Although a product of the previous Government’s policy for reinvigorating the Country’s High Streets, the new government brought into force part 10 of The Levelling Up and Regeneration Act 2023 on 2nd December 2024, and as a consequence, councils have the power to hold high street rental auctions from 2 December.

The rationale of the legislation is that the prolonged vacancy of shops and buildings is a blight on our high streets and so the government wishes to “breathe new life into once bustling town centres and transform them into vibrant places where people once again want to shop, live, work and relax – restoring local pride as we level up across the country”.

The legislation is intended to improve local economies in areas with high vacancy rates by enabling local authorities to auction leases where landlords are not taking active steps to rent vacant properties.

Authorities can designate streets in their areas as high streets or town centres which are important to the local economy because of a concentration of high street uses.

For a property to be within scope it must:

• be located within a designated high street or town centre;
• be suitable for high street use. High street uses are broadly defined as shops or offices, services for visiting members of the public, restaurants, bars, pubs, cafes, public entertainment/recreation uses, communal halls or meeting places, and manufacturing/industrial processes that can be carried out alongside other high street uses but not warehouses
• have been unoccupied for a year, or has been unoccupied for at least 366 days within the last two years and
• be such that the local authority is satisfied that occupation of those premises for suitable high street use would be beneficial to the local economy, society or environment.

Once this is established then the local authority can serve on the owner an initial letting notice for a ten-week period, giving the owner a chance to let the property themselves. During the initial letting period, the local authority must approve the proposed letting.

If after eight weeks from the initial letting notice, no tenancy or licence has been granted, a final letting notice may be served for a 14-week period, with provisions for a counter notice and appeal.

If a final letting notice is in force, is outside the appeal period, and no tenancy or licence has been granted, the local authority may arrange a rental auction. The local authority may enter into a tenancy agreement with the successful bidder, which has effect as if it were entered into by the landlord

Necessarily, there are a number of detailed provisions regarding the auctions and the preparations for them but the intention is for the buyer to cover most of the costs so as to be cost-neutral for the Authority

Specifically on the planning side, a “permitted development right” will permit a change of use of a building which is a qualifying high street premises to a suitable high street use for the duration of a tenancy granted following a rental auction. The purpose of the “permitted development right “ is to avoid any delays to the auction process if a planning application otherwise had to be made for a change of use. That might provide some limited incentive for owners

How many local authorities will designate areas as high streets or town centres remains to be seen.

Lack of resources and the administrative burden this would impose on authorities will be a factor that dissuades many, especially in those less well-off areas that might otherwise benefit. The Government has identified a handful of authorities who have agreed to become “early adapters” in return for some support funding and they include Mansfield DC and Bassetlaw DC in the East Midlands

It may ultimately be seen as more important in principle than in practice as it is one of the few pieces of UK legislation that enables the State to require property owners to dispose of their property against their will, albeit on a short-term basis. Also, there may be implications for Article 1 of Protocol No. 1 to the European Convention on Human Rights which guarantees property rights although it’s to be assumed that the previous government will have satisfied itself that such Article could not be invoked successfully

From a public sector perspective, this is another tool in the hands of local authorities to address vacancy rates in town centres but it’s likely to be some time before we see whether this is a successful policy or just another well-intentioned “damp squib”

If you have any questions regarding The Levelling Up and Regeneration Act 2023 and what it means for local authorities, please contact the Geldards Public Sector Team