Powers to revive the high street: high street rental auctions

A rising number of local authorities are assuming the rights given to them under The Levelling Up and Regeneration Act 2023, allowing them to hold rental auctions for properties that landlords have been unable to find tenant for. This aim of this process is to reduce the number of empty units and bring life back into the local high street.

Which councils are currently taking part?

Currently there are twelve local authorities who have chosen to adopt these powers, these are:

• Barnsley Metropolitan Borough Council
• Broxtowe Borough Council
• The London Borough of Camden Council
• The London Borough of Hillingdon Council
• Lichfield District Council
• North Northamptonshire Council
• North Somerset Council
• Westminster City Council
• Darlington Borough Council
• Bassetlaw District Council
• Mansfield District Council
• Bournemouth, Christchurch and Poole Council

What Properties are subject to these rights?

There are three criteria that must be met in order for the local authority to have the power to undertake a high street rental auction, these are:

1. Location: The property must be located in a designated high street or town centre;
2. Use: The property must be for a “high-street use” which is defined in Section 192 of The Levelling-Up and Regeneration Act 2023; and
3. Vacancy: The property must have been unoccupied for at least a whole year before that date or at least 366 days in the two years preceding that date.

What is the process?

Notice Procedure

1. The local authority must serve an initial notice on the Landlord on any days when the vacancy condition has been met, this notice then operates for a ten week period. Once this notice has been served, the Landlord is immediately restricted on how he can deal with the property;
2. After eight weeks, the local authority must then serve a final notice if no lease has been agreed between the landlord and a tenant with the local authority’s consent. Once a final notice has been served, the landlord is unable to undertake any works to the property without the local authority’s consent. At this point, there are various grounds on which the notice could be appealed.

Auction Procedure

Where a notice is in force and can no longer be appealed, a ten week processes starts, and the following steps must be followed:

Week 1 - Notice to be given to landlord confirming intention to arrange the rental auction and searches undertaken.

Week 2 – Notice to be given to landlord to provide replies to CPSE’s, proof of title and any required documents (safety or regulatory certificates etc). Notice will also include proposed terms of an agreement for lease and the lease itself (which will no doubt be standardised rather than personal to your property).

Week 3 – Landlord is able to give representations to the local authorities as to the terms of the agreement for lease and lease. Local authority must take these representations into account.

Week 4 – The local authority must serve the auction pack on the landlord.

Weeks 5 – 10 – The local authority must begin marketing the property for lease on their website and with an agent. Marketing continues until the end of the 10^th week. At the end of the 10^th week, all bids received must be served on the landlord.

Once the landlord has received all bids, they must choose a one of the bidders, if it does not the local authority can do so, and they have to choose the bidder offering the highest annual rent. If the landlord refuses to enter into the agreement for lease the local authority have the power to do so and if they do so, the agreement has the same effect as if the landlord had entered into it. This power also extends to entering into the lease.

These new powers mean that if you own vacant property on a high street proactive management and marketing are essential to ensure you have full control over the letting of your property.

If you have a property on a high street within one of the above local authorities that has been vacant for a significant length of time and think this process could affect you, please get in touch with our commercial property team.