Understanding the planning implications of High Street Rental Auctions

For a property to qualify for a HSRA it must:

• Be located in a designated area (high streets or town centres that local authorities consider are important to the local economy due to a concentration of ‘high street uses’). The HSRA designation is a local land charge; identifiable from a local search of a property. 
• Be suitable for 'high street use', and therefore have one of the following uses:

• as a shop/office
• providing services to persons who include visiting members of the public
• as a restaurant/bar/café
• as a public entertainment/recreation
• as a communal hall/meeting place
• having other compatible industrial/manufacturing uses. 

• Satisfy the ‘vacancy condition’ (the property must have been vacant for more for 12 months continuously or at least 366 days non-continuously over a 24-month period)
• Satisfy the ‘local benefit condition’ (occupation of the property for a suitable high street use would be beneficial to the local economy, society or environment)
• Be capable of achieving the ‘minimum standard’ (local authorities must survey properties to assess whether any works are required to ensure they are safe, secure and have no significant occupational risks.)

For the most part, properties that meet the HSRA criteria are likely to have an existing use as Class E and no change of planning use will be required. However, in circumstances where a change of use is required following a HSRA, the legislative changes create a new permitted development right (PDR), class DB, for “use of [a] qualifying high-street premises changing to a suitable high-street use”.  

Landlords and tenants both benefit from a greater degree of certainty with the PDR, as a planning application for change of use (the outcome of which is not guaranteed) will not be required for any high street use regardless of the property’s existing lawful use class.  It is important to note though that the PDR only provides for a temporary change of use.  The PDR applies for the duration of the tenancy agreed through the HSRA and the property reverts to its original use at the end of the tenancy. Therefore, if a new lease is agreed with the landlord at the end of the tenancy, a new planning application may be required for that new use (if it is a suitable high street use but outside of the original lawful use). 

Regardless of the planning position (i.e. existing lawful use or PDR for change of use), the local authority can set the use(s), within the list of high street uses, for which bids to rent a property will be eligible. This means that a local authority can ultimately restrict the use of a particular property as far as it wants to and beyond its planning use class. 

The effectiveness of the HSRA regime, in terms of both volume and speed of implementation, will ultimately come down to the local authorities.  This will no doubt depend on the competing priorities and resourcing within each individual local authority. The introduction of the HSRA regime does however put immediate pressure on landlords that are currently sitting on properties which meet the criteria, and it may incentivise private arrangements before a local authority decides to and does step in. 

For the most part, we expect that tenancies entered into through the HSRA regime will be able to rely on existing lawful use (likely Class E) and will not require planning permission. Where a proposed use differs from the existing lawful use, the PDR ensures that HSRA tenancy arrangements are not halted by uncertain planning outcomes.  However, this does not resolve the need for a change of use planning application in the long run if tenancies initially relying on the PDR are sought to be extended.  The PDR is a temporary solution for HSRA tenancies which, at between one and five years in length, are relatively short term. 

It will also be of vital importance if acting for a tenant taking a lease via the HSRA process to check any existing planning permissions to ensure that there are no conditions prohibiting the use of permitted development rights.

Specialist planning legal advice should be sought if there is any risk of such a condition; there is a body of relevant case law which needs to be considered in order to advise on its effect on the proposed lease arrangement.