Overview

• Introduced December 2024 to help local authorities tackle high street decline and long-term vacancies.
• Originates from:
• 2021 Building Back Better High Streets Strategy – addressed empty shops (8 in 10 vacant for 2+ years).
• 2022 Levelling Up White Paper – aimed to enhance pride of place.
• Levelling Up and Regeneration Act 2023 – Part 10 sets statutory process; detailed in 2024 regulations.

Key Conditions for HRA

• Vacancy Condition: met if premises vacant for 1 year or 366 days over 2 years.
• Local Benefit Condition: at local authority discretion – occupation must benefit economy, society, or environment.
• Landlord Engagement: Local authority must attempt engagement; recommended action for members is to keep notice addresses updated at Land Registry and Companies House.
• Survey: local authority instructs surveyor to confirm premises fit for letting.
• Designated High Street: Property must be on designated high street/town centre (each local authority keeps it’s own register).
• Permitted Development Rights: new Class DB allows temporary high street use during auction lease – this can become permanent.

HRA Process

• Initial Letting Notice: Starts a 10-week compliance period; landlord can let with consent for first 8 weeks.
• Final Letting Notice: Locks landlord out of letting or works without consent; breaches = criminal offence.
• Notices served on lenders, mortgagees, superior landlords where reasonably possible; 
• Notices are recorded as land charges which can be discovered via local search.
• Appeals: Counter notice (e.g. on grounds of non-compliance with process, genuine redevelopment plans); further appeal to county court.
• Auction: 12-week period; landlord can select preferred bidder; auction pack includes lease which will contain a schedule of condition limiting tenant repairs, be contracted out, at rent set up auction process.
• Legal Documents:
• Agreement for Lease (AFL): Landlord must carry out minimum works (get wind/water tight, health and safety works, MEES compliance) prior to lease starts – 3 months maximum, prescribed liquidated damages available for delay.
• Lease: 1–5 years, £1,000 deposit or 3 months’ security.

Costs

• Landlord: Works + legal fees.
• Tenant: Contribution to landlord costs – step in rights available for landlord works which are recharged to the landlord.
• Local Authority: Grants + new burdens payment available (limited funding from central government) to pay for works and lease (if landlord cannot be found).

Impact on Stakeholders

• Landlords: Risk of losing control; best defence = proactive engagement.
• Lenders: Tenancies will bypass consent; review banking covenants and monitor vacancies.
• Receivers: Consider HRA risk in valuation and disposal; avoid obstruction.

Future Outlook

• Most councils preparing; pilots at a number of local authorities but no published cases or case studies of use
• £1M government funding available for local authorities (~£3k per LA).
• Possible expansion to other property types in future.