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Ministers are seeking to tackle the scourge of empty shops on Britain’s high streets by allowing local authorities to seize control of the premises, in a move that has prompted unease from landlords.
Under the long-awaited plans, councils will be able to hold “high street rental auctions” with no reserve price for properties that have been left empty for more than a year.
Landlords of the auctioned properties will have to accept new tenants on leases of up to five years, even if they are offering annual payments far below the ostensible market rates.
The initiative is the brainchild of levelling up secretary Michael Gove and is being rolled out in an effort to “address the blight of empty high street shops” and prevent landlords “sitting on empty premises”.
However the drive has been criticised by some landlords who say it undermines property rights and risks damaging wider high-street prices.
Currently one in seven shops on Britain’s high streets lie empty, adding to a sense of decay in town centres that are already struggling.
Some 80 per cent of vacant shops in the UK have been empty for more than two years, while over one in five has stood vacant for longer than four years, according to figures quoted by the government in its response to a technical consultation on the details of the policy this week.
“Tackling the problem of prolonged vacancy . . . is at the heart of the government’s levelling up agenda,” it said. “We want to breathe new life into once-bustling town centres and transform them into vibrant places.”
A £2mn rollout will see eight councils begin piloting the programme this summer, with the first auctions slated for September and the first units occupied by October.
Landlords will be given an eight-week grace period to try to rent out the units, and will have a final choice over which tenants to select, as well as a right to appeal.
But some property owners are unhappy about the plan and the prospect of receiving below-market rents. “This does cut across property rights,” said one industry figure.
There is a belief in Whitehall that some landlords deliberately keep their properties empty in order to maintain an artificially high valuation — which would collapse if the property was let out at a relatively low rent. That is a claim that the industry strongly denies.
Melanie Leech, chief executive of the British Property Federation, said the government was wrong to scapegoat landlords for the scourge of boarded-up shops, blaming “excessive business rates, lack of local disposable incomes, and changing shopping habits”.
“Property owners don’t keep shops empty on purpose, they incur costs and lose rent if they do,” she said, adding that the new scheme “misses the point”.
The government said there were “safeguards” built into the process to ensure that the process is applied proportionately.
A spokesperson for the Levelling Up Department said the measure is “really for those landlords who aren’t engaging with the council at all and are not taking any proactive steps to rent out the property”.
But Andy Thompson, national director at Eddisons Property Auctions — which sells around 3,500 properties each year, many for local authorities — said leasing properties at knockdown rents risked hitting neighbouring landlords, because valuations were based on rents paid in the surrounding area.
“If you are putting in low rents on that building, you will devalue those assets,” he added.
Jacob Young, the Conservative minister for levelling up, insisted that the policy had the potential to be transformational: “These new powers will enable local communities to take back control,” he said.