HIGH STREET RENTAL AUCTIONS

From theory to practice

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Dan Gordon

Dan is a Senior Policy Advisor in the High Streets team at the Ministry of Housing, Communities and Local Government. He focuses specifically on the implementation of High Street Rental Auctions and presented to the ACES’ North East Branch on 6 June. If you would like Dan, or a member of the team, to present at your branch meeting, please do get in touch at highstreetrentalauctions@communities.gov.uk

Dan has kindly agreed to write this article, following his presentation to North East Branch. Thanks too to the branch for organising the article.

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Context

The issue of vacancy on high streets is something that can be seen across the country. In the last quarter of 2024, vacancy rates were reported to be 13.5% across Great Britain (13.2% in England, 15.0% in Scotland and 17.2% in Wales) (Data source is the Local Data Company). It is a particular issue in certain areas of the country, with more than 1 in 4 shops vacant in some high streets in the north of England, for example. The government is committed to revitalising our high streets. Persistent vacancy is a form of blight on our high streets and in our town centres, which can fuel a spiral of decline. High Street Rental Auction (HSRA) powers have been introduced to help combat this issue.

What are HSRAs?

HSRAs were introduced through the Levelling Up and Regeneration Act [2023] and supporting regulations, and came into effect on 2 December 2024. They are a new permissive power available for local authorities in England to auction the lease of persistently vacant commercial high street property.

The process

The full process has a number of stages and potential routes that would be too lengthy for this piece, but the diagram gives an insight into the full process and the stages that would be required (with further guidance on gov.uk).

High Street Rental Auction Process Diagram

Premises are eligible for a HSRA where they are located in a designated high street and have been unoccupied continuously for 365 days, or for at least 366 days within a 24-month period (non-continuous). The process has been designed to increase cooperation between landlords and local authorities, and to make town centre tenancies more accessible and affordable for tenants, including small businesses, community and voluntary groups. We do not expect HSRAs to apply to all vacant properties and we recognise that most landlords are proactive. The intention is to encourage collaboration, identify barriers to letting and find alternative solutions with landlords.

A landlord can be required to comply but there are safeguards built into the process, including an 8-week grace period for the landlord to re-let the premises themselves, and the ability for the landlord to participate in the auction process. We are aware though that in some cases, absent or non-cooperative landlords can frustrate regeneration and repurposing efforts and therefore this power allows local authorities to tackle this. In these cases, the local authority may act on behalf of the landlord and seek a tenant via the auction process. The landlord will be obliged to accept the tenant on the terms agreed through the council-run auction. If a landlord does not engage with certain points of the process, there are mechanisms for enforcement built into the legislation.

The HSRA powers also give local authorities the ability to determine a suitable high street use. This can restrict the types of activities that take place in premises subject to a rental auction. This could include limiting the provision of certain services in favour of businesses that local leaders feel will add the most value to the high street and the wider community.

Support on offer from MHCLG

Local authorities will have a suite of tools available to support them throughout the process. The tools include:

• Detailed non-statutory guidance setting out the steps

  
  

• Template notices, letters, packs and agreements to use throughout the process

  
  

• Offer from officials to meet with and/or respond to queries from any local authority looking to implement

  
  

• Regular bulletin and webinars to continually advertise these powers and share best practice

  
  

A new burdens payment has been made available to local authorities to cover the costs of implementing the policy. The £5,223 payment is designed to cover the legal, marketing and auction costs, incurred in administering the policy. We are aware this may not end up being sufficient to cover all costs in the process and are therefore committed to review the new burdens amount in the autumn. The policy is backed by over £1 million for 2025/26 to help local authorities implement the measures by supporting the creation of vacancy registers and covering the cost of refurbishing vacant properties.

Early adopters

All councils in England can now use HSRAs but we have announced 11 councils which are prioritising implementation as Early Adopters. They will share best practice, show how the powers are unlocking vital space on their high streets, and encourage others to do the same.

The following table: 39Map of EAs

Our Early Adopters are Bassetlaw, Darlington, Mansfield, Barnsley, Broxtowe, Lichfield, Camden, Hillingdon, North Northamptonshire, North Somerset and Westminster.

Implementation so far

We are currently aware of the following local authorities designating their high street areas and going out to consultation: Lichfield, Bassetlaw, Broxtowe, Redcar and Cleveland, and Lewisham. Other councils are due to go live with their consultations imminently. Councils who have completed their consultation on the designated area are reporting that even this first step has led to increased engagement with landlords, some of whom have not engaged with councils for years. It has also seen properties being renovated, put on sale and arrangements being made to find a tenant after, in some cases, years of vacancy.

One case study has been particularly encouraging. Rugby Borough Council has been strategically engaging with landlords ahead of plans to consult on designating its high street. One property there had remained unoccupied for over two years and had visibly fallen into disrepair. The council knew that although there was interest from potential tenants, the condition of the property and the high rental expectations were significant barriers. The council engaged with the agent, explaining the HSRA process and plans for use of these powers. Shortly after the council’s intervention, the agent reported a significant shift in the landlord’s position. The rent was reduced to a more market-appropriate level and the landlord committed capital to fund the necessary renovation works. As a result, heads of terms were agreed with a new tenant and the lease is expected to be completed with the tenant planning a light refit of the premises.

Other councils that are implementing are setting the internal foundations before designating their high streets. This includes getting approval internally, considering areas to designate by consulting local data, applying for funding to support the creation of a vacancy register, seeking internal legal advice, and mobilising project teams. Generally, these teams have included officers from economic development/regeneration, legal, planning, enforcement and communications departments. We hope to see more positive stories emerge as further local authorities start to implement these powers.

For any queries or further information on this process, please don’t hesitate to contact MHCLG at highstreetrentalauctions@communities.gov.uk.