Sunday, 8 May 2022

Not the worst idea ever.

This idea was mooted by the Labour opposition two years ago:

Councils should be given the power to take over the management of empty shops as part of a plan to revive ailing high streets, Labour will say.

Local authorities should be given the power to repurpose commercial properties that have been vacant for at least 12 months to bring them back into use, shadow chancellor Anneliese Dodds will say. She will also use a speech on Thursday to call for the reversal of rules that could allow shops to be sold off for conversion to housing without planning permission.

Now merrily adopted by the Tory government:

Landlords in England could be forced to let empty shops in a bid to rejuvenate high streets, under government plans.

Under the move, set to be unveiled in Tuesday's Queen's Speech, buildings left vacant for a year would have to be entered into a "rental auction". The British Retail Consortium (BRC) has calculated that one in seven shopfronts across Britain is empty. Boris Johnson said boarded-up premises were a "blight" on towns and cities and damaged local economies.

There follows the usual bleating:

BPF chief executive Melanie Leech said: "We fully support government's ambitions to revitalise town centres but political gimmicks such as compulsory rent auctions are not the solution. No property owner wants their premises to be empty. In our experience, property owners are willing to do zero-rent deals to avoid boarded-up shopfronts. But the burden of business rates and other occupational costs mean it is still unviable for many small and independent businesses to trade from town-centre premises."

Yeah, whatever. And disappoingly:

Labour accused ministers of creating "slogans and strategies, with few ideas" for effecting change across the UK.

The devil is always in the detail, but if done properly, this could actually help a lot. It can hardly make things worse. The main point is that a landlord who only owns one or two shops in an area often acts in a way that is detrimental to the whole, so it's a vicious cycle. You have unrealistic rent demands and would rather leave your premises vacant; this depresses the value of neighbouring premises, meaning they are more likely to fall vacant etc.

If one party has control of every building on a high street, be that a large landlord, the local council or 'the community', that party has every interest in agglomeration benefits. It's worth renting out marginal premises at a 'loss' if this enhances the value of neighbouring and more central sites etc. Or offering premises rent free to 'anchor' tenants like Marks and Spencer or Tesco to attract complementary businesses (the 'remora', as DBC Reed called it) to the area.

I suppose the alternative is to transfer every building on a high street into one corporate entity, giving each landowner the appropriate percentage ownership of the entity (so there is no change in economic ownership), and the entity appoints a proper managing agent who gets paid a commission on total rents collected. That way pretty much everybody wins.


Bayard said...

If one party has control of every building on a high street, be that a large landlord, the local council or 'the community', that party has every interest in agglomeration benefits.

As can be seen by a visit to Malton in North Yorkshire, where practically the whole town is owned by some aristocrat.

A K Haart said...

"No property owner wants their premises to be empty."

That's not what we hear. A large local store has been empty for a year because the retailer wouldn't or couldn't pay a rent increase. We've heard of another landlord who quietly agreed to a large rent reduction until business returned to normal after the pandemic.

Mark Wadsworth said...

B, ta for backup.

AKH, ta for more good (and bad) examples of LL behaviour.

mombers said...

Just double business rates if empty for a year - that should light a fire under the landlord to accept market rent. Scrap the 3 month's empty premises subsidy too of course

Lola said...

MOmbers. Yup. Or even better, scrap all the empty premises discounts etc. (Oh and stop exempting 'charity' shops from Bus Rates - all that does is sustain high rents.)

Mark Wadsworth said...

M, I'm a big fan of BR because they are vaguely similar to LVT. Doubling them for void periods (instead of discounts and exemptions) is a crude weapon, but it might work.

L, yes, discounts and exemptions and all the 'charity' stuff just messes things up. Nothing wrong with somewhere to take your old stuff (and buy some new old stuff) on the High Street, but one or two are enough, not half a dozen.

Lola said...

MW The half dozen charity shops (much more than that in this town) are a scandal. they can get rime locations basically because they and the landlords share the BR discounts and have 'free' staff.

Bayard said...

You can't really complain if people want to work in charity shops for nothing. My idea for them would be that they can only get as much discount from business rates as they can demonstrate they are getting from the landlord on their rent.