High Street Rental Auctions: Do they have a future?

This article was co-authored by Atul Joshi, Senior Associate Director - Town Centres and Economic Regeneration at Lambert Smith Hampton, Sean Prigmore, National Head of Retail at Lambert Smith Hampton and Zo Hoida, Partner at Browne Jacobson.

There is clear direction to revive town centres throughout England, as part of the UK Government’s broader plans for growth.

Persistently vacant property is clearly a significant problem in many areas blighting the streetscape and eroding the sense of well-being within our town centres.

The government introduced High Street Rental Auctions (HSRAs) in the Levelling Up and Regeneration Act 2023 granting local authorities (LAs) the power to force landlords to rent out commercial premises vacant for over a year through an auction process. Further regulatory guidance has been published, and a number of pilot schemes have been funded although most are still in their infancy.

With the first successful letting under the HSRA mechanism now completed, Lambert Smith Hampton and Browne Jacobson have held a series of workshops to review HSRAs and have canvassed the opinions of various pilot councils to explore the impact so far of the new legislation

This viewpoint explores the real-world implications and practical challenges emerging from this initiative.

HSRAs have been the subject of much debate amongst the commercial property sector on their effectiveness and transformative potential with some commentators noting that it makes no commercial sense for a landlord to deliberately leave a property vacant. 

However, some landlords have unrealistic aspirations, alternative motives, or lack willingness to invest in the property to make it lettable. The legislation is aimed at these properties and landlords.

The process 

HSRAs are a permissive power designed to help LAs to return long term vacant properties to meaningful use. The process permits LAs to auction a lease of up to five years for a suitable property. LAs may compel landlords to enter into a lease with the successful bidder and require them to undertake necessary works to ensure the property meets a defined minimum standard. 

Before making use of the HSRA process, LAs must designate eligible town centre areas and engage locally with the community for at least 28 days. They must confirm that the property meets the vacancy and local benefit conditions and assess its suitability for occupation via an auction. The process thereafter unfolds across three stages:

1. Notice period (10-12) weeks: The LA serves an Initial Letting Notice giving the landlord eight weeks to secure and eligible tenancy. If unsuccessful, a Final Letting Notice is issued allowing two weeks for objections or appeals before proceeding to auction.
2. Auction period (12 weeks): The LA prepares an auction pack, markets the property for at least five weeks and collects bids. The landlord is given the opportunity to select the successful bidder; otherwise, the LA chooses the highest rental bid. This stage ends when the landlord exchanges a tenancy contract with the bidder. 
3. Post auction: The successful bidder signs two agreements with the landlord; a contract covering required works and a tenancy agreement outlining obligations. The tenancy begins only after the landlord completes the mandated works. 

HSRA pilot schemes

Thus far, only a handful of ‘early adopters’ have been identified to help develop best practices and provide strategic feedback on the new powers. The government has provided funding to support the implementation of these powers. The early adopters are:

• Barnsley Metropolitan Borough Council
• Bassetlaw District Council
• Broxtowe Borough Council
• Darlington Borough Council
• London Borough of Camden
• London Borough of Hillingdon
• Lichfield District Council
• Mansfield District Council
• North Northamptonshire Council
• North Somerset Council
• Westminster City Council

In September 2025, Broxtowe Borough Council was the first local authority in England to formally serve a HSRA notice on a shop premises in Stapleford. The council identified the premises as part of the HSRA programme which prompted the owner to invest in a refurbishment and bring the unit back into productive use which resulted in a tenant being identified and occupying the unit.

Lichfield District Council has designated two areas (including part of the thriving town centre), with around 70% of consultation respondents agreeing the designated area maps were correct. Whilst the authority as yet to serve an HSRA notice whilst carrying out the surveying work for the designation, through engaging with local owners at the time, the council has been able to assist in various units becoming re-purposed and let, thereby achieving the aim of the legislation without needing to use its full process.

Challenges and practicalities

Implementing HSRAs requires balancing regeneration goals with significant procedural, resource and legal challenges.

Market demand

The annual LSH/Revo survey has consistently identified that the UK’s retail centres have too much floorspace – indeed in the 2025 survey, 62% of respondents to the survey felt town centres were “over shopped” by 20%-39%. It would therefore be wrong to assume that all persistent vacancies are the fault of the landlord. Vacancies are often simply a function of supply and demand.

LAs should therefore take specialist advice on local market conditions and occupier demand before progressing an HSRA to mitigate the financially and politically embarrassing situation of failing to find a tenant. 

Review of the marketing undertaken

The LA should review the marketing undertaken by a landlord of a persistently vacant property. If the property is being actively and professionally marketed on realistic terms, then one must question whether the HSRA process is likely to bring about a more successful outcome. In these scenarios the auction process probably is not appropriate.     

LA resources

Another key point is whether LAs have the resources to effectively drive such a process and have sufficient personnel to be involved in the re-letting of premises. Some LAs may question whether HSRAs are worth the effort and resource - especially for smaller high street shops. Targeting landmark and gateway properties, vacant retail parades and large units such as department stores will arguably have the greatest impact and is the best use of limited resource. 

Demanding process

The process requires LAs to assess suitability, consult stakeholders and manage legal and logistical complexities through a detailed stage process. The end-to-end HSRA process is expected to take anything up to 24 weeks.

Legal complexity

HSRAs represent a significant statutory intervention in property rights. The process demands precision - set time periods must be met, formal notices correctly served, and statutory procedures followed to the letter. Given that this is new legislation yet to be tested in the courts, landlords facing compulsory action are likely to scrutinise every procedural step for potential challenge. A single flaw in notice service or process could derail months of work and expose LAs to costly litigation.

The stakes are high: get it wrong and you risk judicial review; get it right and you set precedent for effective use of these powers. Most LAs will benefit from specialist external legal support to navigate this complex terrain, particularly for their first cases.

Property marketing

This is clearly an important part of the process and should be carried out in a transparent and efficient manner to meet the requirements of the HSRA timetable and to demonstrate to landlords and potentially the Courts that the property has had a full and fair exposure to the market. LSH has adapted its successful online auction portal with data room and bid requirements to market leasehold property compliant with the requirements of the HSRA process.

Landlord disincentives

The potential loss of control of the asset by the landlord could lead to legal confrontation and challenge. Furthermore, compelling landlords to carry out costly repairs to bring the property up to a standard for a relatively short-term tenancy creates further issues. Indeed, some properties are vacant because the landlord does not have the resource to refurbish to bring it up to a lettable standard. This raises the question of whether incomplete works prevent letting, and if so, who bears responsibility and cost, or whether the process simply stalls. 

Consultation is key

The HSRA process risks being confrontational. Where possible LAs should engage with landlords of persistently vacant property and try and agree a consensual approach to leasing the property. In the Broxtowe case it appears the threat of an HSRA was enough to encourage the landlord to invest in the asset and attract a tenant. 

Opinion

From our findings to date, HSRAs are proving to be a useful tool with potential to change behaviours simply through their existence. The 'carrot and stick' effect is clear: absentee landlords face the prospect of being compelled to fund refurbishment works and accept lease terms - including rent levels - determined not by them but through a council-controlled auction. This threat alone, as demonstrated in Broxtowe, can be enough to prompt landlords to act.

Our discussions with early adopter LAs reveal understandable concerns about resource requirements and uncertain outcomes. However, there's a paradox here: unless a critical mass of authorities actively deploy these powers, the threat loses credibility and the behaviour-change effect diminishes.

We believe HSRAs work best as part of a broader regeneration strategy. The government's recently announced £6bn Pride in Place programme, targeting over 379 deprived communities across England, Scotland and Wales, provides the perfect context. When combined with coordinated investment in public realm, business support, and community empowerment, HSRAs can be the enforcement mechanism that ensures private landlords play their part in high street revival. Used strategically and supported by specialist advice, these powers can deliver real change.