Plans for landlords to be forced to rent out empty shops will not work – lawyers say

Government plans to be outlined in the Queen’s Speech that will force landlords to rent empty retail units to the highest bidder in rental auctions will work in any meaningful way, according to retail lawyers.

The Conservative government hopes the measures will reinvigorate high streets that it believes are “blighted by derelict shopfronts”. However, retail lawyers, RWK Goodman, suggest that based on what we know so far, it seems unlikely they will work, with the availability of suitable tenants and rental valuations seemingly overlooked.

Vicky Hernandez, a Partner at RWK Goodman comments:The proposals assume that there is the demand from community groups and retailers for these redundant high street units, and that is not necessarily the case. If the demand was there, retail units would be occupied as landlords do not want empty buildings.

“Many of the empty retail units will need considerable investment to bring them up to the higher environmental and sustainability standards set down by Government. Many landlords are not in a financial position to make that investment, and retailers will certainly not want to take on that responsibility.

“Larger landlords, particularly in shopping centres, will want some degree of control over the tenant mix. They, and existing retailers, will not want direct competitors opening next to each other, or retailers that do not fit the current tenant portfolio. Existing retail tenants may also and quite understandably feel put out if neighbouring retail units are let on more favourable terms, and even more so if those tenants impact their own business.

“And finally, landlords that have built a retail portfolio through debt are likely to find that their lenders will have little or no appetite to continue to fund retail property that cannot meet initial rental valuations.

“Neither landlords nor retailers want to see empty or boarded up retail units but forcing landlords and retailers into rent auctions are not the answer. The Government should be looking to re-energise high streets by creating a vibrant mix of retail, leisure and residential uses and thinking of more creative solutions to the problem.”



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