Own a high street property that has been sitting empty? If your local authority has rolled out High Street Rental Auctions, you could be affected.
Covid hit high streets hard, and many have never recovered. With many empty commercial properties standing vacant, at the end of 2024 the government introduced a new power for local authorities – High Street Rental Auctions.
If your local authority has rolled it out, they can step in and require landlords, like you to find a new tenant. If you can’t, the local authority can auction the leasehold and choose the bid that best fits the area’s needs.
What is a High Street Rental Auction?
High Street Rental Auctions form part of the government’s Levelling Up & Regeneration Act 2023.
Initially, it was taken up by a select few local authorities. Since then, more councils have introduced the powers.
If you have an empty commercial property in a high street zone, the local authority will support you with finding a tenant. If you are unable to find one within a set period, they can host an auction for the leasehold. They will then identify the bidder that meets the needs of the community.
The High Street Rental Auction is the last resort. Before it comes to that, there are certain conditions that must be met.
Is your empty commercial property in scope?
Your vacant commercial property or empty retail space will not qualify unless:
· Your property has been continuously vacant for at least 12 months; or
· The property has been intermittently vacant for at least 366 days over a period of 24 months.
To be considered for High Street Rental Auction, your commercial property will need to be suitable for a high street use. This is a broad category covering shops, offices, services, food and drink and community uses. The scheme is aimed in particular at brining leisure and hospitality tenants, such as cafes, restaurants, bars and gyms into empty units.
Your commercial premises would also need to fall within a designated high street ‘zone’. This must be logged by the local authority before they can start to investigate empty properties.
How do High Street Rental Auctions work?
If your empty commercial space meets the criteria, the local authority will issue an initial notice to you.
This gives you up to eight weeks to enter into a lease agreement with a new tenant. If the tenant meets your local authority’s conditions, then the process ends. You can also sell your property during this time – but whoever buys it will be subject to the same notice.
If you can’t find the right tenant, you will receive a final notice. This will kick-start the auction process. You may be required to carry out non-structural repairs to make your commercial property ready to let. However, if structural work is needed – or your property is very damaged – it will not progress to auction.
It is also possible for you to serve counter notices and appeals to halt the process, although they may not be successful.
What are the other options for an empty commercial property?
If your commercial property has been empty for some time, or needs serious repairs, you could consider an auction sale.
Properties that need major works are well-suited to auction. Auctions attract cash buyers, who are often developers or serial investors. This creates a competitive bidding environment.
Speed and certainty are other advantages. Once the hammer falls, contracts are exchanged and the buyer is legally obliged to continue the sale. Completion typically takes place in 28 days or fewer.
You will also be protected by the reserve price, which is agreed between you and the auctioneer. Your commercial property will not be sold if it does not meet this confidential figure.
To find out more about selling your commercial property via auction, book a free valuation. One of our local teams will then get in touch with you to discuss the next steps.
