7 November 2023
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Impact of new council powers to let empty high street premises through compulsory rent auctions

To The Point
(5 min read)

The Levelling up and Regeneration Act 2023 has been given Royal Assent, bringing significant changes to the planning system. This Act grants extensive powers that may necessitate the disclosure of information about landowners and new council powers to let empty high street premises in England and Wales through compulsory rent auctions. To find out more please read the article below.

It's finally here: The Levelling up and Regeneration Act 2023 (Act) has received Royal Assent. It introduces some wide-ranging reforms to the planning system and potentially wide powers that would require the disclosure of information about those who control land. This could see details such as parties and terms relating to land arrangements which are currently "off-register" and confidential, brought into the public domain via the Land Registry's open-access register. Any exercise of this power would be subject to consultation on the detail.

The good news is that its impact is not immediate. Further regulations are required to bring into effect the new power given to local authorities to force commercial landlords to let empty premises in town centres and on high streets by instigating compulsory rent auctions. These further regulations will provide more detail on the rental auction process and possible further grounds of appeal.

What do we know currently?

  • Vacant premises such as shops, offices, restaurants and pubs (after a two-stage notice procedure and a short grace period for landlords to fill the vacancy) could end up being subject to an auction process for a letting which is forced on the landlord by the local authority (LA);
  • The LA will be empowered to grant the lease on behalf of the landlord (including provisions for works) after inviting bids from prospective occupiers;
  • An owner's grounds for appeal at the pre-auction stage include: the rental auction process conditions 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;
  • Any tenancies granted will be for a minimum of one year and a maximum of five years (with deemed consent from superior landlords and mortgagees);
  • The LA can ultimately decide and grant the tenancy at an agreed rent for a suitable high street use;
  • Some comfort is offered to landlords as any lease granted will be outside the security of tenure provisions of the Landlord and Tenant Act 1954. 


  • No minimum level of rent/reserve price: Currently, there is no guidance as to the criteria under which rental offers should be assessed. Is the most suitable offer the one where the tenant agrees to pay the most rent or should other factors such as the tenant's commitment to renovate the premises (or at least put them into repair), be considered? In theory, a prospective commercial tenant could offer £1 a year in rent and, if they are the only bidder, could be awarded a lease of the premises;
  • Impact on rent review: There could be a significant impact on rental values in the area in question if leases granted pursuant to rental auctions could be included as comparable evidence for statutory lease renewals and rent reviews, (the effect on rent reviews being mitigated by the fact that most leases provide for upwards-only rent reviews);
  • Repair of premises: Hopefully, the guidance will cover maintenance of the premises. Otherwise, there will be a risk of premises falling into disrepair and the character of high streets being adversely impacted. Landlords are likely to think twice about carrying out significant improvement works, if their property is in an area which could be subject to a rental auction;
  • Service charge regime: Guidance should cover this and the LA's ability to divide large premises and auction these off as separate sections. If a LA can grant a lease which is not aligned with other leases that have been granted in a building, this could result in unfair outcomes for tenants and complex issues for landlords to navigate;
  • Costs of auction process: whether landlords or tenants should pay the costs associated with surveying, marketing, running the auction, solicitor's fees and searches and enquiries;
  • Desired effect: There is some scepticism whether the powers will achieve the desired effect. Whilst no landlord wants to see a property sitting empty, LAs may not have the time and resources available to implement the new powers when they are already stretched. Landlords may decide to repurpose their stock for example, from commercial to residential, rather than this having the effect of regenerating the high street.

The devil will be in the detail when further regulations and guidance are issued. We do not know when this will happen.

If you want more detail on the Act and the auction process, please read on.

The Act in more detail

To the Point 

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