Star Pubs and Bars has stopped charging tenants for a schedule of dilapidations when requesting a Market Rent Only (MRO) option, after an intervention by the Pubs Code Adjudicator (PCA).

Photograph: Pubs Code Adjudicator

It has also refunded a total of £25,000 and now informed tenants of its change in policy.

Star Pubs & Bars Limited (Star) was informing all tied tenants who requested a MRO option that they would be charged for a schedule of dilapidations.

The PCA was concerned that this upfront cost could put off tenants who wished to exercise their Pubs Code right to request MRO. Requiring the tenant to pay for the schedule of dilapidations when requesting MRO could amount to a pub company subjecting them to detriment because they exercised a code right. Regulation 50 of the code protects tenants against this.

The PCA asked for Star’s justification for requiring the tenant to pay for a schedule of dilapidations on receipt of a MRO Notice. This resulted in Star changing its policy.

The PCA then asked for a breakdown which identified those tenants it had charged under its previous policy. The PCA required Star to review all those cases and explain what steps it was going to take to rectify the situation for the tenants affected.

Following the PCA’s first intervention, Star had stopped requiring tenants to pay for the schedule of dilapidations when requesting MRO. In 2020, Star identified all tenants who had been charged for a schedule of dilapidations in response to a MRO notice and refunded them. Star made a refund totalling £25,460 to tenants. This was regardless of whether the tenant ultimately took the MRO option or not.

But Star’s administrative systems did not ensure that its website was updated with its change in policy, and this was only updated in March 2021. Tenants may therefore have read information about its MRO policies that was out of date. Star acknowledged this failure and has updated its website. It has also in its newsletter asked any affected tenants to contact its Pubs Code team.

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