The Levelling Up and Regeneration Bill Explained - What High Street Landlords Need to Know

The Levelling-Up and Regeneration Bill received Royal Assent on 26th October 2023, meaning new laws are now in force. The Government believes the Levelling-up and Regeneration Act 2023 (‘the Act’) ‘will speed up the planning system, hold developers to account, cut bureaucracy, and encourage more Councils to put in place plans to enable the building of new homes.’

The Act introduces significant changes, notably empowering local authorities in England to conduct rental auctions for qualifying and vacant high street and town centre premises. Whilst Part 10 of the Act is not yet in force, this article aims to provide an overview of what the local authorities’ powers will include. 

The motivation behind these powers is to counteract the negative impact of high street vacancy rates on local economies, aiming to rejuvenate town centres and foster vibrant community spaces.

The Act sets out four main stages when exercising these powers:

Stage 1: Designation

Local authorities can designate an area as a high street or town centre if it is considered essential to the local economy due to a concentration of premises suitable for high street use. The phrase “high street use” encompasses various activities, including shops, offices, food or drink establishments, places for public entertainment, and communal halls or meeting places. 

Stage 2: Initial Letting Notice (‘ILN’)

Local authorities can serve a landlord with an ILN for qualifying high street premises. Qualifying premises include those that have been vacant for more than one of the previous two years and where the occupation of the premises would benefit the local economy, society or environment. A 10-week ILN period restricts the landlord from letting the premises without local authority consent. The local authority will need to grant permission to a letting during this period if it meets certain conditions.  

Stage 3: Final Letting Notice (‘FLN’) and rental auction

An FLN can be served on a landlord once eight weeks have elapsed since the ILN was initially served and where the landlord has not sought consent to let. The FLN triggers a 14-week final notice period, during which the landlord must again obtain consent to any proposed letting. The landlord may serve a counter-notice on the local authority specifying the grounds on which they intend to appeal the FLN. 

Where an FLN has been served, and the landlord can no longer appeal, the local authority may conduct a rental auction, the details of which are yet to be finalised. The purpose of the rental auction is to locate potential tenants willing to take a tenancy of the premises. 

Stage 4: Power to Contract to Let

Local authorities may gain the power to enter into a tenancy contract with the successful bidder after the FLN notice period has elapsed and the landlord has not applied for consent to let. Standardised contracts and tenancy agreements are anticipated to streamline the process.

The Act enables the local authority to gather information from pertinent parties and gain access to the premises for surveys. Notably, compensation under Part 10 is confined to damages incurred whilst exercising surveying powers, setting a defined scope for potential financial restitution.

Next Steps 

We expect further details of these powers to emerge during the year ahead; however, many questions remain unanswered. For example, how will this work in practice, and who will bear the costs incurred by the local authority in carrying out these powers?

Charlotte Payne, Solicitor in our commercial property team, commented: “Although Part 10 of the Act is not yet in force, I would encourage landlords to look at their property portfolio immediately and assess the potential impacts of the Act, particularly because the clock is ticking with regards to the vacancy condition. The utilisation and success of these powers in revitalising high streets will be closely observed.”

For further information or assistance regarding the new regulations outlined in this article, please reach out to our Commercial Property team on 023 9275 3575 or email enquiries@warnergoodman.co.uk.