High Street Rental Auctions: a tenant's guide

High Street Rental Auctions (HSRAs) were created by Part 10 of the Levelling-up and Regeneration Act 2023 and brought into force in England through the Local Authority (Rental Auctions) (England) Regulations 2024. They give local authorities a power they have never had before: where a suitable high street or town centre premises has stood empty for long enough, the council can put the right to occupy it out to auction and grant a tenancy to the winning bidder, whether or not the landlord agrees.

For small businesses and expanding independents, that is a genuinely new route to space on a street they could not otherwise get onto. It is not a bargain by default, and the tenancy you win is a particular animal with particular limits. This guide sets out how the process runs, what the resulting lease does and does not give you, and where occupiers most often get caught out.

When can a council use the power?

Four tests have to be met before a rental auction can be run on a unit:

How the process runs

The council serves an initial notice on the landlord, which starts a ten-week window. For the first eight weeks the landlord can let the unit themselves, on a tenancy of at least a year, and stop the process. If nothing happens, the authority serves a final notice, and the auction must then be held within a further fourteen weeks.

The auction itself is a sealed-bid or open process advertised locally, with a survey of the premises and a standardised set of terms published in advance. Bidders offer a rent. The authority selects the successful bidder, and can then grant the tenancy itself, in the landlord's place, if the landlord will not.

What the tenancy actually gives you

The condition and fit-out trap

A unit that has been shut for a year or more is rarely in trading condition. Services will have been isolated, the shopfront may be boarded, and there may be no meaningful landlord obligation to put it right before you take occupation. The regulations allow the parties to agree who carries out works to make the premises fit for the permitted use, and to reflect that in the terms, but the default position is not generous.

Price the fit-out before you price the rent. A schedule of condition attached to the tenancy is the single most valuable document you can secure, because it fixes the state you took the unit in and limits what can be argued at the end of the term.

Bidding discipline

There is no reserve requirement obliging the landlord to accept a low bid in every case, and there is nothing in the process that guarantees the rent achieved is below market. In a street with genuine demand, competitive bidding can push the rent above what a negotiated letting would have produced — with none of the incentives, rent-free period or capital contribution a landlord would normally offer to secure a tenant.

The end of the term

Because the tenancy is contracted out, you have no right to stay. If the business succeeds, you are negotiating a fresh lease from a weak position with a landlord who never wanted you there. Build that into the plan: either treat the HSRA tenancy as a fixed-life project with a payback inside the term, or start the conversation about a follow-on lease early, while your trade figures are the strongest argument you have.

Getting advice before you bid

HSRAs are still new, and the volume of completed auctions is small. The terms are standardised but the commercial consequences are not, and once a bid is accepted there is very little room to renegotiate. We act for tenants only, so we can review the auction pack, test the rent against local evidence, advise on condition and fit-out risk, and tell you plainly when the number has gone past the point where the unit works for your business.