North Yorkshire Council
Executive
17 March 2026
Sprucing Up Scarborough – High Street Rental Auction Pilot
Report of the Corporate Director for Community Development
2.0 SUMMARY
2.1 The importance of our High Streets is recognised through a myriad local, regional and national strategies. Yet, despite existing powers, continuing efforts to make improvements and to engage landlords, many empty and increasingly derelict properties blight our High Streets.
2.2 To help tackle this issue, realising the limitations of existing powers, the Government has introduced new powers to help local authorities to address instances where properties have been vacant for more than a year. As part of the Levelling Up and Regeneration Act 2023, powers to hold High Street Rental Auctions (HSRA) have been bought into force and a new power for local authorities has been introduced which can require landlords to rent out persistently vacant commercial properties to new tenants such as local businesses or community groups. The staged process is designed to open up dialogue with landlords to broker voluntary solutions to bring properties back into economic use, but at its fullest extent the process requires that properties must be brought up to a minimum lettable standard and an auction held to secure a tenant. This goes further than existing powers, such as Section 215 of The Town & Country Planning Act, which only provides powers to bring a property to a condition where it is ‘no longer affecting the amenity of the area’.
2.3 High vacancy rates can significantly impact a place’s economic performance by reducing footfall. Areas of high vacancy can have higher unemployment rates and suffer from clusters of boarded-up, empty and vandalised shops, often with upturns in anti-social behaviour. These factors have been noted in some of our towns affected by high vacancy rates and pressure to tackle the issue is being applied by local communities, businesses and our MP’s.
2.4 Existing initiatives that have had success on a number of fronts have not yet been able to tackle the issue of persistent vacancies and a decaying built environment. This report therefore outlines the work undertaken to date, the limitations we face with existing processes and a proposal for a pilot of the new HSRA powers in the urban centre that has the highest vacancy rates in the county, Scarborough.
3.0 BACKGROUND
3.1 The prolonged vacancy of shops and buildings is a blight on our high streets. Data from the Local Data Company (Green Street) shows that nationally, in July 2025, around 1 in every 7 (circa 14%) high street shops were closed. In Scarborough the vacancy rate is 14.4%, higher than the national average and significantly worse than our other urban centres (Harrogate 11.4% & Selby 7.8%). Through successive engagement to inform delivery of Government programmes in Scarborough including the current work to develop a Regeneration Plan for the Pride in Place (PiP) programme, the top issue highlighted is the poor condition of the town centre. The priority theme for PiP arising from the consultation work highlighted in the plan is Regeneration, High Streets and Heritage.
3.2 This was also the case when the Council previously undertook consultation for the Long-Term Plan for Towns (LTPT), the forerunner of PiP introduced by the previous Government. This was suspended whilst the new Government assessed the programme to be sure it aligned with its own objectives. Such was the need and the strength of feeling about the condition of the town centre in Scarborough that the Council established the Scarborough Cross Council Task Force (SCCTF) to look at interventions it could undertake whilst the new PiP programme was established.
3.3 Key amongst the initiatives of the SCCTF is the Sprucing Up Scarborough initiative which has delivered good outcomes for improving the cleanliness of streets and bolstering civic pride through community clean ups. It also included measures to improve the built environment. One attempted intervention which would improve the look of vacant units was the application of vinyl wraps. Despite the Council offering to 100% fund the wraps, and repeated attempts to engage with private landlords, none of the vacant properties have taken up this offer. Many failed to respond at all.
3.4 Use of Section 215 powers is being explored. These powers have quite a high bar for their application and properties must be deemed to be affecting the amenity of the area to enable their use so not all vacant properties can be improved through section 215 powers. Additionally, the improvements resulting from the application of the powers are limited, only ensuring the property is no longer affecting the amenity of the area. Ultimately this power does not achieve the outcome that will have the greatest impact, which is securing a new tenant and bringing the properties back into use.
3.5 Increasingly the condition of the town centre of Scarborough, in particular Huntriss Row where there is a concentration of vacant premises, is being raised with the Council not only through engagement work but independently by town centre businesses and also by the MP. This area sits within the Castle Ward which ranks as one of the most deprived wards in the country. Given the lack of impact of earlier initiatives, the limits of existing powers and the local imperative to tackle the issue, it is proposed the Council pilots the use of the new High Street Rental Auction powers to compel landlords to improve the vacant premises and secure new tenants.
4.0 HIGH STREET RENTAL AUCTIONS
4.1 High Street Rental Auctions (HSRA) are a new power for local authorities to require landlords to rent out persistently vacant commercial properties to new tenants such as local businesses or community groups. This new power was introduced as part of the Levelling Up and Regeneration Act 2023, Part 10 of the Act setting out the framework for the power.
4.2 HSRAs are designed to provide local authorities with a strong tool to use in places where vacancy rates are a problem and where there is little cooperation between landlords and local authorities. To utilise the power the council needs to consider whether the specific premises in question meets the requirements of the legislation. Principally the properties where the power is applied must:
· Be located in a designated high street or town centre.
· Have been vacant for at least 366 days in the past two years.
· Be suitable for high street use, such as retail, offices, public services, hospitality, entertainment, or light industry.
· Be considered by the local authority to benefit the local economy, society, or environment if occupied.
4.3 The HSRA process takes around 22 to 24 weeks to complete but there are a number of preliminary actions to undertake before beginning the full auction process which are outlined below:
· Designating a street or area where a High Street Rental Auction can be used, including a 28-day minimum community engagement period
· Satisfying the vacancy condition and local benefit condition
· Obtaining information about the premises in question, capturing this information in a vacancy register
· Engaging with landlords to encourage cooperation between parties
· Surveying the premises to assess the suitable high street use and/or the works needed for the premises to reach the Minimum Standard (a minimum lettable standard).
4.4 The preliminary stages of the HSRA auction process require consultation and engagement with landlords and agents. This is intended to start a dialogue and, quoting from the HSRA non statutory guidance “Where landlords and local authorities are both constructive and pragmatic, alternative options for bringing the premises back into use may be identified, avoiding the need for a High Street Rental Auction to take place.”
4.5 The survey work should establish if refurbishment is financially viable or if additional interventions are required to bring the property back into productive use. Surveys may highlight properties that are not suitable for an HSRA, for instance where buildings are affected by issues such that the significance of the remedial works puts the property outside of the scope of this process. Other powers to effect regeneration measures such as Compulsory Purchase powers may be required in such instances. Additionally, the Council needs to consider if there is likely to be a sufficient tenant base and demand for the premises, should it be available at the Minimum Standard and at a fair market rent. The surveying stage may also require the production of an Energy Performance Certificate (EPC) if one does not exist for the building as a prerequisite for the marketing of the building.
4.6 Scarborough, and Huntriss Row in particular, make for a good pilot area as there is a cluster of long-term vacant premises, and much of the preliminary work has been undertaken as part of the Sprucing Up Scarborough project. Effectively the vacancy register is in place and landlords have been identified and previously approached.
4.7 Throughout the HSRA process there are stages where contact is made with landlords and engagement with the Council is encouraged. The first of these opportunities is the 28-day community engagement when designating the area for application of the HSRA powers. A high-level overview of the process is provided below and further detail is provided in Appendix A.
Initial Notice to Landlord - A 10-week notice is served to the landlord. This restricts the landlord’s ability to lease or alter the property without local authority consent. The landlord may engage with the authority to arrange a letting during this period.
Final Notice - If no agreement is reached after 8 weeks, a final notice is issued. This imposes further restrictions and allows the Council to proceed with the auction.
Auction Preparation - The local authority prepares an auction pack, including lease terms and property details. The property is marketed to potential tenants.
Auction Period - The Council has 12 weeks to conduct the auction and complete the tenancy contract. The Council can enter into the lease on behalf of the landlord, making it legally binding.
Post-Auction - The successful bidder at auction will enter into two legal agreements with the landlord. The first is the tenancy contract, which governs the landlord’s required works, required to bring the property up to a minimum lettable standard, prior to the tenancy commencing. The second is the tenancy itself, which will set out the specific obligations on the tenant and landlord during the term of the tenancy. Following completion of the landlord’s works, the tenancy is granted.
4.8 HSRA powers are relatively new and a number of early adopter councils are working closely with the Ministry of Housing Communities and Local Government (MHCLG) on their implementation. Their progress is being followed and shared including that of a neighbouring authority Darlington Borough Council. MHCLG are reporting that where HSRA areas are being designated “Councils are reporting that empty premises are being actively marketed, refurbished and rents are reducing where the powers are being adopted locally.”
4.9 Engagement with early adopter Councils Rugby and Bassetlaw provided useful insights into how the powers are being applied elsewhere. The HSRA powers have been designed by Government to stimulate engagement with Landlords to find solutions to vacant properties, auctions are seen as a measure of last resort. The early stages of the process consulting on the area to designate or serving initial notices for instance have helped open up conversations where there had not previously been a dialogue. This helps to understand any underlying causes of long term vacancies and encourages voluntary solutions before the Council triggers the formal powers. The early stages of the HSRA process have yielded positive results in some areas seeing agents and landlords stimulated to renew their efforts, filling vacancies without the need for further intervention. Equally the process has also highlighted areas where there is a lack of market demand. Utilising the powers to stimulate dialogue opens up the potential to develop alternative solutions for properties where re-use is commercially unviable or market demand isn’t sufficient.
4.10 If a pilot project is approved an indicative timeframe for the project would be:
· Preparatory work – up to end March 2026
· HSRA designation engagement period – April 2026
· Main HSRA process – May – Dec 2026
· Evaluation of results – Jan – Mar 2027
5.0 ACTIVITY TO DATE & LIMITS OF EXISITING POWERS
5.1 The change in government at the last election resulted in a pause in some major programmes whist the new government reviewed them and realigned them with their objectives. One of those programmes was the Long-Term Plan for Towns (LTPT) which Scarborough was designated to be a beneficiary of. This is a long-term programme providing just under £2m per year of investment to the town for a period of ten years. Engagement work with local businesses and the community to inform the delivery programme highlighted the poor condition of the town centre as a priority issue to be tackled.
5.2 Representation of the condition of the town centre has been strong on several fronts and the Council was determined to act ahead of the Governments consideration of the LTPT programme as it was unclear if or when the programme would come forward. The Council therefore established the Scarborough Cross Council Task Force, a cross departmental working group, to look at and seek to resolve a number of pressing town centre based issues.
5.3 Part of the activity of this group covering a range of physical improvements such as an enhanced street cleaning regime, improvements to the public realm, community clean up initiatives and improvements to vacant premises was badged under an initiative called Sprucing Up Scarborough (SUS). This initiative has worked well and been well received on many fronts but notably has not been able to improve the condition of vacant premises. Contact has been made with some landlords of vacant premises offering vinyl wraps, 100% funded by the Council, as a solution for a temporary improvement, but none have taken up the offer. Some landlords have not responded at all.
5.4 The potential to utilise Section 215 powers is being explored with the Planning Enforcement team and there may be scope to make some improvements to the worst condition properties. The powers are limited though, and the extent of improvements is only to the point where the property is ‘no longer affecting the amenity of the area’.
5.5 Neither the Section 215 powers, nor the SUS vinyl wraps proposals provide the longer-term outcome that will have the greatest effect on the town centre, that is finding new tenants for the units and bringing them back into use.
6.0 CONTRIBUTION TO COUNCIL PRIORITIES
6.1 Utilisation of HSRA powers would contribute to the following Council Plan objectives:
Thriving Places and Empowered Communities
· measures to reduce vacancy rates supports businesses and community groups to find affordable premises, supports the revitalisation of the High Street, improves footfall, provides employment and increases civic pride. Improving occupancy and appearance of the town centre increases the likelihood of additional private investment into the town.
Sustainable and connected places
· HSRA would help in the protection and enhancement of the built heritage of our towns by bringing vacant properties up to a good standard of repair and reanimating void units creating a more welcoming and cared for environment. Ensuring vacant properties are utilised makes best use of existing assets.
Safe Healthy and Living Well
· Reducing vacancy rates and increasing footfall is shown to reduce antisocial behaviour and improve civic pride.
6.2 The initiative would strongly support the Councils Economic Growth Strategy delivering against priorities such as ‘Equipping our towns for the 21st Century’, and ‘Delivering Sites for Growth and Investments’,
6.3 HSRA would support the priority theme, Regeneration, High Streets and Heritage, identified though business and community engagement during both the Long-Term Plan for Towns and Pride in Place initiatives in Scarborough.
7.0 ALTERNATIVE OPTIONS CONSIDERED
7.1 Alternatives to undertaking the HSRA pilot are:
Do Nothing: this is the status quo, and it is evident without some form of intervention that vacancy rates will remain high.
Implement a temporary shop front vinyl wrap project: this has been attempted and has not resulted in any uptake of the fully funded offer.
Implement a shop front improvement grant project:a more extensive programme could be initiated to provide a grant towards shop front improvements. This would require funding to be secured to offer the grant programme, council officer resources to operate the grant programme, and would require a contribution from any landlords participating. As this would be a more extensive intervention it may have more appeal to landlords but is hard to determine given the lack of engagement with the vinyl wrap project. This approach would not compel landlords to undertake improvements and may not result in the vacant premises being taken up after improvement. However, this could be considered as a complementary scheme, if funding could be identified.
8.0 IMPACT ON OTHER SERVICES/ORGANISATIONS
8.1 It is proposed the HSRA pilot is led by the Regeneration Team who are already working on a range of regeneration initiatives in Scarborough town centre. The initiative is a continuation of the work undertaken as part of the SCCTF delivering on town centre improvements as part of the Sprucing Up Scarborough initiative. Initially it is anticipated the work required operating the HSRA process would not take any more than a 0.2fte for an initial twelve-month trial period. Additional time requirements would be involved in securing funding required to cover unrecoverable costs or for funding for any additional interventions required.
8.2 The Property service could be utilised to undertake market rental valuations which require 0.5 days resource per property, to assist with the commissioning of surveys and the level of likely market demand to establish the potential of the HSRA process to secure tenants. Together with legal services, Property could be engaged in developing and enacting tenancy agreements with successful bidders. Tenancy contract templates are provided as part of the HSRA prospectus. Alternatively, this element of the HSRA process could be outsourced to Align Property Services.
8.3 The Legal service would by impacted by the need to designate the HSRA area, serving notices at stages in the process, handling any potential appeals, servicing of auction packs and enacting tenancy contracts. The implementation of any HSRA’s would have to be mapped out with Legal to ensure there is sufficient capacity at key stage of the auction process such as when serving landlords with the Auction Packs which require contracts, terms of the tenancy, a marketing brochure and results of the searches and surveys. An estimated 3 to 5 days work would be required per property. Resource implications here would be mitigated both by seeking solutions with landlords ahead of undertaking the full auction process and by trickling properties into the auction process. This approach should minimise legal resource impacts and avoid saturating the market.
8.4 For the Planning service impacts will come from the designation of the HSRA area. The designation becomes a local land charge which the planning team manages and records so it will appear in property searches. Confirmation from the planning team will be required to ensure any bidders proposed uses are suitable for High Street use and determine if a change of use application is required. It is hoped this will be minimal as HSRA leases benefit from a temporary permitted development right (Class DB) introduced in 2024. This allows change of use to a suitable high street use without a full planning application, reducing cost and time for bidders. Planning officers will also need to check if any works required to bring premises up to the Minimum Standard require planning consent.
8.5 Finance would assist with budget management and ensuring HSRA expenditure aligns with all financial compliance and audit requirements.
9.0 FINANCIAL IMPLICATIONS
9.1 There are a number of financial implications of the HSRA process, most of which only occur if it is decided to conduct an auction, some of which the Council may be required to bear, and others that will be required to be paid up front but may be recoverable.
9.2 Costs that need to be covered by the Council but may be recoverable from the Government include:
· issuing legal notices
· gaining access to the premises
· marketing and promoting the auction and premises to be let
· administering and managing the auction process.
9.3 Councils are eligible to apply for New Burdens payments to cover these costs. For the purposes of providing the payments the costs of the above were determined to be £5,223 per HSRA, costs above this level would be borne by the Council. New Burdens grant payments for HSRAs can be requested from 15 January 2025 until 14 January 2028 or until the burdens are met through a Spending Review bid or a Local Government Finance Settlement.
9.4 Costs that need to be covered by the Council but may be recovered from successful HSRA bidders (tenants) include:
· legal costs incurred by the local authority in the preparation of the auction pack, including the preparation of the tenancy contract - £1,050 per commercial lease.
· search fees incurred by the local authority – circa £600 per search.
· costs of carrying out a survey of the property - will vary with the scale of the property ranging from £1.2k for the smallest through to £6k for larger properties.
· where required EPC certificates – circa £400-£600 per property
The local authority may require the successful bidder to pay the above costs as part of the consideration for the grant of the tenancy; however this is an additional barrier to entry for prospective tenants. Many early adopter Councils that have shared their experience of HSRA’s have opted not to recharge these costs to tenants. In the event of an unsuccessful auction the Council would bear these costs.
9.5 A HSRA fund is currently available where MHCLG provide grants for producing a register of vacant commercial high street properties and for the refurbishment of vacant properties subject to an HSRA. Projects must end and all costs be paid by 31st March 2026 to be able to benefit from the grant. A quote from Align property services for work to produce the vacancy register has been obtained. Funds to cover costs estimated at £9,000 for this work would be applied for from the HSRA fund.
9.6 In the absence of the grant all costs for property repair, to a minimum lettable standard, are to be covered by the landlord. Fit out costs are covered by the tenant.
9.7 Some staff costs for the operation of HSRA would be covered by the New Burdens payments outlined in 9.2. Otherwise, the Council would bear the costs of operating the scheme.
9.8 To further reduce financial risk external investment could be sought. One live potential is the Pride in Place programme. As previously mentioned, the improvement of the town centre is a consistent high priority in engagement work in Scarborough. Subject to agreement by the Scarborough Neighbourhood Board funding may be secured to support the HSRA powers through part funding improvement works to further incentivise landlords to engage with the Council, overcome potential viability gaps and bring properties back into use.
9.9 Should there be costs that fall to the council that cannot be recovered from other sources the existing Regeneration and Economic Development General Fund would be utilised to cover the costs.
10.0 LEGAL IMPLICATIONS
10.1 HSRA is a statutory mechanism introduced by the Levelling-up and Regeneration Act 2023 and detailed within the Local Authorities (Rental Auctions) (England) and Town and Country Planning (General Permitted Development) (Amendment) Regulations 2024. The non-statutory guidance was published on 2 December 2024. The legislative framework establishes clear procedures and conditions that councils must follow when implementing HSRA, ensuring vacant commercial properties are efficiently and transparently returned to active use.
11.0 EQUALITIES IMPLICATIONS
11.1 There are no equalities implications. See Appendix B.
12.0 CLIMATE CHANGE IMPLICATIONS
12.1 Implementing the proposals would result in currently empty properties that are not using energy being brought back into use and will begin to use energy. This is mitigated to a degree in that works the landlord has to undertake to bring the properties up to a minimum lettable standard which includes meeting minimum Energy Efficiency Standard (MEES). Whilst the additional energy consumption resulting from reuse of the properties does not increase Council carbon emissions, it will result in some increase in emissions. If comparing to the last time properties were actively used, the levels of emissions would not be markedly different. See Appendix C.
13.0 POLICY IMPLICATIONS
13.1 No policy implications are anticipated.
14.0 RISK MANAGEMENT IMPLICATIONS
14.1 Managed in accordance with the new legislation and undertaken within the statutory timetable the HSRA process should have minimal risks but there is the potential for:
· Identifying through survey work that a property is unviable to restore and bring forward for a HSRA and requires additional intervention. In such cases the properties do not have to proceed to an HSRA, the Council could work with the landlord to find other routes to supporting the regeneration of the site.
· A property to be brought forward for a HSRA but the auction is unsuccessful. This could carry reputational risks and undermine the perception of regeneration efforts. Assuming the market demand has been assessed prior to the HSRA process this likely signals the property is still unattractive due it’s position, condition or the reserve rent level is too high. Re-running the auction in conjunction with lower levels of rent or additional offers of support e.g. fit out cost grants may help secure bidders. An unsuccessful auction, due to either weak market demand or properties unattractive to the market could result in the Council covering costs as outlined in paragraph 9.3.
· Legal challenges from landlords or serving of counter notices. The HSRA process does in the Notice period provide the opportunity for landlords to serve a counter notice and set out their grounds for appeal. If the Council does not agree with the grounds of the counter notice the landlords can make an appeal to the County Court.
· Poor evidence, weak designation rationale or flawed notice serving could also lead to legal challenges. These would be mitigated by ensuring processes are implemented with care and utilising external professional inputs where required. Potential exists for Judicial review exposure though this hasn’t been encountered by other early adopter Councils to date.
· Landlords backlash at the application of the powers and souring of relationships.
· Disputes over building conditions and/or ability to access and survey the property which could result in abortive cost.
14.2 There could be a risk of market distortion in areas with high vacancies and weak demand which could drive rents down. This would be mitigated by ensuring that there is a measured approach to the application of powers, not bringing all vacant premises to auction at once to avoid saturating the market.
14.3 Care will also need to be exercised in ensuring tenants secured aren’t tenants landlords wouldn’t normally accept which could affect long term asset value. This can be mitigated through the auction process which allows the Council to specify the permitted end-use of the property for the duration of the tenancy within the framework of high street uses. The Council should also build in due diligence checks on potential tenants to ensure the new use is likely to endure and the property will not quicky become vacant again.
14.4 A further risk is the potential interest in applying the HSRA powers in other towns with long term vacant properties. This may occur organically as the knowledge of the new powers becomes more widespread but would potentially be catalysed by their application in a pilot. The proposed pilot however would provide an opportunity to gain familiarity with the process and ensure the resource implications for the Council are well understood. The pilot will be evaluated through its implementation to fully assess resource implications. A decision can then be taken on the costs and benefits of the scheme to determine if there is value in more widespread application of the powers.
15.0 HUMAN RESOURCES IMPLICATIONS
15.1 Staff resources will be required to support the scheme as mentioned in Section 8. Officer time costs could be built into businesses cases for external funding bids where funders terms support this.
16.0 COMMUNITY SAFETY IMPLICATIONS
16.1 A poor quality town centre with high vacancy rates can significantly impact a places economic performance by reducing footfall. Places that look uncared for impact civic pride and, where footfall is reduced, there is often an increase in incidents of antisocial behaviour. Bringing empty properties back into use will improve the look of the area, increase footfall and natural surveillance helping people to feel safer and reduce incidences of anti-social behaviour.
17.0 CONCLUSIONS
17.1 High levels of long-term vacancies blight town centres and cause a range of issues not least stifling investment into affected towns. Existing powers are limited and recent initiatives have not found landlords receptive to improvements even when fully funded.
17.2 New powers have been afforded to the Council in the form of HSRA’s which compel landlords to work with the Council and find new tenants. Being new they are untested in our County so a small-scale pilot in one of our worst affected town centres is proposed. Finance and resource implications for the pilot are modest especially if the powers are utilised to stimulate dialogue and voluntary solutions to filling vacancies with landlords. Costs can be supplemented by support from external sources.
17.3 A small scale pilot would allow the full resource implications of HSRA powers to be assessed and enable an informed decision to be made regarding any further application.
17.4 This is an opportunity to be proactive in addressing an issue which is consistently highlighted as a priority for Scarborough town centre. It provides a route to improve the built environment, bring vacant properties back into use, create additional employment, increase civic pride, drive investment confidence and increase footfall in the town centre.
18.0 REASONS FOR RECOMMENDATIONS
18.1 To address a long-standing regeneration issue in an area with the highest vacancy rate amongst our urban centres that has been consistently raised from numerous quarters as a priority need for Scarborough.
18.2 Use of new HSRA powers are recommended given the limitations of existing powers and initiatives to effect significant improvements.
19.0 RECOMMENDATION(S)
19.1 Note the report and the new HSRA powers that the Council can utilise.
19.2 Grant consent to begin community engagement relating to the designation of a High Street Rental Auction (HSRA) area in Scarborough.
19.3 To delegate powers to designate the final HSRA area and to delegate powers to implement individual rental auctions to the Corporate Director for Community Development
19.4 Continual evaluation to be undertaken during the Scarborough pilot to assess the outcomes, impacts and resource implications. Authorisation to extend application of the powers to be delegated to the Corporate Director for Community Development in consultation with the Executive Member for Open to Business.
APPENDICES:
Appendix A – High Street Rental Auctions background
Appendix B – Equalities Impact Screening Form
Appendix C – Climate Change Impact Assessment Form
BACKGROUND DOCUMENTS:
Nic Harne
Corporate Director – Community Development
County Hall
Northallerton
6 February 2026
Report Author – Mark Haynes, Regeneration Delivery Manager
Presenter of Report – Nic Harne, Corporate Director