The High Street Rental Auction (HSRA) system, introduced by the Labour Government in November 2024, aims to tackle the growing issue of vacant commercial properties in high streets and town centres across England. The Local Authorities (Rental Auctions) (England) and Town and Country Planning (General Permitted Development) (Amendment) Regulations 2024 come into force on 2 December 2024 and apply to England only, marking a significant shift in how vacant properties can be leased.
The UK has long faced the problem of vacant high-street properties, which create eyesores and attract anti-social behaviour. The previous Conservative Government highlighted these vacancies as a “blight” on communities, committing to regeneration as part of its Levelling Up agenda. Under the Levelling-up and Regeneration Act 2023, local authorities can now initiate HSRA processes to encourage businesses and community groups to occupy these spaces, helping revitalise town centres.
The HSRA process allows local authorities to auction leases on vacant commercial properties in designated high street areas. To be eligible for an HSRA, properties must meet specific criteria. They must:
- Be located in a designated high street area;
- Be a ‘high street use’ such as a shop, café or entertainment venue;
- Be vacant for at least a year (or 366 days in the last two years); and
- Be suitable for a high-street use. The local authority must determine that renting the space would benefit the local economy or community.
Once a property is eligible, the local authority will serve an initial letting notice to the owner and commission a survey of the premises. If the landlord does not lease the property within a defined period, the local authority can step in and accept a bid at auction, typically from the highest bidder. A standard tenancy contract is provided, and the local authority may charge the successful bidder for legal and survey costs.
In support of the HSRA process, the Town and Country Planning (General Permitted Development) (Amendment) Regulations 2024 introduce a new permitted development right, allowing temporary changes of use for the duration of the tenancy. This aims to help bidders as they do not have to seek separate planning approval for a change of use, providing greater certainty for businesses looking to occupy the property.
The introduction of HSRAs has not been universally popular among property owners since there is the potential to lose control over their properties: if landlords do not accept an auction bid within the required timeframe, local authorities can step in and grant the lease in any event. Additionally, landlords may face fines for failing to provide necessary information or comply with the regulations.
There may also be implementation issues since the £1 million in government funding allocated to support the auction process may not be enough to fully address the scale of the initiative, and local authorities may well struggle to implement it effectively given the short timeline before the regulations come into force.
While the goal is to revitalise high streets, there are practical challenges. Some vacant properties remain empty due to high redevelopment costs, while others may be in locations with low demand. The true test will be whether the HSRA system can bring long-term value to high streets or if it will only shift vacant properties between owners without addressing underlying economic issues.
In summary, the HSRA system offers Local Authorities a new tool for regenerating town centres and reducing vacancies but it also raises concerns for property owners about loss of control and potential financial uncertainty. If you would like advice about the HSRA, you can contact our Property Litigation team by clicking here.