From 2 December 2024, local authorities will be able to let out vacant high street premises at auction without the owner’s consent as part of a new rental auction process.
Local authorities will have the power to force landlords to let out high street premises which have been vacant for 12 months, or at least 366 days in the preceding 24 months. Landlords will be forced to engage in a process for a rental auction of retail and other premises in a designated street or town centre.
Qualifying high street premises
The new law will affect vacant premises which are deemed as having a high-street use and as qualifying high-street premises. ‘High-street use’ includes any premises whose use is, or was when last occupied, as:
- a shop or office;
- providing services to persons who include visiting members of the public;
- a restaurant, bar, public house, café, or other establishment selling food or drink;
- for public entertainment or recreation;
- a communal hall or meeting-place; or
- manufacturing or other industrial processes of a sort that can reasonably be carried on alongside one of the above uses (but not as a warehouse).
A premises will form a ‘qualifying high-street premises’ if:
- they are situated on a designated high street or in a designated town centre, and
- the local authority considers them to be suitable for a high-street use.
Once a detailed auction process has taken place, the local authority will have power to enter into an agreement for a lease which will be binding on the owner and any superior landlord. There are various key terms for the agreement for lease and lease which will be prescribed by the Regulations. If the landlord ends up defaulting on the agreement, then the local authority can grant the lease directly to the tenant.
Costs and minimum energy efficiency standards (MEES)
Most of the costs for the auction will be placed on the tenant. The landlord will bear its own costs, including those for works to bring the premises up to the MEES standard of EPC rating E (and potentially EPC rating C or B if the MEES consultations are ever implemented).
Conclusion
Whilst this new auction process does seem alarming, the conditions highlighted above must all be satisfied before the local authority can force the auction process. It will be interesting to see if local authorities choose to implement these powers and if it will make any difference to the high street, bearing in mind most landlords would prefer to have their premises occupied but may not have been able to for a multitude of reasons.
