A review of the recent changes bringing in high street rental auctions

With one in seven high street units reportedly vacant, the Government has brought forward legislation in an attempt to tackle this problem and bring empty units back to life. Ros Monk, partner, and Daisy Gielty, paralegal, in our property dispute resolution team consider the changes.

Originally proposed by the previous Government to combat this issue, High Street Rental Auctions (HSRAs) will come into force in England on 2 December 2024 by way of The Local Authorities and Town and Country Planning Regulations 2024 and The Levelling-up and Regeneration Act 2023 (LURA).

Which properties will it apply to?

To fall within the HSRA process, the premises must satisfy the following conditions:

• Designation: it must be within a ‘designated’ high street or town centre. Heavy industrial, warehouse and residential premises are not included.
• Usage: it must be for ‘high street use’ such as a shop, restaurant or offices, or for public entertainment or recreation.
• Vacant: it must be unoccupied for the whole of the previous year, or for at least 366 days during the previous two years.
• Suitability: the local authority must consider the letting for a suitable high-street use to be of benefit to the local economy, society or environment.

What is the process that the local authority must follow?

The local authority must serve an initial letting notice on anyone who has an interest in the relevant premises. The local authority must then instruct a qualified person to survey the premises, to ensure the premises are secure, with any significant risks removed or managed.

Once the local authority has served a final letting notice, and the period for any appeal by the owner has passed without the premises being let, the auction period can begin.

The auction period lasts for 12 weeks, and the Regulations set out specific obligations on the owner and the local authority.

Interested parties can then bid for a lease of the premises. The Regulations do not specify a minimum rental figure and so the bidder is free to put any bid forward.

If the owner of the premises does not accept any of the valid bids, then the local authority can do so on the owner’s behalf and if so, the local authority needs to accept the bid offering the highest annual rent. The local authority can then grant the tenancy if the owner fails to do so.

The Regulations contain standard form documents, including the tenancy itself.

Bidders should be aware that the local authority can request that the successful bidder pays the fees of the local authority.

It is worth noting that the Town and Country Planning (General Permitted Development) (England) Order 2015 has also been amended, providing temporary planning permission for HSRAs.

Final thoughts

This is quite a radical piece of legislation, overriding the ability of the owner of land to deal with its property as he wishes, with the aim of regenerating high streets.

The Government has quickly brought the Regulations into force, so local authorities may not yet be ready to use these new powers.

Whether this will work in re-populating empty units, will depend on the appetite of local authorities to use these powers and crucially whether there are any interested bidders for these long-standing empty properties.  It may also have an impact on the market rent. We will watch with interest.

For those interested in the scheme, please visit SaveTheHighStreet.org/end-vacancy to register.

If you would like to speak with one of our lawyers, then please get in touch with our property disputes team on 01772 258321.