UK high street rental auctions require caution despite providing new opportunities

The introduction of HSRAs marks a significant shift in the balance of power between landlords, tenants, and local authorities. Introduced under the Levelling Up and Regeneration Act 2023 and the Town and Country Planning Amendment Regulations in 2024, HRAs came into force in December last year.

Through the adoption of HSRA powers, local authorities gain the ability to intervene and let out long-term vacant high street properties without the consent of the owner or lender, provided certain conditions are met. These conditions include the property being vacant for over 365 days in a 24-month period, being located in a designated ‘high street’ area and being deemed ‘suitable’ and ‘beneficial’ to the local community.

There was little guidance provided for the meaning of ‘high street’, and ‘suitable’ and ‘beneficial’, leaving much room for interpretation by local authorities, enabling a flexible approach enabling local authorities would use their discretion to benefit their local economies and generate a greater high street presence.

The HSRA potential

HSRAs have the potential to benefit all parties involved and revive communities and their high streets, despite concerns about their ability to be consistent and predictable.

Landlords have rights to appeal in many cases, meaning that they retain autonomy, and the legislation enables landlords to take so-called ‘preventative measures’ to stop their properties being subjected to the HSRA powers. Such measures include finding their own tenants, using the properties for their own purposes, or having active plans to refurbish or redevelop their properties, which in turn should also go some way to allaying Local Authorities who were concerned enough to seek to invoke powers in the first place.

The introduction of HSRAs could also be incredibly beneficial to prospective tenants, especially small businesses and community groups. HSRAs could open up more affordable access to prime ‘high street’ locations that may have previously been out of reach. There are, however, caveats, as the leases offered through HSRAs range from one to five years, which may not provide the long-term security many businesses desire. 

Policy drivers

Where councils implement HSRAs in line with these underlying policy goals, they will be able to strategically focus resources within their local communities on previously vacant and potentially boarded-up shops on derelict high streets.

Despite these ambitions however, the challenges remain significant, from resource constraints to administrative burdens. For instance, the six-stage process for initiating a rental auction is administratively demanding. Councils must also appropriately assess suitability, consult stakeholders, and manage legal and logistical complexities. 

There are also concerns that the introduction of the HSRA powers misdiagnose the reasons as to why high street properties are vacant, focusing only on the fact that they are vacant. On the face of it, the legislation does not deal with the wider challenges around changing consumer habits and economic uncertainty. Whilst these may be strong contributing factors to high street vacancies, it is important to view HSRA powers through the wider lens of the ongoing reforms to the planning system, and the so-called ‘levelling up’ agenda, and thus form part of a package of measures.

Overall, the HSRA policy objectives refer to the greater good of communities, however whether implementation of the HSRA powers will be successful, will largely depend on the time and resources available to the local authority. They will need to be prepared and financially able to fully commit and be aware that use of HSRAs in isolation may not resolve all issues effecting the growth in local economies.

As of the mid-way point of 2025, a relatively small number of innovative authorities have been early adopters.

These powers provide teeth, particularly if used in tandem with other powers such as wider planning reforms and in a targeted and strategic manner. Many authorities are likely to be watching the early adopter authorities with interest.

Co-written by Lucy Stephenson of Pinsent Masons.