Commercial property owners to be forced to fill empty spaces under new council ‘right to rent’ powers

Local authorities have the power to intervene if commercial properties remain empty for prolonged periods, under new measures introduced by the government.

Thrings’ Property Litigation Solicitor Sara Shaikh explores what this could mean for commercial landlords.

What is happening?

The High Street Rental Auctions (HSRAs), announced this month, create a ‘right to rent’ for businesses and community groups on lots that have been empty for more than 365 days in any 24-month period – with the local authority (LA) empowered to auction off leases on behalf of ‘disengaged’ landowners, ranging between one and five years.

Whilst a series of LAs have been announced as early adopters, more are expected to join the programme at a later stage. As such, it is important for commercial landlords to ensure they are staying up to date regarding what this could mean for their properties.

What does this mean?

Originally introduced by the previous Conservative government as part of the Levelling Up and Regeneration Act 2023, HSRAs seek to support businesses and community groups by providing access to underutilised sites.

For properties that are found to have been underutilised, landlords will be issued a notice that the HSRA process has begun and will be required to engage with the LA to avoid committing a criminal offence (with fines of up to £2,500).

Ultimately, for those landlords whose properties are subject to a HSRA, the likely outcome is that they will lose control of the renting process if the HSRA process is initiated against their property, and they may be left out of pocket as a result of the requirement to maintain the property to a "Minimum Standard".

The process

• Initial notice: The start of the HSRA process with a minimum eight-week grace period for the landlord to let the property following the notice taking effect;
• Final notice: To be served within 14 days of the expiry of the grace period if the landlord has not let the property;
• Counter-notice: The landlord can serve a counter-notice under a number of grounds to argue the final notice – for example, if the property cannot be reasonably let or requires substantial works;
• Appeal: If the LA doesn’t serve a withdrawal notice within 28 days of the counter-notice, the property owner can make an appeal to the county courts. If no appeal is brought forward in that window of time then the auction process begins;
• Auction: The local authority has 12 weeks to auction the premises and exchange the tenancy contract.

What can landowners do?

LAs will be required to designate and consult on the area where HSRAs could be used, which will give landowners a window for direct engagement prior to any policies being put in place.

Once HSRAs are introduced, there will be a requirement for LAs to work proactively with landlords to bring properties back into meaningful use, where possible, before going to auction. This will provide a final opportunity for landlords to secure the best possible value for their property before bidding begins.

Due to the complicated and time-sensitive nature of the notice procedure, it is also important for landlords to seek legal advice as soon as they are made aware that the process has begun. This will not only help them avoid the serious implications that they could be subjected to if they fail to comply, but could also help them utilise measures to stop compulsory measures against their property.

Thrings’ Property Litigation lawyers are experienced in reaching resolution in property disputes, acting for both landlords and tenants, often without recourse to court proceedings, and with an excellent track record when cases do go to Court. To find out more, get in contact.