Looking back to look ahead: tenanted pubs and MRO 10 years on

Complexity and early challenges

The Code, which aimed to enforce fair and lawful trading by pub owning businesses (POBs) in relation to their tenants and ensure that tied tenants were no worse off than free of tie tenants, was introduced with major fanfare by the Government in July 2016. Pub tenants envisaged an easy transfer from their tied operations, however they quickly found that the Code was complex and subject to varied interpretation.

There was an initial flurry of activity with 325 applications to move from a tied to free of tie deal being received during the first six months of operation, but the issues surrounding the Code resulted in no free-of-tie leases being granted by the end of 2016.

Stonegate (originally EI Group) received 42.1% of the 1,985 applications which have been submitted to date, with their 44.7% share of applications in the first year reducing to 29.3% in the last full year, with Star Pubs now receiving the most at 35.4%. With the exception of 2021, there has been an annual decline in applications, and in the first nine months of 2025 only 56 had been made. So, what’s the reason for this decline?

If you take a narrow view of the numbers, the Code could be considered a failure as only 3.7% of eligible tenants have transferred to a free-of-tie arrangement after 10 years, despite all effectively have had the opportunity. However, as stated above, the main aim of the Code was to ensure that tied tenants were in no worse financial position than free-of-tie tenants.

Impact beyond free-of-tie

What the Code has done is give tenants a stronger negotiating position against their landlord. As Tim Tomlinson, licensee of a successful pub in Lancaster, said recently in the Morning Advertiser: it has given him the opportunity to negotiate purchase-discount deals similar to those that would be obtained in the free trade.

What is notable is the reduction of eligible operators: the number of POBs has fallen from around 12,000 at the introduction of the Code down to around 2,400, a result of them moving to managed franchise models or offering leases up to five years.

Maintaining balance for the future

The Pubs Code and MRO legislation hasn’t resulted in the industry moving from tied to free-of-tie as some anticipated. Most tenants were generally satisfied with their arrangements but felt that the balance of power had shifted too far toward the POBs. The legislation helped restore fairness in those relationships, and in that respect, it has achieved its purpose: the balance between POBs and their tenants has improved in the last decade. Nonetheless, its future needs to be monitored and we must ensure that complacency does not set in or it will be to the detriment of the sector as a whole.  Tenants do not sit in a vacuum and need to seek advice from licensed property practitioners when rent notices are received.

Further information

Contact Tony Hunter or Daniel Mackernan

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