In recent years, the UK’s high streets have faced growing challenges, with vacant shops becoming a common sight in many towns and cities. As the retail landscape continues to shift, local councils are exploring innovative ways to address the issue of vacant properties. Following changes to legislation last year one such solution gaining traction is the proposed auctioning of vacant shops. This initiative aims to breathe new life into these empty spaces and provide opportunities for both businesses and communities.
From a positive perspective if shops have sat empty for a considerable time and led to the demise of an area of course all parties involved should be doing whatever they can to resolve the issue and try to get the property occupied and breathe life into the area and boost local economies. This project will also benefit new and growing as well as opportunist businesses, with the opportunity to obtain premises for a rent lower rent than they might do in a commercial marketplace and as such may lead to them opening more premises in other locations.
Sadly, the idealism of this project is one that appears to have overlooked many important factors where those initiating this could perhaps look a little closer to home in the first instance to help fill these empty units and boost local economies.
The internet has impacted the high street as we know in recent years and whilst there has been a shift in demand from the high street to warehousing this has not been reflected in business rates to soften the blow for retail and leisure operators. It will be very interesting to see if having dictated to a landlord that they have to accept a nominal sum of rent for their property because it’s the highest offer on the table whether the same relativity will be applied to the business rates of the property!
Perhaps local authorities also need to consider excessive parking charges that are quite clearly deterring customers from shopping in town centres when they can park for free or a fraction of the cost at out-of-town stores or outlet centres where Landlords are able to dictate the level of parking charges and work in partnership with their tenants to create a successful partnership all round. Whilst in an ideal world we would all be able use walk or use public transport; we all know that’s just not realistic so addressing customers be able to access town centres for free or at a relative cost will certainly encourage people back if there is an alternative to ordering online that won’t cost more.
It’s been claimed that one of the major advantages of the auction process will be that it speeds up the process. As an agent with 25 years plus in the business, it’s been a very rare occasion that a landlord with an empty shop unit doesn’t want to complete a letting as quickly as they can to improve their property, generate income and also to stop paying empty business rates. I think it's fair to say what has been missed in this regard is the due diligence that both parties must consider before entering into a lease. From a landlord’s perspective, they may well have restrictive covenants on the property prohibiting certain uses. Their lenders may require that if the property is let, it is let for a certain level of rental and if let for less it may incur penalties or increased interest rates where the capital value is affected as a result. The lender’s consent is also normally required. what will happen if this is not forthcoming?
In terms of use many landlords take a sympathetic approach to the use of their commercial space of how it will impact neighbouring occupiers and tenants either above or surrounding. It will be interesting to see if this is something that gets considered. Will a noisy or smelly user be allowed to occupy a premises because they are offering the most rent or will those involved take these factors into consideration?
The due diligence to be carried out by the incoming tenant is also a matter that can cause delays in transactions. Will this style be to the detriment of incoming tenants where they are rushed to make an offer because of the deadline of the forthcoming auction and just because it is “cheaper” don’t realise the associated obligations that come with taking a lease and create financial problems for themselves and their business leading to them vacating the property and running up legal costs for both the landlord and possibly themselves when the landlords look to obtain possession only to be put back in the same position again.
So, to conclude without doubt actions to fill empty shops is a positive measure but is dictating to a landlord that has paid to own a property who they let it to and for how much, a slippery path to go down that will lead to them using loopholes to avoid being dictated to or alternatively looking to invest their money elsewhere?
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