Decoding the Levelling-Up and Regeneration Act 2023: A Landlord’s Guide
Introduction
The introduction of the Levelling-up and Regeneration Act represents a significant legislative shift with direct implications for property ownership and management on our nation’s high streets and town centres. This Act has been crafted with the intention of countering the trend of retail vacancies and decline in foot traffic, which have increasingly affected the vibrancy and economic health of these urban areas.
Central to the Act is a series of measures that empower local authorities to take decisive action to stimulate regeneration and reoccupation. For landlords, this signifies a new landscape of responsibilities and opportunities. The Act aims to transform high streets and town centres into bustling hubs of commerce and community engagement through strategic interventions. These include the designation of key areas for economic development, the facilitation of property occupation, and the fostering of an environment conducive to both business growth and community cohesion.
The role of the property owner is pivotal in this transformation. Understanding the Act’s nuances will be instrumental in navigating the future of property management and contributing to the collective prosperity of our high streets.
Further details below. Contact partners@savethehighstreet.org for more information on how the Act, the Vacancy Partnership and new solutions for landlords.
Background of the Act
The enactment of the Levelling-up and Regeneration Act is a response to the social and economic challenges facing our high streets and town centres. In recent years, we have witnessed a marked increase in vacant properties and a downturn in local commerce, a trend accelerated by the rise of online shopping and changes in consumer behaviour. These shifts have not only diminished the economic vitality of these areas but have also eroded their social fabric.
The traditional role of high streets as bustling centres of trade and community life has been under threat, leading to an urgent need for revitalisation. Economic stagnation in these areas has had a ripple effect, impacting local employment, reducing business rates revenue, and leading to a decline in property values. Socially, the diminishing attractiveness of high streets has weakened community ties and led to underutilised public spaces.
This legislative approach seeks to reverse these trends by empowering local authorities with tools to actively promote and manage the redevelopment of high streets. For landlords, the Act opens up new engagement with local councils and the community, presenting both challenges to adapt to regulatory changes and opportunities to capitalise on potential growth.
Key Provisions of the Act
The Levelling-up and Regeneration Act is a comprehensive piece of legislation designed to address the current challenges facing our high streets and town centres. To summarise, the Act enables local authorities to:
- Designate certain streets and areas as essential for economic and community development, prioritising them for strategic intervention and support.
- Establish the ‘vacancy condition’ for properties, allowing intervention when premises remain unoccupied for a specified duration, thus combating long-term vacancy.
- Facilitate the reoccupation of properties by implementing a structured letting process, including rental auctions to match vacant properties with viable businesses.
For landlords, the implications of this Act are significant and multifaceted. Key provisions that directly affect you include:
- Requirement for Landlord Consent: You are required to seek consent from local authorities before entering into new tenancy agreements once a property has been identified under the vacancy condition.
- Participation in Rental Auctions: Should your property meet the vacancy condition, you may be called upon to participate in rental auctions organised by the local authority, which could influence the selection of tenants and rental terms.
- Compliance with Designation Criteria: If your property falls within a designated high street or town centre, there will be specific criteria for the types of businesses that can occupy the space, focusing on those that enhance the area’s vibrancy and economic activity.
- Appeal Process: The Act provides a clear appeal process should you contest a designation or decision made under its authority, ensuring your rights are protected.
Understanding these components is crucial as you navigate the new regulatory landscape. The Act’s provisions present both the necessity to align with community and economic objectives and the opportunity to benefit from the revitalisation initiatives that these changes are expected to bring.
New Responsibilities for Landlords
With the enactment of the Levelling-up and Regeneration Act, the role high street and town centre landlords is subject to new responsibilities. The Act imposes a duty to work with local authorities to address the issue of vacant premises, a critical factor in the economic and social health of these areas.
Key responsibilities:
- Compliance with Vacancy Condition: If a property is deemed unoccupied under the Act’s ‘vacancy condition,’ the owner is obliged to collaborate with local authorities to find suitable tenants within set timeframes.
- Engagement in Rental Auctions: In certain cases, the owner may be required to participate in rental auctions organised by the local authority, aimed at finding tenants who will contribute positively to the high street’s economic revival.
- Consent for Letting: During the notice period specified by the Act, you must obtain consent from the local authority before entering into new tenancy agreements, ensuring the property’s use aligns with the strategic goals of the Act.
- Adherence to High-Street Use: You must ensure that any new tenancy aligns with the designated high-street use, a measure to maintain the commercial diversity and vibrancy of the area.
Importance of Compliance:
Compliance is not just a legal obligation; it’s a commitment to the collective effort to rejuvenate shared commercial spaces. Adhering to the Act’s requirements signifies dedication to fostering a thriving, economically robust high street.
Consequences of Non-Compliance:
Failure to comply with these stipulations can lead to significant consequences. These may include void tenancy agreements, penalties, and potential legal action. Non-compliance can also hinder the progress of broader revitalisation efforts, impacting the collective value and reputation of the high street.
As we navigate these changes, it is imperative to understand the weight of these new responsibilities and the critical nature of compliance. Working in tandem with local authorities and adhering to the Act’s provisions will not only contribute to the revitalisation of our high streets but also safeguard and potentially enhance the value of investments in high street property.
Opportunities Presented by the Act
The Levelling-up and Regeneration Act, while introducing new responsibilities, also opens up benefits and opportunities for property owners. The Act’s focus on reviving high streets and town centres can significantly enhance the commercial viability and attractiveness of these areas, directly impacting value and profitability of property assets.
Potential Benefits and Opportunities:
- Increased Property Values: The Act’s initiatives aimed at reducing vacancies and enhancing area appeal can lead to an appreciation in property values, augmenting your real estate portfolio’s worth.
- Attracting Quality Tenants: The structured letting process, including rental auctions, increases the likelihood of attracting stable, quality tenants committed to long-term success in the community.
- Enhanced Rental Income: With the revitalisation of high streets, demand for prime locations can increase, potentially leading to higher rental income and more favourable lease terms.
- Investment Incentives: Local authorities may offer grants or incentives for property improvements, facilitating upgrades at reduced costs and improving the desirability of your premises.
Proactive Engagement for Advantageous Outcomes:
Proactive engagement with the Act’s processes is key to realising these benefits. By collaborating closely with local authorities, you can influence decisions that directly affect your properties. Participating in community planning and development discussions can provide insights into future trends, allowing you to position your properties strategically.
Moreover, embracing the vision of revitalised high streets and actively contributing to their transformation can bolster your reputation as a forward-thinking, community-oriented property owner. This reputation can translate into tangible economic advantages as tenants and consumers alike are drawn to businesses that demonstrate a commitment to community and economic development.
In summary, the Levelling-up and Regeneration Act presents an opportunity to not only contribute positively to the community but also to strengthen the financial robustness of your property investments.
Challenges and Concerns
The Act, while presenting a progressive framework for urban redevelopment, introduces challenges for landlords. Foremost among these is the adaptation to the stringent regulations surrounding the letting process, which may require a change in management strategies to remain compliant.
A significant concern is the restriction on entering new tenancy agreements during notice periods without local authority consent, which may affect timely leasing of vacant properties. This limitation, aimed at ensuring tenancies contribute to the high street’s economic resurgence, could potentially delay income generation from your assets.
The implementation of the vacancy condition also introduces the challenge of increased scrutiny over property occupation. Landlords must be vigilant in monitoring and reporting occupancy status to avoid penalties for non-compliance, adding to the administrative burden.
Moreover, the Act’s emphasis on designated high-street uses restricts the type of tenants you can engage, which might limit the scope of potential leasing opportunities. This could be particularly challenging if the current market trends or your property portfolio do not align with these designated uses.
From the landlord community, there are concerns regarding the potential for increased operational costs, especially if properties require significant investment to meet the high-street use criteria or to attract tenants through rental auctions.
To mitigate these challenges, it is advisable to establish a proactive and collaborative relationship with local authorities. Engaging in open dialogue can provide clarity on the Act’s requirements and foster a partnership approach to high street revitalisation. Staying informed about any available support, such as grants for property improvements, can also alleviate financial pressures.
Understanding and anticipating these challenges will be critical in adjusting to the new landscape shaped by the Act. By doing so, you can position yourself not only to meet your legal obligations but to take advantage of the opportunities for growth and enhancement of your property assets.
Strategies for Landlords
Aligning with the objectives of the Levelling-up and Regeneration Act is imperative for landlords. Here are strategic approaches you can adopt to ensure compliance while enhancing the value of your properties:
Strategic Alignment with High-Street Uses:
Review your property portfolio and consider adjustments to align with the Act’s focus on high-street uses. Proactively repositioning your properties to attract retail, dining, and service-oriented businesses can increase their desirability and value.
Embrace Collaborative Partnerships:
Forge partnerships with local businesses, community groups, and local authorities. Such collaborations can lead to shared visions and initiatives that not only comply with the Act but also add vibrancy and value to your properties.
Invest in Property Upgrades:
Consider investing in improvements that make your properties more attractive to potential tenants and customers. Upgrades that enhance curb appeal, energy efficiency, and functionality can justify higher rents and attract long-term, high-quality tenants.
Utilise Available Incentives:
Stay informed about any financial incentives or support programs offered by local authorities for property development and use these to offset the costs of aligning with the Act’s objectives.
Active Participation in Local Development Plans:
Get involved in local urban planning processes to understand future development plans. This insight can inform strategic decisions about property development and positioning in the market.
Adopt a Proactive Marketing Approach:
Market your properties effectively, highlighting their alignment with the Act’s objectives and their contribution to the high street’s revival. A strong marketing strategy can place your properties at the forefront of desirable locations for businesses.
By adopting these strategies, you can leverage the Act not as a regulatory hurdle, but as an opportunity to enhance the value and profitability of your properties. The Act’s objectives can serve as a roadmap for strategic investment and development, positioning your properties as key players in the economic and social revitalisation of our urban centres.
Case Studies and Examples
The following hypothetical scenarios illustrate the impact of the Levelling-up and Regeneration Act on landlords:
Scenario One: Enhanced Tenancy Quality
Imagine you own a series of retail spaces on a once-thriving high street that’s experienced an increase in vacancies. Under the Act, your local authority initiates a rental auction to fill these vacancies with quality tenants. As a result, a mix of boutique shops, cafes, and a community art space win the auction. These new businesses attract foot traffic, revitalise the street, and in turn, increase the desirability of your properties. Compliance with the Act leads to enhanced tenancy quality and potentially higher rents due to the increased demand for space in a rejuvenated area.
Scenario Two: Diversification of Property Use
You are the landlord of a large, vacant property that previously housed a department store. The local council, using powers granted by the Act, designates your property as part of a high street regeneration project. With guidance and possible financial incentives from the council, you invest in remodelling the space into a multi-use complex including retail units, co-working spaces, and leisure facilities. This diversification aligns with the Act’s objectives, attracts a broad customer base, and increases your property’s value.
Scenario Three: Collaborative Development
In another scenario, you collaborate with local authorities to convert a group of underutilised properties into a residential and retail hub, in line with the Act’s vision. This partnership results in a mixed-use development that meets community needs and aligns with the high street’s character, significantly raising your property’s long-term revenue potential.
Each of these scenarios underscores the Act’s transformative potential when landlords engage proactively with its provisions. By embracing the opportunities presented, you can contribute to and benefit from the sustainable revitalisation of our high streets.
Conclusion
The Levelling-up and Regeneration Act ushers in a new era of responsibility and opportunity for property owners. Key takeaways include the necessity to adapt to enhanced regulatory frameworks, particularly regarding property vacancy and the alignment of tenancy with the Act’s objectives. The Act stipulates landlord engagement in rental auctions and imposes a structured process for tenancy agreements, underscoring the need for active participation in the revitalisation process.
For landlords, compliance is not merely a legal requisite but a chance to capitalise on the economic uplift of regenerated areas. By embracing the Act’s vision, you can elevate the commercial viability of your properties, enhance their value, and contribute to the sustainability of high streets.
Looking ahead, the Act enhances the potential to redefine our high streets and town centres. It promises a collaborative journey towards rejuvenation, with landlords playing a critical role. By aligning with the Act’s provisions, you can be at the forefront of shaping vibrant, economically robust, and community-focused urban landscapes. The future of our high streets and town centres is poised for transformation, and as landlords, you hold a pivotal role in steering this positive change.
Contact partners@savethehighstreet.org for more information on how the Act, the Vacancy Partnership and new solutions for landlords.
