Leading analyst Mark Brumby at Langton Capital looks at the House of Lords rejecting amendment proposing pubcos investing ‘significantly’ in their estates should be excused MRO option and further declines to exempt franchises.
In case of ‘significant investment’:
· Lord Hodgson proposed MRO be set aside for companies making a ‘significant’ investment in their leased & tenanted pubs
· This has been rejected
· BISC said ‘the Government accepts, in principle, the introduction of an MRO clause but wants to make sure it is workable in practice’
· It wants to ‘minimise the risk of unintended consequences’
Franchises:
· Lord Hodgson proposed exempting franchises
· Baroness Neville-Rolfe (for HMG) held this a ‘loophole’ & Lord H withdrew amendment
· He said, however, he would ‘come back on this strongly as it has been too quickly and too easily brushed aside.’
Where to now?
· Legislation will now move to the Report Stage, then Third Reading
· H of Commons will then consider any amendments – but thus far, these have been few
· Separately, the situation in Scotland is unresolved as SMPs have governance
· Tenant demand for (higher) free-of-tie rent remains unclear. Where pubcos have offered this in the past, interest has been muted
· But, for the moment, the uncertainty prevails.
· And this could persist through a full cycle of rent reviews with the ultimate impact not known for several years.
