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Staying updated on the latest commercial property legal rulings

Since the pandemic, the high street has faced a downward trend. In response, the Government has introduced new powers at the end of 2024, aimed at revitalising high streets by empowering councils to address the issue of empty shops.

High Street Rental Auctions (HRSAs) will allow businesses and community groups to lease neglected town-centre commercial properties.

Local leaders can auction the leases of vacant properties, ensuring landlords don’t leave them unoccupied for more than 365 days within a 24-month period.

The local authority must be convinced that occupying the property for a suitable high street use would benefit the local economy, society, or environment. Once established, the rental auction can be carried out.

To explore this topic Matthew Ridding, Head of Commercial Property, looks at the implications for owners and investors in commercial property.

How will commercial property be auctioned?

A survey will be conducted to create a condition report, outlining the necessary repairs to meet regulatory standards.

These repairs must be completed by the landlord at their own expense unless the property has substantial issues.

The local authority prepares the auction pack, but the landlord must provide title proof, accurate responses to inquiries, and relevant documents like safety certificates and Energy Performance Certificates (EPCs).

Matthew explained that once the property is marketed, bids are forwarded to the landlord, who is not required to accept the highest offer.

If the landlord doesn’t select a bid, the local authority can step in and typically must choose the highest bid.

If the landlord refuses to grant the lease, the local authority can sign the lease agreement on their behalf.

Lease terms include a duration of one to five years and exclusion from the Landlord and Tenant Act 1954’s security of tenure, meaning no automatic right to renew.

A rent deposit of the higher of £1,000 or three months’ rent is also required.

How will the new commercial property rules impact landlords and business owners?

“The Act and Regulations may be controversial for landlords as they limit their freedom to choose tenants, set rents, and manage properties,” said Matthew.

“However, with one in seven high street shops vacant nationwide, the Government is motivated to revitalise high streets and prevent long-term vacancies through this legislation.”

The initiative’s success depends on potential tenants bidding on vacant properties. Long-term vacancies may be due to high business rates, redevelopment costs, and low footfall.

However, the new rules could motivate owners to lease their persistently vacant properties on their own terms, avoiding the new statutory auction process.

“The new regulations are bringing significant changes to the high street landscape. It will be important for landlords to familiarise themselves with the new legislation so they can be prepared for how it may affect them,” Matthew added.

There are also new opportunities for business owners or prospective business owners to take their market to a new high street.

Having the right legal guidance and a deeper understanding of the market is crucial when purchasing commercial property. Get in touch/contact-us/ with our experienced team for assistance.

Matthew Riding

Director – Head of Commercial Department

My core area of expertise lies in investor buy to let properties and property refinance. I have worked with a wide range of clients to deliver the advice and support that they require.

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