The government has published its Anti-Social Behaviour Action Plan committing to its long-awaited review of commercial tenancy legislation as well as its high street rental auction initiative, both of which have major implications for UK commercial real estate.
Unveiling the plan Secretary of State for Levelling Up, Housing and Communities Michael Gove said local people and businesses will be helped to take control of empty shops blighting high streets with councils armed with new powers through High Street Rental Auctions to take control quickly of empty buildings. Communities and local businesses will have the opportunity to bid for the chance to rent shops.
The Anti-Social Behaviour Action Plan also makes £2 million available to help communities and local businesses take control of these properties by covering the cost of refurbishing properties, the auction and council fees.
Gove said: "Too many high streets which were once the beating hearts of our communities have fallen into disrepair and are now blighted by boarded-up shops, broken windows and anti-social behaviour. We are putting this right through our Anti-Social Behaviour Action Plan which will give communities the power to breathe new life into their high street, ensuring that empty shops can be rented out to local people and community groups."
The Levelling Up and Regeneration Bill is already moving through Parliament proposing high street rental auctions that will allow councils to force property owners to rent out vacant high street units if they’ve been empty for a year, or 366 days out of the past two years. The British Property Federation in a column written for CoStar News has previously voiced property industry concerns that no more than a small number of vacancies, for a short period of time, are ever deliberate.
Gove also said a review of "current complex leasing laws" – led by the Law Commission - will further remove barriers to accessing property and help small businesses to "occupy properties quicker and reduce the number of empty shops on high streets, boost the local economy and bring more jobs to areas". No further details were given of the extent of the review - first suggested as likely in 2020 - which has major implications for commercial real estate.
The government did say up to 172,000 commercial properties are empty across the UK and eight in 10 of these have been vacant for more than two years. The North East and West Midlands have the most shuttered shops, with over 15% properties empty.
A recent CoStar News review of the success of the government's COVID-19 rent arrears scheme, which closed in September of last year, found there is consensus that the process did work on a functional level with legal experts saying the government is reviewing how it could be used as the template for its promised overhaul of the 1954 Landlord and Tenant Act.
The Landlord and Tenant Act 1954 was created to provide security of tenure for business tenants. In December 2020 the government said a major review of the Act would be conducted by the Law Commission and would examine how landlords and their tenants can better collaborate. It would consider how the lease process can be reviewed and improved to ensure high streets thrive as the country emerges from the COVID pandemic and would likely cover rents, lease models and forfeiture.
One party close to the review told CoStar News: "One area the government is interested in is how lease renewals might be taken out of the Court system. It has seen that using something similar to the COVID arbitration system would make resolving lease renewal conflicts a private process rather than seeing them bogged down in the County Courts, and there is clear merit in this."
Responding to the commitment to the commercial tenancy legislation review today (28 March) Melanie Leach, chief executive of the BPF, said that outdated legislation has hindered town centre regeneration for years, and welcomed the government "finally making good" on its 2020 promise to review it.
"Ideally the review would be of all commercial tenancy legislation, but even a more limited review of the 1954 Landlord & Tenant Act could see some straightforward changes to speed up, simplify and reduce the cost of starting and renewing tenancies making it easier to let empty properties, in turn boosting town centre economies. We look forward to constructively engaging with the review and helping modernise the commercial lease system.”
Other measures now committed to by government include:
- Cracking down on those that exploit vulnerable people by taking control of their property for criminal activity, or ‘cuckooing’, by consulting on making it a criminal offence
- Unlimited fines for irresponsible landlords and building owners who allow their properties to fall into disrepair and for anti-social behaviour to thrive
- Giving councils more powers to move in quickly when houses are left vacant – cutting the timeframe from when they can act from two years of a building being empty to six months
In terms of the wider High Street Accelerator funding announced Leach said it had been great to see the government take up the BPF's idea of targeted support to breathe life into run down town centres through Town Centre Accelerators.
"We’ve been making the case for this kind of bespoke approach that brings together stakeholders – business, the council and the local community – because we know that often it’s small-scale local issues that can hinder investment, and sometimes it just needs a limited amount of funding and local capacity to get new developments moving. The detail still needs to be worked out but this announcement is a big step in the right direction.”