Appendix 1: Local Authorities (Rental Auctions) (England) and Town and Country Planning (General Permitted Development) (Amendment) Regulations 2024 (SI 2024/1139)
Additional information from the Ministry of Housing, Communities and Local Government
Q: Could you provide a brief summary of the rental auctions process–how it works, the main stages, to what extent the landlord can object etc?
A: High Street Rental Auctions are a new permissive power which are intended to assist local authorities in bringing long term vacant property back into meaningful use. Subject to conditions such as the term of vacancy having been satisfied, they permit local authorities to undertake an auction offering a lease of up to five years upon the property. Local Authorities may compel landlords to enter a lease with the successful bidder and to undertake works to the property to ensure the property meets a defined minimum standard.
The key stages can be defined as follows:
Steps prior to using a High Street Rental Auction
A local authority must take several preliminary actions before beginning the process, they must:
- Designate the high street areas where a High Street Rental Auction can be used, having undertaken a 28-day minimum community engagement period;
- Survey the property - to understand if the property is suitable for auction, what uses may be appropriate for the property. They may also assess what works a landlord may need to undertake to meet a minimum standard (although this may be done at a later stage).
- Satisfy the vacancy condition and local benefit condition–These conditions ensure that the process can only be used where a property has been vacant for a year, or cumulatively for more than a year within a two-year period and that the undertaking of the process would provide a benefit to the local society, economy or environment.
Using a High Street Rental Auction
The High Street Rental Auction Process begins with a 10-12 week Notice Period and then a 12-Week Auction Period.
Stage 1–Notice period
- The Notice Period begins with a local authority serving an Initial Notice on the landlord of a property they have identified as eligible for a High Street Rental Auction.
- The landlord can grant a tenancy or licence for the premises at this point, but this must begin within 8 weeks of the start of the Initial Letting Notice period (the tenancy must comply with the conditions set in S197 Levelling up Regeneration Act 2023).
- Where no eligible tenancy is found within the Initial Notice period the local authority can then serve a Final Letting Notice (a period lasting two weeks).
- The landlord then has the chance to serve a counter-notice, a period lasting two weeks (at which point the local authority can withdraw) and appeal to the County Court.
- Assuming the final notice is not withdrawn by the local authority following counter- notice or successfully appealed, the process will then move to the 12-Week Auction Period.
Stage 2–Auction period
- The local authority then has 12 weeks to (1) auction the premises (2) complete the tenancy contract.
- During this period the regulations provide points at which the local authority and landlord should engage, via the landlord making representations on certain details of the tenancy.
- The local authority must prepare an auction pack including the tenancy contract, and the terms of the tenancy, revised, where appropriate, to take account of any representations made by the landlord, along with several other documents will make up the auction pack. A marketing period of 5 weeks minimum follows where interested parties can register their bid with the local authority.
- In weeks 10-11 the local authority must serve the bids on the landlord before a successful bidder is chosen–the landlord is given the opportunity to choose the successful bidder, failing which the local authority will choose the highest rental bid. The auction process concludes with a tenancy contract exchanged by the successful bidder and the landlord.
Stage 3–After the auction
- The successful bidder at auction will enter into two legal agreements with the landlord.
- The first is the tenancy contract, which governs the landlord’s required works prior to the tenancy commencing, and the second is the tenancy itself, which will set out the specific obligations on the tenant and landlord during the term of the tenancy.
- Upon completion of the landlord’s works the tenancy will begin.
19 November 2024