Landlords Could Be Forced To Let Vacant Premises Under Levelling Up And Regeneration Bill.

• High street/town centre designation: Local authorities (LAs) can designate a street in its area as a high street, or an area as a town centre, if it considers it to be important to the local economy because of a high concentration of "high-street" uses (see list below). A designation will be registered as a local land charge. Any premises located in a designated area could be affected by the new proposals if the following two conditions are met: 
  • Vacancy condition: the premises are unoccupied and have been unoccupied for the whole of the previous year or for at least 366 days out of the previous two years (occupation by a trespasser does not count and it is not specified whether such 366 days should be consecutive occupation); and
  • Local benefit condition: the occupation of the premises for a suitable high street use would be beneficial to the local economy, society or the environment.

High street use means any use of premises:

• as a shop or office;
• for the provision of services to people (including visiting members of the public);
• as a restaurant, bar, public house, café or other establishment selling food or drink for immediate consumption;
• for public entertainment or recreation;
• as a communal hall or meeting place;
• for manufacturing or other industrial processes that can be reasonably carried out in proximity to and are compatible with the uses specified above.

Warehouse use is excluded. When considering whether a use is suitable, the LA can take into account any work which the landlord may be required to do or which the tenant would be allowed to carry out.

Occupation requires the "regular presence of people at the premises". Further guidance on the precise meaning of occupation and what is meant by a "regular presence" will be welcomed. There are provisions in the Bill which require landlords to give information on their premises to the LA, including information as to the occupation of the premises. Failure to respond to such requests for information or giving false information in response is an offence punishable by a fine. 

• Initial letting notice: The LA can serve an initial letting notice on the landlord giving it a minimum 8-week period in which to let the premises (the notice expires after 10 weeks if a final letting notice has not been served);  
• Restriction on letting while initial letting notice is in force: Once an initial letting notice has been served, it prevents the landlord from granting (or agreeing to grant) a lease or licence to occupy the premises without first obtaining the LA's consent (such consent to be given or refused within a reasonable time). Any lease or licence granted without LA consent is void. It is not clear how this would work in practice. However if there is an existing agreement for the letting of the premises, the service of an initial or final letting notice will not prevent the landlord completing that agreement;
• Permitted lettings: The LA must give consent to a lease or licence to occupy which is for one year or more (without a right to terminate during the first year) which begins within eight weeks from the initial letting notice taking effect and results in the premises being occupied for an activity that involves the "regular presence of people at the premises" (quite what this amounts to, remains to be seen);
• Final letting notice: If the landlord is unable to let the property within an 8-week period, the LA can serve a final letting notice. This starts the rental auction procedure. The final notice starts a 14-week window during which the LA is entitled to run a rental auction to try to find a tenant for the business. The landlord cannot grant or agree to grant a lease or licence during this period without the LA's consent.
• Counter-notice and appeal: There is a process for the landlord to appeal the service of a final notice by serving a counter-notice. The permitted grounds are specified in the Bill. They are (broadly) that the relevant conditions for exercising the rental auction process have not been satisfied, that the owner intends to carry out substantial works or intends to occupy the premises for its own business or residential purposes. If the final letting notice is not withdrawn, the owner of the premises can make an appeal to the county court within 28 days of serving the counter-notice. The county court must either revoke or confirm the final letting notice;
• Rental auctions: The LA may arrange a rental auction to find prospective occupiers willing to take a tenancy and at what rent. Regulations will detail the process, how the successful bidder will be identified and allow the LA to specify the suitable high street use ahead of the auction. The LA can ultimately decide and grant the tenancy at an agreed rent for a suitable high street use;
• Grant of tenancy to successful bidder: The Bill provides that the LA has the capacity to enter into any tenancy with the successful bidder on the landlord's behalf, at the end of the auction. The landlord will then be required to grant the lease, and if it does not do so, the LA can do so on the landlord's behalf. The lease is deemed to be granted with the consent of any mortgagee or superior landlord;
• Terms of tenancy: The terms of the agreement for lease and lease can be decided by the LA (having regard to any representations made by the landlord). There are no provisions allowing the landlord to challenge the terms agree by the LA. The detail of the clauses will follow in further regulations but the Bill does set out the types of covenant that must be included. All leases will be contracted out of the Landlord and Tenant Act 1954 and the contractual lease term must be between 1 and 5 years (subject to the length of the landlord's own interest) and must include a restriction on use to the relevant high street use notified by the LA in the rental auction process. The agreement for lease can also include terms forcing the landlord to carry out pre-tenancy works to the premises or allowing the tenant to enter the premises to carry out fitting-out works.