Labour plans to allow councils to seize empty shops

The Financial Times, by Sebastian Payne and Jonathan Eley
The UK’s opposition Labour party has announced it will give local authorities the power to take over properties that have been vacant for at least 12 months in a bid to rejuvenate the country’s struggling high streets.

Empty shops on high streets have become a symbol of struggling local economies which increasingly feel abandoned by the government.

Nationally, around 11.8 per cent of stores are currently vacant, according to the Local Data Company, but this masks wide regional variations. In some towns the rate is over 20 per cent and the highest figure in the database is 33 per cent.

In a visit to Bolton on Saturday, Labour leader Jeremy Corbyn is expected to say that the UK’s “once thriving high streets are becoming ghost streets” and boarded-up shops have become “a sorry symbol of the malign neglect so many communities have suffered”.

“Labour has a radical plan to revive Britain’s struggling high streets by turning the blight of empty shops into the heart of the high street, with thousands of new businesses and projects getting the chance to fulfil their potential,” he is set to say.

Under a Labour government, local authorities would be able to take over management of the vacant premises in a similar manner to empty dwelling management orders, which force empty homes back into use. There would be no change to the ownership.

It would apply to an estimated 29,000 retail units that have been vacant for 12 months. The announcement did not explain who would occupy the properties.

Although the plans will be put out to consultation, the party does not think there would be a time limit on how long local authorities would, in effect, take over such tenancies. If the landlords decide to sell their empty properties, the management orders would lapse.

Recommended Corporate bonds Short sellers target bonds to profit from UK retail crisis The announcement follows the party’s other proposals to assist the high street, including an annual revaluation of business rates, free WiFi in town centres, free bus travel for under-25s, and ending ATM charges and Post Office closures.

In response, Jake Berry, the minister for the Northern Powerhouse, which aims to boost the economy of northern England, said that the government was focused on delivering Brexit in order to “get on with levelling up opportunities across our country and breathe new life into high streets and town centres.”

“Jeremy Corbyn would wreck the economy, tax small businesses and scare off the investment needed to help our high streets, meaning more boarded up shops and fewer jobs,” he said.

Ion Fletcher, director of finance and commercial policy at the British Property Federation, said that while the organisation supported initiatives to turn around struggling town centres, giving local authorities the power to reopen shops “simply shifted the challenge of finding an occupier from the private to the public sector”.

He added that the idea raised “worrying questions about what rights property owners would have in such cases”.

“Many landlords are happy to let out property on a meanwhile basis with little or no rent, but the sad fact is that in many places property owners find it difficult to find an occupier even at zero rent”.

An inquiry by the House of Commons Housing, Communities and Local Government select committee earlier this year concluded that the government should investigate why high street properties remain vacant for long periods of time, but stopped short of advocating repossession.

The British Retail Consortium, which represents mainly larger retailers, said that it welcomed new ideas aimed at rejuvenating high streets, but that politicians should prioritise reforming business rates.

Dominic Curran, property policy adviser at the lobby group, said rates were “the biggest cause of shop closures in the UK”. The idea that properties should be revalued annually for business rates has been advocated by several major retailers and lobby groups, including the BRC.

They argue that rates bills would then respond more quickly to downward movement in rents, easing the total costs of occupancy for retailers. From 2021, revaluations will take place every three years.

The Local Government Association reiterated its call for councils to be given more autonomy over business rates discounts and reliefs locally. “They also need more powers and flexibility, particularly in relation to planning, to help shape and deliver vibrant town centres,” it said.