Government Unveils New Powers to Tackle Long-Term Vacant Shops
Ian Harvey attends the High Street Rental Auctions Showcase Event where detail of the government's new policy to address long-term vacant shops was revealed.
HSRAs are a lever for tackling long-term vacant shops, but their success will depend on how well they align with local circumstances and broader economic goals—and on whether local authorities have the capacity to administer.
It’s estimated that one in seven high street shops currently sits empty, a visual reminder of the challenges facing town centres. Persistent vacancies don’t just reflect existing difficulties—they worsen them, discouraging investment, reducing footfall; and causing a downward spiral of decline. In a recent policy assessment, IPM identified vacancy rates as an important "influencer of vitality and viability". Vacancy is ranked as the 29th most important out of 237 factors that affects the performance of the high street (Parker et al, 2017). That puts vacancy in the top 15% of all factors.
Nevertheless, up until now, the Institute of Place Management (IPM) has been fairly critical of the policy. Mainly because researchers and practitioners alike felt government was unrealistic about the impact the policy will have. We have supported HSRAs as "a tool of 'last resort' used most effectively in locations where vacancy is already actively managed, by place partnerships between key stakeholders (including landlords) and where there is a guiding vision as to the long-term goals for place transformation". In these instances, IPM estimated that HSRAs would improve the vitality and viability of the high street and could reduce vacancy rates nationally by around 1 to 1.5%.
With that in mind, I was pleased to attend the High Street Rental Auctions (HSRAs) Showcase Event in Wolverhampton on 21st November, where Local Growth Minister, Alex Norris, provided further insights into the government’s new policy to tackle long-term vacant shops. Bassetlaw; Bournemouth, Christchurch, and Poole; Darlington, and Mansfield are the four local authorities chosen to pilot the powers and develop guidance/best practice for others to follow - but with no additional funding.
High Streets Rental Auctions - New Powers
First introduced through the Levelling Up and Regeneration Act 2023, the policy enables local authorities to auction leases on commercial properties that have been unoccupied for more than 365 days in a 24-month period.
It’s another tool to reinvigorate high streets. Government hopes the powers will bring more business and community users onto the high street, creating jobs and breathing life back into city, town, and neighbourhood or village centres. Many IPM members will welcome the government’s focus on this issue because tackling long-term vacancies does more than stimulate economic growth— seeing empty units occupied again can restore pride in place and confidence.
During the showcase we learnt more about the process coming into force on the 2nd December. In simple terms there are two main parts to this. Part 1 - Before the auction there is preliminary work, notice period, and a grace period which allows the landlord time to bring the property into use, without being forced to. If not, then there is the auction (Part 2). Councils will get £5k 'new burdens money' to facilitate the process. There will be a £1 million fund for councils and landlords to bid into to help with the capital costs of meeting minimum letting standards.
Right now, the pre-auction stage, is of most interest. Partly because this stage comes first but also because it requires useful exploratory and collaborative work to be undertaken which will help local authorities understand more about the locations they have planning authority for. For example, this will include creating a Vacancy Register as well as undertaking a consultation to define the 'high street area' of interest. Even if a local planning authority has a defined town centre boundary (for example in a local plan) they must still undertake this consultation to define the high street area they are focussing on.
The Ministry of Housing, Communities and Local Government have committed to running a series of webinars, after the 2nd December, as they accept administering these powers will be incredibly complex.
Tough on vacancy or tough on the causes of vacancy?
The policy has the potential to solve some of the causes of vacancy - like when rents are higher than what the local market will bear. The powers may solve more problems that originate from landlord practices - by forcing them to engage with potential tenants - but there are many other reasons why units are vacant that have little to do with landlord behaviour (Taken & Park, 2021).
There are stark differences in high street vacancy rates across England - reflecting far more systemic issues. The Northeast is struggling the most, with nearly 18% of all high street properties empty. Contrast that with the Southeast, where overall vacancy rates are below 10% because the country's economic performance is heavily skewed towards London and the Southeast. Economic inequality is a more fundamental cause of high street vacancies - and this policy will not solve that. This needs intervention at national and regional level, through policies like the industrial strategy and devolution agenda.
However, the HSRAs could be very effective if paired with broader economic strategies that address the root causes of regional disparities. Government will be devolving significant powers to Mayoral Combined Authorities across England, enabling them to grow their sectoral clusters and improve their regional economies. HRSAs will need a similar place-based approach, devolving decisions and power to local people - not just at the level of the local authority - but at the level of the town.
Implementing the powers
Place-partnerships, like Business Improvement Districts and Town Teams, are well suited to do a lot of the necessary preliminary groundwork to know when HSRA intervention is needed. BIDs were mentioned as a mechanism through which the auction process can be promoted. But they can't use the powers. Only Local Authorities can.
One key challenge is local authority capacity to utilise these new powers effectively. Research from the High Street Task Force and the Institute of Place Management revealed that many local authorities face capacity—and often capability—gaps when it comes to taking action to help their high streets.
Without local intelligence to know when to use the powers and adequate capacity to implement them, the use of HSRAs will be limited.
Building this local capacity and capability must follow through if this policy - and any other 'tool' - is to be used effectively and have the impact the government is hoping for. However, there was an acknowledgement from the civil servants today that they do not have the finance to do that
IPM Role and Insight
The IPM has been closely involved in shaping this policy, contributing its expertise and facilitating meaningful dialogue between government and practitioners. Our work in this area has focused on engaging our professional network to ensure your voices are represented to the Government. This has included assessing the impact of the HSRA policy on the vitality and viability of high streets, hosting a round table with the Department and our members to provide a platform for practitioners to offer direct feedback and collating technical questions from our network for DLUHC to consider. Since engagement on the policy development in 2023, we have continued to provide feedback on key issues to aid the development of secondary legislation through regular meetings with officials.
In conclusion....
Throughout our engagement, we have been consistent in our message that it’s vital to recognise that the vacancy problem is not uniform across the country and that neither are the causes of vacancy. HSRAs are just one part of the solution and will not be a silver bullet. They can be a useful tool to adjust local rents on high streets where there is demand, or bring property back into use. This power will be far more effective on high streets where there is a place-partnership (or similar) that has a vision/plan and understands the dynamics of the local market. It's positive that the four Local Authorities have been selected (the early adopters) because they have a vision and are a"tackling high street issues now".
Ultimately, HSRAs will only take place if the local authority has capacity to use the powers - and want to use them. Councils who are more collaborative and more networked with their business and wider community will possibly be under more pressure to use the powers. We can conclude the four early adopters have both the desire and the capacity. Our experience at IPM, and through leading the High Streets Task Force, suggests these four are not representative of all English Local Authorities - who may not have the desire or the capacity - or both.
I appreciate the honesty about the limitations of funding and the policy. However, given that a Minister has launched it today, but with so little resource to support, makes me worry that HSRAs means the "high street policy" box is ticked for the foreseeable future.
References and further reading:
Parker, C., Ntounis, N., Millington, S., Quin, S. and Castillo-Villar, F.R. (2017), "Improving the vitality and viability of the UK High Street by 2020: Identifying priorities and a framework for action", Journal of Place Management and Development, Vol. 10 No. 4, pp. 310-348. https://doi.org/10.1108/JPMD-03-2017-0032
Talen, E., & Park, J. (2021). Understanding Urban Retail Vacancy. Urban Affairs Review, 58, 1411 - 1437. https://doi.org/10.1177/10780874211025451.
The lack of local authority capacity and capability is covered in Making the Most of High Street Investment: A High Streets Task Force Review and is available here.
Vacancy statistics from The Local Data Company
Policy Work on HSRA from IPM
About the author
Formed in 2006, the Institute of Place Management is the international professional body that supports people committed to developing, managing and making places better.