Regulations coming into force on 2 December bring into effect provisions in the Levelling Up and Regeneration Act 2023 (LURA) enabling rental auctions of vacant High Street premises, and introducing a new connected permitted development right in England. The Government’s explanatory memorandum explains that the purpose of the legislation is to improve local economies in areas with high vacancy rates by enabling local authorities to auction leases where landlords are not taking active steps to rent properties.
Under these sections of the LURA local authorities can designate streets in their areas as high streets and town centres where they are important to the local economy because of a concentration of high street uses. High street uses are broadly defined as shops or offices, services for visiting members of the public, restaurants, bars, pubs, cafes, public entertainment/recreation uses, communal halls or meeting places, and manufacturing/industrial processes which can be carried out alongside other high street uses.
If the local authority considers a property on a designated high street or town centre:
- would be suitable for a high street use (taking into account landlord/tenant works which could be carried out);
- has been unoccupied for a year, or has been unoccupied for at least 366 days within the last two years; and
- the occupation of the premises for a high street use would be beneficial for the local economy, society or environment;
the local authority can serve on the landlord an initial letting notice for a ten-week period, giving the landlord a chance to let the property themselves. During the initial letting period, the local authority must approve the proposed letting.
If after eight weeks from the initial letting notice, no tenancy or licence has been granted, a final letting notice may be served for a 14-week period, with provisions for a counter notice and appeal.
If a final letting notice is in force, is outside the appeal period, and no tenancy or licence has been granted, the local authority may arrange a rental auction. The local authority may enter into a tenancy agreement with the successful bidder, which has effect as if it were entered into by the landlord.
Necessarily there are a number of detailed provisions regarding auctions and the preparations for them. Specifically on the planning side, a new permitted development right will permit a change of use of a building which is a qualifying high street premises to a suitable high street use for the duration of a tenancy granted following a rental auction. The local authority must inform the local planning authority of the suitable high street use for which the premises will be used, the date on which the use will commence, and the date on which it will cease. The premises must revert to the previous use at the end of the tenancy.
The purpose of the permitted development right is to avoid any delays to the auction process if a planning application had to be made for change of use.
For now, there will be a watching brief for planning professionals – due to the need for local authorities to designate areas as high streets or town centres, the impacts of this change will not be felt immediately, as local authorities go through that process. Local Authorities will be required to publish proposals to designate high streets or town centres, with a 28 day period for the submission of representations, and so property owners and developers may want to monitor relevant areas closely, for example where they have a vacant property awaiting redevelopment in an area which could potentially be designated.
As the designation will be a local land charge, and a local authority must keep a list and map available showing the designated high streets and town centres in its area, it will be a new factor to check when purchasing a property. The permitted development right will not apply where there is a planning condition restricting change of use under permitted development rights; as such, those seeking to benefit from High Street rental auctions and the new permitted development right should review the planning history of the property in advance to ensure that the permitted development right will be available.
