12 Days of Christmas – Day 11

On day 11, we look at the new regulations governing the auctioning of vacant high street rental properties, which came into force on 2 December 2024 following the introduction of Part 10 of the Levelling Up and Regeneration Act 2023.

 

BACKGROUND

This new legislation allows local authorities in England to auction tenancies of vacant premises in high streets or town centres – without the need for the landlord's consent.

The legislation applies to commercial premises which satisfy the following criteria:

• Designation: within an area the local authority has designated as being a high street or town centre;
• Vacant: unoccupied for the whole of the last year or for at least 366 days in the last two years;
• Suitability: suitable for ‘high street use’; and
• Change beneficial: considered by the local authority to benefit the local economy, society or environment if occupied for ‘high street use’.

 

THE AUCTION PROCESS

The new regulations provide a more detailed overview of the auction process, including a requirement of the local authority to give notice to the landlord of the intended auction, provide a week-by-week timetable of the auction process, and specify the 'high street use' they intend to apply to the premises. The local authority must also use reasonable endeavours to determine whether there is a superior landlord or mortgagee and serve an initial notice (and final notice) on them.

The auction process lasts for twelve weeks, and is started by the service of a final notice:

• By week 3: landlords may be required to provide certain information relating to the premises, including a response to pre-contract enquiries, proof of title, and various safety certificates. Landlords may also make representations on the agreement for lease and tenancy terms during this time.
• By weeks 5-10: weeks 5-10 are the marketing period and are when bids will be received.

Landlords can appeal the final notice on specified grounds, but otherwise the same restrictions on granting their own leases, licences etc. apply during the final notice period. Also, landlords must not carry out any works during the final notice period without the local authority's consent.

If landlords fail to comply with any of the above, it is a criminal offence punishable by a fine.

 

WHAT NEXT?

The 2024 regulations only came into force at the start of December, so it is unclear how much local authorities will make use of their new powers to host high street rental auctions, and how many willing tenants there will be.

For further advice on high street rental auctions, please take a look at this publication: High street rental auctions – what you need to know

And finally if you have managed to read this far, we thought we would reward you with a festive joke to get you in the Christmas spirit: Why did no-one bid for Rudolph and Blitzen on eBay? Because they were two deer.