The Scottish Pubs Code Regulations 2024

Characteristics of an MRO lease

14.—(1) An MRO lease is a lease, the terms of which—

(a) set the rent payable in respect of the tenant’s occupation of the pub at—

(i) an amount agreed between the landlord and the tenant in accordance with the procedure described in this Part, or

(ii) the market rent, in the event that no agreement is reached in accordance with that procedure,

(b) impose neither a product tie nor a service tie in relation to the pub,

(c) comply with any requirements set out in this code as to the terms that a lease must contain in order to be an MRO lease, and

(d) do not contain any unreasonable terms.

(2) An MRO lease modifies a tied-pub tenant’s existing lease only to the extent necessary for that lease to become an MRO lease, except where the tenant agrees to a more extensive modification of their existing lease or accepts an offer of a new lease.

(3) An MRO lease may, with the agreement of both the pub-owning business and tenant, be for a period longer than the remaining period of the existing lease.

(4) Any offer which includes one or more of the following terms is not an offer of an MRO lease—

(a) a break clause only exercisable by the pub-owning business, unless such a term is included in the existing lease,

(b) a lease period shorter than the remaining period of the existing lease,

(c) a stocking requirement other than as defined in regulation 2(1),

(d) a deposit requirement which increases the deposit disproportionately to any rent increase, except with the consent of the tied-pub tenant, or

(e) a personal guarantee requirement more onerous than in the existing lease, except with the consent of the tied-pub tenant.