Reviving Town Centres: High Street Rental Auctions

The government is pressing ahead with plans to introduce rental auctions of long-term empty retail properties on the high street, so what might this mean for commercial landlords?

At the moment, the proposals are light on the detail, but it was confirmed in mid-May that local authorities will be handed High Street Rental Auction powers as early as this summer under Part 10 of the Levelling up and Regeneration Act 2023. The first auctions are due to take place in September this year with the first new unit expected to be occupied and open to the public in October.

“A lively high street brings an irreplaceable community spirit,” said Jacob Young, Minister for Levelling Up, “one that is unique to its own area – along with new jobs and opportunities for local people.”

Regeneration of high streets is long overdue; no one can deny that revitalization of run down town centres, replete with empty, boarded up retail premises - interspersed with tired-looking charity shops, takeaways and newsagents - is urgently needed to bring back community cohesion and thriving businesses.

The situation has worsened since the pandemic. Data revealed that in the first quarter of 2023, one in every seven shops on the high street were closed.

So what’s the government’s vision?

How the scheme will work

The proposals are radical: essentially, the council will be able to auction off a high street shop that has been empty or unoccupied for at least a year – on a lease for up to five years. ‘Occupied’ means ‘substantial’ and ‘sustained’. However, commercial landlords will not be left powerless:

  • Councils will be advised only to use the power where landlords are not taking reasonable steps to let the property.
  • Auctions will take place without a reserve price.
  • Landlords will be able to choose which bid to accept.
  • Landlords will be required to grant a lease of between one to 5 years to the successful bidder.
  • If the landlord does not grant a lease, the council can step in to grant a lease of the property.

Local authorities will have to satisfy two criteria before forcing an auction.

  • A ‘vacancy condition’ - the property must have been vacant either for a full year or at least 366 days over the previous 2 years.
  • A ‘local benefit condition’ - the LA must consider that an intended letting will be of benefit to the local economy, society or environment.

The devil is in the detail and further regulations will be required. For example, the minimum required terms of the agreement for lease and lease itself are as yet to be clarified. The government also says it will release “detailed guidance” on the scheme ahead of implementation.

Commercial property practitioners will need to keep abreast of developments, particularly given its implementation in a matter of months.

In our upcoming live events, Mark Shelton will be taking practitioners through the key questions for commercial landlords. See our upcoming LAW2024 events.


Posted on 21.05.24