251: Levelling Up and Regeneration Bill 2023 – vacant high street premises and other property aspects

Amongst the sea of changes to the real estate sector recently, the Levelling Up and Regeneration Bill (LRB) 2023 will arguably bring about the most significant change.

It contains two key proposals; the first is to grant local authorities with enhanced powers to hold auctions for vacant high street premises and contract on behalf of landlords in order to fill vacant properties, secondly, a number of reforms have been proposed to the planning process to make it more efficient and enhance enforceability.

Unsurprisingly, Covid-19 exacerbated the loss of retail outlets, leaving 6,000 more units empty since the pandemic. The prior situation was already quite dire, with 150 million square feet of vacant retail property units nationally as of September 2019 (half of which had been vacant for more than 3 years) with this figure expected to rise to 429 million square feet by 2040, if the government doesn’t intervene.

The LRB is a response to MP’s recent calls for an increase in the speed of the planning permission process – a desire shared by tenants and landowners across the UK. Emphasis has been placed on targeting areas within the UK that are struggling the most to ‘catch up’ to the rest of the UK, in order to reduce geographical disparities and spread equal opportunities through the regeneration of the high street.

Interestingly, the LRB allows local authorities to hold a compulsory rental auction of vacant premises in designated high street areas. These auctions can only be carried out if the property is:

• in a high street or a town centre;
• is suitable for high street use; and
• will provide a local benefit.

The local authority must first enter into a two-stage process which will give landlords a chance to appeal, but once the auction begins, local authorities are empowered to contract as if they were the landlord. It can even include contractual provisions for major works on the part of the landlord.

The LRB also aims to reform the planning process in a number of ways. This will be done through amendments made to the Town and Country Planning Act (1990) and are set out as follows:

• an increase in fines associated with breaches of planning permission;
• doubling fees for retrospective applications and limiting the amount of times retrospective planning permission can be applied for to just one application;
• providing the Planning Inspectorate with the power to dismiss certain appeals where the appellant causes undue delay; and
• extending the planning enforcement time limit from four to 10 years for building operations and change of use to a single dwelling.

There is a theme of efficiency that runs through the LRB, with a proposal for the enhanced digitalisation of local authority systems to a) speed up the process by which local authorities can act; and b) provide them with the confidence to exercise their new powers.

While the enhanced digitalisation of local authority processes is probably much needed, the question remains as to whether in practice, the local authority is going to have the financial resources and manpower to implement these changes, particularly when it comes to rental auctions and entering into contracts on behalf of landlords.

The Bill is expected to come into force in 2024. Many of us are on the edge of our seats to see how effective it will really be.