The Levelling-up and Regeneration Act 2023 (“LURA”) contains powers to “transform our town centres by giving councils the powers to work directly with landlords to bring empty buildings back into use by local businesses and community groups, breathing life back into empty high streets”.
When?
LURA has now received Royal Assent, but the letting of vacant high-street premises by local authorities will apply from a future date, which is yet to be announced.
What?
LURA gives local authorities investigative powers in respect of premises located within designated high streets and town centres which they consider to be important because of a concentration of high street uses.
A local authority can require a person who has an interest in the premises to provide information about occupiers and interests in the premises.
Upon 14 days’ written notice to the landlord or person in possession of the premises, a local authority can enter the premises to conduct a survey. The information seeking and rights of entry can only be exercised to obtain information which the local authority thinks is likely to be necessary to exercise its powers, and it is a criminal offence not to comply with the information request without reasonable excuse or to block entry.
A local authority can serve an initial notice on a landlord if the premises are unoccupied on that day and have been for 365 days in a two-year period (not necessarily consecutively).
This applies if the premises are on a designated high street, suitable for high street use and where occupation would be beneficial to the local economy. Following the initial notice, the landlord cannot enter into an agreement to occupy nor grant any lease or licence without the consent of the local authority (with such consent to be given in a reasonable time). After eight weeks from the date of the notice, if still no tenancy has been granted by the landlord, the local authority has two weeks to serve a final notice which extends the restriction on the use of the premises for an additional 14 weeks and additionally means the landlord cannot conduct any non-emergency works without the local authority’s consent. The landlord has two weeks to appeal this notice on specified grounds, such as if the premises are not suitable for the use set out in the notice or the landlord intends to redevelop and cannot do so without vacant possession.
If the final notice has been given, not appealed, and still no tenancy has been granted by the landlord, the local authority can arrange a rental auction process to find someone to take the premises for a short term (between one to five years) on a lease contracted outside of the security of tenure provisions of the Landlord and Tenant Act, at a rent determined by the local authority as a result of the auction. The rent should be the rent proposed by the successful bidder unless otherwise agreed by the landlord. Any such lease would be deemed to be granted with the consent of any superior landlord/mortgagee and the local authority must have regard to any representations made by the landlord.
We await the regulations to see the finer detail of the terms of the leases granted but landlords of high street type premises should note, the two-year period to determine unoccupancy will be backdated to the date the rental auction provisions come into force. Prudent landlords may want to consider the implications of LURA on any of their properties which are currently vacant.