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As of Monday 2nd December 2024, local authorities will be given powers to let out empty high street properties via auctions without their owner’s consent, leaving landlords facing significant costs, according to property law firm, BDB Pitmans.
High Street Rental Auctions (HSRAs) will allow local leaders to tackle persistently vacant properties in city, town and village centres by putting the leases up for auction, which the government says will boost the high street through a ‘right to rent’ commercial lots for businesses and community groups.
Commenting on the impact these new powers will have on landlords, Jenny Chappell, Real Estate Counsel at BDB Pitmans said: “Local authorities have been given the power to force landlords to let out high street premises that have been vacant for 12 months or at least 366 days in the last 24 months via rental auctions.
“Whilst landlords will have little control over the rents achieved through those auctions, they will leave property owners facing significant costs including those to bring the property up to the required standard of repair.
“These local authority-led auctions can be forced on landlords of shops, offices, restaurants, cafes, bars, community halls and manufacturing premises. ‘High streets’ are also widely defined to include property sitting on a designated high street or town centre or whatever a local authority considers to be suitable for high street use.
“Landlords with older buildings will be forced to undertake works to bring those properties up to the minimum energy efficiency standards (MEES) of EPC rating E and potentially, if MEES recommendations are adopted, to EPC rating C or B before a tenant takes occupation. This will leave landlords facing crippling costs.
“Should a landlord fail to engage or default on a lease agreement, local authorities also have the power to grant leases directly to a tenant, passing on costs to the landlord.
“Landlords do not choose to leave properties vacant and would rather have good quality tenants in place. There are often very good reasons why a property is vacant, and these regulations do not appear to take a landlord’s concerns or long-term strategy for a property into account.
“Questions also remain as to whether hard-pressed local authorities have the time, expertise, cash and desire to move forward with these lease auctions. It is a space we and landlords will watch closely.”
