The High Street Rental Auctions (HSRA) regime, introduced in late 2024, is designed to empower Local Authorities to bring long-vacant high street premises back into productive use – particularly where landlords have been unwilling or unable to secure tenants. This initiative seeks to revitalise town centres and improve local economic, social, and environmental outcomes.
The legal framework underpinning HSRA is set out in The Local Authorities (Rental Auctions) (England) and Town and Country Planning (General Permitted Development) (Amendment) Regulations 2024,
which came into force on 2 December 2024 and applies exclusively to England. On the same day, the UK Government released non-statutory guidance to support stakeholders through the HSRA process from initiation to completion.
Purpose and Operation
Under the HSRA scheme, Local Authorities are granted the power to auction leases for premises in designated high street use categories that have remained persistently vacant. Properties subject to HSRA will be brought up to a minimum standard and let at fair market rent. The scheme is intended as a last resort when engagement with landlords has not led to a viable tenancy.
Key Points from the Government Guidance
- Timeline: The end-to-end HSRA process is expected to take approximately 22 to 24 weeks.
- Engagement First: Local Authorities are encouraged to engage constructively with landlords to explore alternatives before initiating a rental auction.
- Suitability of Premises: Not all vacant properties are suitable. For example, premises affected by significant costly issues, or large former department stores undergoing long-term redevelopment or those with significant structural issues may be negatively impacted.
- Overcoming Lending Restrictions: HSRA tenancies are deemed to have lender consent, potentially enabling lettings where financial restrictions might otherwise apply.
- Due Diligence and Resource Planning: Authorities must assess whether the premises meet the legal criteria and whether a HSRA is the most appropriate solution. It should be noted that they may also apply for a ‘new burdens payment’ funding to help cover the costs of implementing a rental auction per property.
Preliminary Steps for Local Authorities
If proceeding with HSRA, the following preparatory actions are required:
- Designation: Identify and designate a qualifying street or area.
- Statutory Conditions: Ensure the property meets:
- The vacancy condition (unoccupied continuously for 12 months or at least 366 non-continuous days in 24 months).
- The local benefit condition (letting must benefit the local economy, society, or environment).
- Survey and Access: Assess suitability and required works. Landlords must grant access for surveys.
If refused, Local Authorities may enter without consent under statutory safeguards.
Offences
- Obstruction of survey entry without reasonable excuse is a criminal offence, punishable by a fine of up to £1,000 (Level 3).
- Disclosure of confidential information obtained during the survey may lead to imprisonment (up to 2 years), a fine, or both.
Notice Period and Landlord Engagement
- Initial Notice: Served on landlords of eligible properties.
- Grace Period: Landlords have 8 weeks to secure their own tenancy arrangements.
- Final Notice: If Landlords fail to secure such arrangements, the Local Authority may issue a final notice stating its intention to proceed with HSRA.
- Objections and Appeals: Landlords may respond with a counter-notice and lodge an appeal.
Auction Period
- Local Authorities then have a 12-week window to conduct the auction and complete the tenancy agreement.
Post-Auction Process
- The successful bidder enters into two agreements with the landlord:
- A tenancy contract (agreement for lease), specifying works to be completed prior to the tenancy commencing.
- A tenancy agreement (lease), effective once the required works are complete.
- The Local Authority has the legal power to execute these agreements on behalf of the landlord and must provide them with signed copies.
Landlord Obligations
- Failure to respond to information requests or providing false information may result in fines of up to £2,500 (Level 4).
- Local Authorities may proceed in the absence of information, potentially resulting in lower rental offers due to uncertainty.
Support Materials
- The Government guidance includes standardised templates and letters for use throughout the HSRA process.
Latest Developments
According to the latest update from the Ministry of Housing Communities & Local Government, 11 councils have to date committed to trialling the scheme:
- Bassetlaw District Council
- Darlington Borough Council
- Mansfield District Council
- Barnsley Metropolitan Borough Council
- Broxtowe Borough Council
- Camden London Borough Council
- Hillingdon London Borough Council
- Lichfield District Council
- North Northamptonshire Council
- North Somerset Council
- Westminster City Council
For more information
For more information, contact Phil Scully.