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High Street Rental Auctions: Coming Soon?

After many years of waiting and hoping, finally, we have a blog topic that actually merits a picture of a gavel! 

The topic: High Street Rental Auctions.

High Street Rental Auctions are something of a “ronseal” initiative, the legislative basis of which forms part of the Levelling-Up and Regeneration Act 2023.  The ‘what it says on the tin’ summary of the idea is as follows:

  • Local Planning Authorities are given the power to put commercial tenancies of vacant high street units within town centres up for auction, so that they can be bid on by local businesses
  • This will help to reduce the number of persistently vacant units in English high streets, revitalising the area and reducing anti-social behaviour.

Alternatively, to use the wording of the DLUHC press release:

"High Street Rental Auctions, a new local authority power to combat high street vacancy, will allow local leaders who know their area best to take control of empty properties blighting their high streets and rent them out to local businesses that want use them.

The new powers will help councils level up their high streets and tackle wide-ranging issues stemming from prolonged high street emptiness exacerbated by the pandemic, such as low footfall which leads to struggling businesses, increased unemployment and anti-social behaviour.

Where a high street shop has been empty for over a year, High Street Rental Auctions will allow local leaders to step in and auction off a rental lease for up to five years. Auctions will take place with no reserve price, giving local businesses and community groups the opportunity to occupy space on the high street at a competitive market rate."

DLUHC ran a detailed consultation on the operation of the policy in March 2023. On 14 May 2024 (over a year later), we got the response. 

Most of the details of the policy relate to how the auctions will run, who will prepare the auction packs, what will be in those packs, and the details of the leases that are to be auctioned. All of which falls a long way outside of the planning bubble in which I operate. I have no doubt that one of my real estate colleagues will be able to explain the details to you, but for now, I will simply link to the consultation response, which can be found here.

There are, however, some interest planning points squirrelled away in the detail of the consultation responses. 

Use of Permitted Development Rights to Support High Street Rental Auctions 

The consultation had originally proposed creating two new types of permitted development right to support the High Street Rental Auction Process: 

  1.  A temporary permitted development right that allowed the conversion of the unit being auction to a “suitable high-street use as determined by the local authority for the period of lease”; and 
  2. A permanent permitted development right that would allow the ‘temporary’ change of use authorised during the period of the lease to be made permanent after the lease term had expired. 

The government has now abandoned the idea of a permanent permitted development right, but the details of the temporary right make very interesting reading. 

This new temporary permitted development right will be unlike any PD right authorising a change of use that is currently in existence. 

The main differences are as follows:

  • it will not be subject to any prior approval process
  • nor will it be subject to any size thresholds; 
  • it will also apply to listed buildings and premises in Article 2(3) land.

The government's justification for this is as follows:

"The local authority will be considering and setting the suitable use and may, as part of this process have considered community views, noise, odour and other matters of planning. It would be duplicative and burdensome for them to have to replicate this process through a planning application or through consideration of prior approval under the permitted development right. The local authority will set the uses for which bids will be permitted, with the permitted development right providing the tool to grant the permission. For example, if the local authority is of the view that a vacant pub should stay a pub, they are fully empowered to limit an auction to only prospective pub businesses.

In the same way, the local authority can consider which buildings, and which locations, may benefit from the High Street Rental Auction process. They can therefore take a view on whether it should apply to a listed building or to a building in article 2(3) land, and therefore it is not necessary to duplicate this consideration in the right itself. The permitted development right does not permit any physical works that would amount to development, unless other permitted development rights apply (N.B. works affecting only the interior do not require permission).

Separate from planning permission, listed building consent will be required for any internal or external works affecting the character of a listed building."

In short, because LPAs are controlling the uses that a building can be put to, and the buildings to which the right will apply, through the auction process - there is no need to build any of the usual safeguards into the permitted development right itself. 

Timescales for Introduction

The other interesting element of the response, given that this is an election year, relates to timings. 

The consultation response promises:

  •  Secondary legislation to bring High Street Rental Auctions into legal effect by mid-2024.
  • Detailed guidance on the operation of the policy, along with a series of introductory events for stakeholders, all of which is to be rolled out before the secondary legislation takes effect.

These timescales are expanded upon in the accompanying press release, which promises that:

“The new law will shortly be laid in Parliament with the first auctions expected to take place expected to take place in September this year and the first new unit occupied and open to the public in October.”

This does not give the government a lot of time to pull together what will necessarily be a lengthy, detailed and rather complicated set of statutory instruments….  clearly, the auction clock is ticking. 

The news comes as the government publishes its response to a technical consultation today, setting out the details to help councils to enact the policy. The new law will shortly be laid in Parliament with the first auctions expected to take place expected to take place in September this year and the first new unit occupied and open to the public in October.”