This week, the government unveiled plans to revitalise high streets up and down the country. Under the new policy – which will only be revealed in full during the Queen’s Speech next month – landlords will be forced to rent out shops that have been vacant for more than six months.
The aim is to free up unused space and revamp some of the waning high streets, especially in towns in the north of England. Now councils will acquire the power to rent out these empty shops through a compulsory rental auction in a bid to allow small businesses to get better deals on retail units – and give some power back to community groups who will be able to participate.
Unsurprisingly, the retail industry immediately heaped praise on the proposal. Commercial landlords, on the other hand, are worried of potential devaluations. In retail, the most valuable properties are those with a long-term tenant and the promise of a stable income. If the government forces landlords to have anyone taking their shops, no such guarantee of that income exists, and the value goes down.
“When you dictate to people what to use their spaces for, you’re entering a difficult space for ownership”, says John Hoyle, CEO and founder of Sook, a company renting flexible spaces to pop-up shops and small businesses. The UK has praised itself for very transparent property rights, according to Hoyle. Interfering with them in such a radical way could have a real material impact on the value of properties.
As simple as the policy sounds, it could fall down on technicalities, according to Sook.
The ownership of the high street is extremely fragmented, with hundreds of people owning property on the same street. Some of them will be the local landowners – people known in the area who are easily linked to the property they own. Others might be foreign entities or landlords living abroad, and these are much harder to track down. It’s unclear how the government plans to enforce this in a fair way. It might wind up with local landowners forced to rent their properties, while those owners “who live in South America” are off the hook from the policy, Sook said.
Ultimately, the announcement is a good sound-bite, and makes a strong statement politically. The government wants to be seen as doing something concrete to revamp these high streets, especially in the Red Wall once controlled by Labour. Especially as the Conservatives face a challenging set of local elections. After all, who wouldn’t want a revitalised community-led high street, full of new independent shops instead of the old ruins of what once was a Topshop store?
Yet the plans are complex and require nuance. With one in seven retail units in the UK sitting empty, the government has to get it right in every aspect – otherwise the consequences will be felt all over the place in the sector.
When the details are outlined next month, there must be equal clarity about implementation.
We do need empty spaces to be filled up, and fresh economic activity on our high streets. But the way we do it will mean everything: unfairness and uncertainty scare the market, and at a time when retail is already struggling due to online competition, clarity will make a world of a difference.