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Empty Shops and Negligent or Absent Landlords

Landlords are one of the most challenging 'stakeholder' groups to get involved to turn around a fading high street or centre. In many cases the owners of small property holdings on high streets and in town centres are completely disinterested in improving the attractiveness of the place regardless of the likely improvement in their building's value - they see time is money and with dozens or hundreds of such properties to deal with they tend to be a rather detached line on an excel spreadsheet rather than the place local businesses turn up to every day or residents visit for their shopping.

Unfortunately the 'stick' rather than the 'carrot' has to be considered however - and to mix metaphors - said stick does not have very sharp teeth. However at a recent Town Team event hosted by DCLG, solicitors SNR Denton gave a run down of the various powers available to councils to try and get landlords that have allowed their buildings to fall into disrepair to at least make them more presentable in order they are not having a negative impact on the area.

Their paper is reproduced in full below - if nothing else item 3 (s.15 of the Town and Country Planning Act) is well worth noting.




National Portas Pilots Event

Empty Units and Absentee Landlord Workshop

 

1                    Introduction

This paper is designed to summarise the information that will be discussed at the workshop of the National Portas Pilot event. 

Having previously spoken to a number of Portas Pilots, one key issue that has come up again and again is the problem of empty units on the high street and the inability to do anything about them.  This could be due to a number of reasons including absentee or uncooperative landlords or planning restrictions.

Whilst this a complex issue, there are a number of steps that can be taken to help bring these empty units back into use and which this paper will seek to address.

Working with Local Authorities

Whilst the powers set out below can certainly help bring empty units back into use, it should be noted that in all cases, the powers are exercisable primarily by local authorities and therefore will require their co-operation and investment.

Local authorities have a wide range of powers which can be used to beneficially intervene in town centre management, albeit, there is no specific duty on them to do so. Nonetheless, there are a range of more indirect duties/obligations which arguably together create a general stewardship obligation and support pro-active engagement.

As planning authorities, local authorities are required to prepare a development plan for their area (TCPA 1990, s. 12).  In doing so, they must have regard to the National Planning Policy Framework, which requires them to "recognise town centres as the heart of their communities and pursue policies to support their viability and vitality" (my emphasis).

In exercising any function, a local authority must have due regard to "the need to do all that it reasonably can to prevent crime and disorder in its area" (Crime and Disorder Act 1998, s.17), to consider housing conditions and the need to provide further housing (as Housing Authority under s.8 of the Housing Act 1985 – this may be particularly relevant where the abandoned retail unit has residential uses above it) and to maintain the highway (under the Highways Act 1980, s. 41) and keep it clear of litter (Environment Protection Act 1990, s.89).

The solutions outlined below will require investment by local authorities, not all of which will inevitably be recouped. However, they will generate immediate benefits in improved presentation and management of high streets and thus greater potential for improved non-domestic rate receipts as well as possible savings in other areas.

2                    Identifying absentee landlords

Identifying an absentee landlord can be difficult but there are a number of sources which can be used in order to try and determine who the landlord is.

Land Registry Search

Where the freehold and leasehold titles have been registered, ownership details can be requested from HM Land Registry by way of an index map search. However, this will not disclosed details of leases with duration of less than 7 years nor of licences.

Other routes

Local Planning Authorities (LPA) are able to request information under the Town and Country Planning Act 1990 (TCPA) from occupiers and agents with regards to their interests in a property.    By serving a section 330 notice, an LPA can request information from an occupier of any premises or from anyone (directly or indirectly) in receipt of rent from a property, to state their interest in the property.  This will include the disclosure of names and addresses of anyone they know to have an interest in that property.  Information must be provided within 21 days from the date the notice was served and failure to comply or the provision of false information is punishable by a fine.

A similar power is conferred on a local authority through a section 16 of the Local Government (Miscellaneous Provisions) Act 1976. This power can also be used to serve notices on agents who manage the property without receiving the rent (either directly or indirectly).

It is possible to request a list of rate payers from local authorities.  If these are not already published it should be possible to access them by way of a request under the Freedom of Information Act 2000.  Details of occupiers of land may also be obtained through the electoral role (albeit, will not necessarily be up to date).

3                    Tidying up the presentation of sites

Where "it appears to the LPA that the amenity of part of their area is adversely affected by the condition of the land" it can serve a notice under section 215 of the TCPA specifying remediation steps and a remediation timetable.

Failure to carry out the works within the specified timetable allows the LPA to enter the land and carry out the works itself.  Its costs in carrying out the works are then payable by the owner of the land, and if unpaid, are automatically charged against the land.  If necessary the property can be sold in order to recover the monies. 

A section 215 notice can be appealed on the basis that the land does not adversely affect the amenity of the LPAs area. However given the drafting of section 215, courts should allow an LPA a reasonably wide discretion in serving the notice.  Government guidance suggests that most appeals are unsuccessful.

4                    Bringing sites back into economic use – change of ownership

Bringing empty properties back into economic use may require a change of ownership. Although, in most cases, a section 215 notice will only result in cosmetic improvements to the land, if the LPA has to carry out the work itself, and is unable to recoup its costs from the owner (perhaps because the owner cannot be identified), it can apply to court to force the sale of the land to recoup its costs.

Other debts to the Council which are charged against land (such as failure to pay business rates) can similarly be used to justify the forced sale of abandoned land. In either case this offers a reasonably simple but effective way of dealing with abandoned properties.

5                    Compulsory Purchase

Local Authorities have a wide range of powers to compulsorily acquire property. Where the power is being exercised to bring town centre premises back into use to support a town centre strategy, the most appropriate power is likely to be section 226 of the TCPA.[1] This allows an LPA to acquire land that:

·        it thinks will facilitate development, redevelopment or improvement relating to the land and where that redevelopment will contribute to the economic, social or environmental well being of its area; or

·        is required for a purpose necessary to achieve in the interests of the proper planning of an area in which the land is situated.

While in many cases, the LPA will want to acquire the freehold interest in the property as well as any underlying leases, it can equally simply acquire any existing head lease. Indeed, if all that is needed to achieve the LPA's objectives is to control the head lease, then that may be the quickest and least contentious approach.

6                    Flexibility in the planning system

One issue that has been flagged up previously is that certain properties, albeit within an area allocated for retail use, have no retail future and if this is the case, what can be done about them?

Inflexibility within the planning system

By using a combination of the Use Classes Order 1972 and the General Permitted Development Order 1995 (GPDO), changes of use within specified classes are permitted without the need for planning permission. Therefore, premises which have been used as a Bank (A2 use) can change to retail (A1 use) without the need for a further planning permission.

However, the GPDO does not allow changes of use from retail to residential and thus a planning application would need to made for change of use.  The application would need to be supported by convincing evidence that the property has no retail future and this evidence could be used as material consideration to allow an LPA to justifiably overrule site allocations in the adopted local plan. This flexible approach is also specifically encouraged in the recently published National Planning Policy Framework (NPPF).

The NPPF

There is currently a window of opportunity for more fundamental "root and branch" reform of local plan policies. The NPPF (published March 2012) requires LPAs to review their existing local plans and to update them so that they conform to the NPPF by early March 2013. If there is evidence that current use allocations are too inflexible, LPAs can be encouraged to adopt a more flexible approach in their local plan reviews.

However, revising local plans is likely to take time as the revised policy will need to be put out to consultation, and to undergo examination before it can be adopted. Even where the changes are relatively minor, that process is likely to take 12-18 months at least.

Local Development Orders

A Local Development Order (LDO) provides a regime of general permitted development developed by the LPAs and is applicable to either all or part of its area. If the change of use falls within the scope of the LDO, no planning application is required.

The main difficulty with an LDO is that the development which it is intended to facilitate must be supported by policies already within the local plan.  However, in many cases, policies within local plans pull in different directions. Where there are strategic policies which justify the proposed change of use, it should be possible to build a case for an LDO permitting that use even if they conflict with allocations in the Local Plan.

The process for adopting an LDO is similar to the process for adopting local plan documents. Hence, where amendments are proposed to the Local Plan in response to the NPPF, it may be sensible to promote an LDO at the same time.

Neighbourhood Development Orders

As an alternative to an LDO, a parish council or neighbourhood forum can promote a Neighbourhood Development Order (NDO) which can grant a general permission for particular types of development within a particular neighbourhood area (which is likely to follow the boundaries of a parish).

 

The process of adopting an NDO requires it to be prepared by the parish council or neighbourhood forum, approved by the LPA, put out to a formal examination, and then approved in a referendum. Hence, the process is neither short nor simple.

 

7                    RICS Small Business Retail Lease

As part of the workshop, we thought it would also be useful to address the issue of leases. Signing a lease is a significant financial commitment and before doing so it is important that you ensure that the lease you are signing meets the requirements of your business.

 

To this end the Royal Institution of Chartered Surveyors (RICS) and the British Retail Consortium (BRC) have developed and launched a new type of lease specifically aimed at small retail businesses looking to take up empty units on the high street.  The Small Business Retail Lease has been developed to simplify the process of taking up commercial property which has often been seen as a significant barrier for small and independent retailers.  A full version of the lease and the heads of terms can be found on the RICS website at http://www.rics.org/uk/knowledge/more-services/professional-services/small-business-retail-lease/.

 

For the purpose of today’s workshop Nick Darby of SNR Denton who authored and developed the lease, will be on hand to answer any questions that you may have about taking up new a new lease.  Furthermore, a set of papers have been attached to this handout which gives tailored advice and guidance to both tenants and professional advisors when looking to lease a business premises.



[1] Similar powers exist to acquire listed buildings under section 47 of the Planning (Listed Buildings and Conservation Areas) Act 1990

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