Pubs Code regulation 26 (2) (b) page 23. The day after the s26 notice is served you can serve a separate notice requiring MRO. This the preserves your rights to go free of tie come what may in the teeth of the pandemic. The response time for the POB is complicated and picked up in regulation 29 (9). This response period allows the POB to have a breathing space of two months before the MRO request effectively 'goes live'. It allows for the POB to first decide how they wish to respond to the s26 notice and whether they wish to oppose the request. BUT if there is no response within two months in normal times the s26 notice is deemed to not have been opposed.

It seems that the PCA moratorium has not covered the detail of the s26 notice service at all. If you have a lease renewal in the next twelve months this advice is meant for you!


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