Search

How can we help?

Icon

Can the Local Authority force me to lease my commercial property?

Understanding the LURA 2023

We previously discussed the Levelling-up and Regeneration Bill as part of what to expect in 2023 (read our article here.) This Bill received Royal Assent on 26 October 2023 and became law, resulting in several issues landlords need to be aware of. This article explores the key aspects of the Levelling-up and Regeneration Act 2023 (LURA 2023) that may impact landlords in England.

The LURA 2023 ushered in significant changes for the commercial real estate sector, as it aims to drive economic growth and enhance community well-being. For commercial landlords, it is crucial to comprehend the key aspects of this legislation to navigate its implications successfully.

Community regeneration

The LURA 2023 places a strong emphasis on community regeneration, aiming to uplift economically deprived areas. In an effort to revitalise high streets, the LURA 2023 allows local authorities to take action to prevent prolonged vacancies of properties it designates as being ‘important to the local community’. Controversially, if such a property has been vacant for longer than a year, or for 366 days within the previous two years, the local authority has the power to organise auctions to lease these vacant properties, providing an opportunity for businesses or initiatives to occupy and rejuvenate these spaces. Landlords now have a duty to work with local authorities on the issue of vacant premises.

Auctioning vacant properties

The criteria for properties that may be auctioned is therefore as follows:

  • The property must be situated in an area which the local authority has designated as being a high street or town centre;
  • The property must have been vacant for at least the past year, or for 366 or more days in total in the previous two years;
  • The property must be suitable for high street use; and
  • The local authority considers that the property will benefit the local economy, society or environment if it became occupied for high street use. Occupation involves the regular presence of individuals at the property, however, there is no clear definition in the Act.
Sana Nahas

Trainee Solicitor

View profile

‪+44 118 960 4611

Landlords now have a duty to work with local authorities on the issue of vacant premises.

If a property meets the above criteria, the local authority can serve a notice on the owner of the property, and whilst the notice is served, the owner is prevented from renting out the property without the local authority’s permission, unless a contract is already in place. The duration of the notice may last up to 10 weeks. If, however, the landlord has a potential letting for at least one year, and the local authority is satisfied that this will result in occupation by the regular presence of people, i.e. the letting would ensure that the property’s use aligns with the goals of the LURA 2023, then the local authority must consent to the letting. If no such letting is going to take place, then the local authority can serve a final notice on the property’s owner, and once this expires, a rental auction for the property can be carried out. The owner can serve a counter-notice on the local authority, in which the owner states that they intend to carry out construction works or similar on the property, or they intend to occupy the property for their own business or residence.

A rental auction for a lease of the property must be for a term of between one and five years, and the lease will be excluded from the Landlord and Tenant Act 1954, meaning the tenant would not benefit from security of tenure. The terms of the tenancy will be based on regulations, but they may include a requirement for the landlord to carry out works.

Although the LURA 2023 may appear daunting to property owners, the Act is not without benefits. The LURA 2023’s goals of reducing vacant properties can improve a high street’s appeal, attracting more traffic to that area and leading to more competitive property values and higher rental income.

Conclusion

Landlords must understand and actively manage high street properties. This Act serves as a catalyst for addressing prolonged vacancies by providing local authorities with the tools to bring these properties back into productive use. The risk of auctions may necessitate landlords to plan strategically, and put measures in place to keep their properties occupied or explore alternative uses to avoid triggering the vacancy threshold. Landlords are also encouraged to embrace the Government’s vision of revitalised high streets and collaborate with local authorities to bring this vision to life.

About this article

Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

Sana Nahas

Trainee Solicitor

View profile

‪+44 118 960 4611

About this article

Read, listen and watch our latest insights

art
  • 27 March 2024
  • Commercial Real Estate

5 key considerations when taking on a lease of a pub property

Taking on a pub property can be both exciting and daunting. Here are 5 key considerations that pub tenants should consider when taking on this new venture.

art
  • 28 February 2024
  • Commercial Real Estate

Hidden risks in serviced office agreements

This is usually a fully furnished and equipped office space that is managed by a facility management company and made available for short-term or long-term rentals to businesses, varying from one week to a year, or even longer.

art
  • 05 February 2024
  • Commercial Real Estate

What happens when a tenant serves a break notice ‘early’?

To exercise the break option, the tenant had to provide the landlord with at least six months’ notice, and in order for the notice to be valid, it must be served by special delivery or have receipt acknowledged by the landlord.

art
  • 01 February 2024
  • Commercial Real Estate

Can a tenant forfeit their own lease?

In the unusual case of NPS (40GP) Limited v Liberty Commodities Limited EWHC 2137 (Ch), a landlord had to dispute a claim by their tenant that their lease had been forfeited, after their key card access to the building had been revoked following routine maintenance.

art
  • 04 December 2023
  • Commercial Real Estate

Real Estate update and 2024 expectations

The ECC confers rights on code operators to install and maintain electronic communications apparatus on public land, and even grants operators the right to sometimes apply to court for an order allowing them to install and maintain such apparatus on private land.

art
  • 16 November 2023
  • Commercial Real Estate

Navigating Telecom agreements: landlords beware

A telecommunications agreement, or wayleave agreement, is a contract between a service provider and a landowner which allows the service operator access to install infrastructure on the privately owned land, in return for wayleave fees.