With one in seven high street shops sitting empty, the government is stepping in to revitalise struggling town centres through the introduction of high street rental auctions. These new powers, which came into effect on December 2nd 2024, enable local authorities to auction leases for long-vacant commercial properties, giving businesses and community groups a right to rent.

What are high street rental auctions?

High street rental auctions aim to address long-standing vacancy issues in city, town and village centres by offering new opportunities to occupy under-utilised commercial spaces. This process empowers local authorities to auction one-to-five-year leases for qualifying properties that meet certain criteria:

• Located within an area that the council has designated a high street or town centre.

• The properties are vacant and have been for at least 366 non-concurrent days in the past two years or a whole uninterrupted year.

• Suitable for high street use, as determined by the local authority.

• The council must consider the occupation of the property beneficial to the local economy, society or environment.

Landlords with properties meeting these requirements must prepare for potential council intervention, especially if they have not actively sought tenants.

Advice for landlords: Be prepared and proactive

The new regime presents significant challenges for landlords, particularly the loss of control over how and to whom their properties are rented. Here’s what landlords need to know and how they can prepare:

Proactively seek tenants

If your property has been vacant for an extended period, it’s vital to demonstrate a genuine effort to secure tenants. Keeping comprehensive records of marketing efforts, enquiries and negotiations can help mitigate the risk of intervention.

Prepare for compliance

Should your property become subject to an auction, you’ll need to provide detailed information, including responses to pre-contract enquiries; proof of title; and compliance certificates (e.g. energy performance, gas safety, fire risk assessments; and current surveys, such as asbestos management plans). Failing to supply accurate information or conducting unauthorised works during the auction process can result in criminal charges and fines.

Limited grounds for appeal

If a local authority serves a final letting notice, landlords can appeal on limited grounds. One of the most significant is if you have plans for major construction or demolition that would be incompatible with a tenant occupying the property. Another potential ground is procedural errors, such as the council failing to follow the correct processes or improperly issuing notices. Appealing requires detailed evidence and must be completed within strict deadlines, making it vital to seek expert legal advice as early as possible.

Understand auction implications

During the 12-week auction process, landlords will have limited ability to negotiate terms or select tenants.

Seek expert guidance

From preparing auction packs to managing compliance, legal expertise is crucial. We can help ensure you understand and meet your obligations while minimising the risk of financial or reputational harm.

Opportunities and considerations for tenants

For businesses and community groups, the new powers offer an exciting opportunity to secure affordable premises in prime locations on faster timescales. Here’s what prospective tenants need to consider:

Prepare for costs

The auction process allows councils to charge successful bidders for legal and surveyor fees, as well as other costs associated with the lease. These fees should be factored into your budget when bidding.

Assess the lease terms

The lease will include obligations such as maintaining the property to a specified standard. While this provides some security for tenants, you’ll need to review the terms carefully to avoid unexpected liabilities.

Swift decision making

Auction conditions often require swift conveyancing. Having legal and financial arrangements in place ahead of time can ensure a smoother transaction. We can assist in reviewing auction packs and guiding you through the legal requirements.

Leverage the opportunity

Whether you’re a start-up looking for a high street presence or a community organisation in need of space, high street rental auctions provide a unique chance to occupy previously inaccessible premises. The short-term nature of the leases may also offer flexibility to test new markets or ideas.

How we can help

At Mayo Wynne Baxter, we’re uniquely positioned to assist both landlords and tenants in navigating the high street rental auctions process.

For landlords, the legislation highlights the importance of proactive property management to avoid losing control over valuable assets. We can advise on minimising the risk of council intervention, assist with compliance and prepare auction packs, and provide representation in appeals or disputes with local authorities.

For tenants, it offers a pathway to affordable commercial space in sought-after locations but due diligence is essential to avoid hidden pitfalls. We can review auction packs to ensure transparency in the process, support bid preparation and lease negotiation, and provide end-to-end legal assistance for the transaction.