From 2 December 2024, local councils in England have been given authority under the Levelling-up and Regeneration Act 2023 to conduct rental auctions for vacant commercial properties located in specified high streets up and down the country. The initiative has been billed as part of a broader effort to breathe new life into struggling high streets. In enabling the reoccupation of vacant properties, by forcing landlords to re-let to the highest bidder, the government hopes this will boost local economies, create more employment opportunities, and foster greater community engagement.  

The properties eligible for the auction scheme must:

• Be located in a high street or town centre designated by the local authority.
• Have been vacant for at least one year within the past two years.
• Be suitable for uses such as retail, offices, food and drink establishments, or community spaces.
• Be deemed by the local council to provide economic, social, and environmental benefits if reoccupied.

The auction process is complex. In simple terms it requires local authorities to follow a stringent 12-week process, including serving notices on landlords, publishing proposals, and preparing extensive documentation. Landlords then have a small window of opportunity to object before the auction proceeds. If the auction goes ahead, it could result in a landlord being forced into accepting a potentially poor tenant covenant paying a low rent. It could also become liable for undertaking significant improvements to bring the property up to standard. This will be harsh, particularly on non-institutional landlords who often lack capital reserves to fund expensive works.  

Experts remain understandably sceptical about the effectiveness of the policy. The policy seems to have been born out of an assumption that all landlords are deliberately leaving properties vacant, which is not true. Issues such as high business rates, the rise in the cost of living, the failure to attract businesses that fuel jobs and footfall are all arguably the root causes of failing high streets. Changes in consumer behaviour and customer preference, including the rise online retail and the attractiveness of out-of-town shopping have also brought additional pressure to bear on the local high street in recent years.  

With the auction process yet to be trialled, it remains to be seen whether the gavel will come down on vacant properties in specified locations, but it is easy to see why the high cost and administrative complexity of the process will still present significant obstacles to local authorities using these powers. It, therefore, seems very unlikely that the rental auction scheme will provide a satisfactory alternative solution to tackling the more fundamental root causes of high street decline.