‘Rent auction’ hope for 58,000 empty shops

GOVERNMENT plans to force landlords to rent out empty high street shops could bring up to 58,000 premises back into use, according to a report published today.

Analysis by the centre-right think tank Onward found that an estimated 14 per cent of high street shops are vacant nationally, twice the average before the 2008 financial crisis. But in some towns the vacancy is much higher, including 31 per cent in Rotherham town centre where two-thirds of empty units have been unoccupied for more than three years.

The vacancy rate in the NorthEast is nearly double that in London with four other regions – including Yorkshire and Humber – suffering levels more than 60 per cent higher than the capital.

Onward’s report said large commercial property owners and overseas investors accounted for nearly half of all empty properties in the UK.

In many cases they are incentivised to keep shops empty rather than let them out at lower rents because the assets are packaged into financial products that incur penalties if the rental yield falls. As a result, rents do not fall as vacancies rise.

Government proposals, included in the Levelling Up and Regeneration Bill, would give councils the power to hold a rent auction where a town centre shop had been empty for more than a year.

Landlords would still be able to choose the winning bid but would have to accept one.

The Onward report set out how the policy could work and estimates it could bring as many as 13,200 high street units back into use in the North.

Rotherham Council leader Chris Read welcomed the

proposals but questioned how effective they might prove to be for a town particularly hard hit by its proximity to other retail destinations, including the nearby Meadowhall mall.

A £200m regeneration programme has begun in the town centre, involving residential as well as commercial development.

Coun Read said: “The report is right to identify that institutional and absent owners have contributed to that problem, and efforts to encourage them to let out properties at a genuine market rate are to be welcomed.

“This would be even more effective alongside business rate reform to level the playing field with online retailers.

“I do somewhat wonder how practical this will prove to be though.

“The report states that councils will be able to take control of properties where owners refuse to engage, but I imagine renting out a shop unit that the council has had to break into first may not be very appealing to potential tenants.”

He added: “Moreover I suspect merely refusing to engage will be only the beginning of the efforts some owners will make to avoid having other people use their properties.”

“Even where it is successful, local economies can only support so much retail, especially in the face of the coming cost-of-living crisis, and this policy will only exacerbate the challenge of an oversupply of retail space.”

Onward’s direct Will Tanner, who was one of Theresa May’s Downing Street advisers, said: “Any tenant is better than no tenant at all so the Government is right to be taking steps to address this problem by forcing commercial landlords sitting on vacant shops to make them available to the community.”