Will More Commercial Properties on the High Street Be Sold at Auction?

There have been numerous headlines about the declining high street across the UK with many retailers and businesses struggling to keep the lights on.

In 2022, Britain suffered a net loss of 3,627 shops, including a range of major retailers, pubs and independent businesses, according to Reed Smith. So far in 2023, 26 retail businesses have been closed at the cost of 506 stores.

This rise in empty shops is happening due to a number of challenges businesses are facing, such as inflation, the rising cost-of-living and the ongoing issues with energy supply.

As there is a growing number of empty and closing shops, the government has created a plan to address this. And with this upcoming legislation and current market conditions, will more commercial properties on the high street be sold at property auctions? Here, we’ll dive into the details.

Upcoming legislation and business rates impacting owners of commercial properties

The Levelling Up and Regeneration Bill includes proposals for granting local authorities the power to take any high street property that has been vacant for longer than a year to a rental auction if it would benefit the local economy – regardless of the landlord’s wishes.

This bill hasn’t been written into law yet, but it’s made it through the House of Commons and is currently at the report stage in the House of Lords. It will then need to go into its third reading and the final stages, consideration of amendments and Royal Assent. Keep up with the progress of the bill on the UK Parliament website.

Additionally, as commercial property landlords have to pay business rates for empty retail properties after three months, this has put an extra strain on owners of commercial properties that are sitting empty.

More empty shops may be sold moving forward

The Levelling Up and Regeneration Bill and business rates compounded with the additional challenges of rising inflation and the cost-of-living crisis could increase the supply of commercial properties being sold.

Moving forward, owners of empty shops may be keen to sell fast before it’s been empty for over a year or prior to these changes coming into effect altogether. Many may choose to sell via auction for a quicker sale.

Empty shops have frequently been sold at auctions. Selling these kinds of properties at auction comes with a number of benefits, including being a more secure, convenient and efficient way to sell overall.

Opportunities in the commercial property auction market

Commercial property auctions were really busy throughout 2022, and this momentum continued into 2023 with the sector remaining relatively strong despite turbulence in the financial markets.

The commercial property auction market has been stimulated by attractive pricing, and this is what continues to drive the sector. This has also widened the appeal of commercial property to savvy investors looking for good value.

There are a range of new development or buy-to-let opportunities currently on the auction market with prospects of strong ROIs. And there is still a robust number of business owners seeking new premises.

Property auctions can play an important role in bringing more empty shops on the high streets into use and allowing this to happen much more quickly. And as more commercial properties could go under the hammer, this could bring more opportunities forward for business owners and commercial property investors!