Cut the number of empty shops by putting communities in control of high streets – new report

The report finds that greater community ownership of high street properties could lead to many fewer empty shops, compared to ownership by private-sector interests such as real estate companies and overseas investors. Analysis for the report by EG [1] finds that in the 22 busiest high streets in the UK:

• Shops owned by overseas investors are more than twice as likely to be vacant as shops owned by the public sector
• Real estate companies own one in four of all empty shops, and overseas investors own one in five; whereas the public sector and social sector [2] own around one in ten each
• Just 8% of units owned by the social sector are vacant, and 4.5% of those owned by the public sector – compared to 9.2% for real estate companies, 9.6% for overseas investors, 11.9% for institutions like pension funds, and 13% for investment management schemes

This new research comes on top of existing evidence proving the economic benefits of community ownership of buildings and land. These community-owned assets, including on the high street, contribute £220m to the UK economy, and 56p of every £1 they spend stays in the local economy. Three-quarters of community-owned assets report being in good financial health, and community businesses have a survival rate of 94% or more [3].

The report, entitled Take Back the High Street: Putting communities in charge of their own town centres, argues that the response to the crisis engulfing the high street must include greater community ownership of commercial properties. It shows how the era of mass retail-dominated high streets is over, and calls for a new, more rooted and more sustainable model – one which turns high streets into genuinely civic spaces and gives communities themselves greater ownership and influence over their own town centres.

The report sets out a series of recommendations which the Government should pursue so that communities can take greater ownership over the future of their own high streets. These include:

• A powerful new Community Right to Buy so that communities themselves can more easily purchase neglected high street units, and force the sale of these where necessary [4]
• £250m to support community buyouts of strategically important high street properties over the next five years, taken from the new Towns Fund recently announced by the Government and including £10m to build the capacity of community organisations [5]. This would mean at least 800 commercial properties moving into community ownership, kickstarting a radical shift in high street ownership around the country [6],
• Increased support for neighbourhood plans aimed at revitalising high streets, as well as greater community influence in the governance of Business Improvement Districts and a new requirement to show community involvement when submitting applications to high street funds

Vidhya Alakeson, Chief Executive of Power to Change, said:“Mass store closures by big retailers are coming thick and fast, and each one is another blow for hard-pressed towns around the country. No one should be under any illusion – the big chains aren’t coming back to the high street, because we simply don’t shop that way any more.

“It’s not all bad news, though. This is a moment of transition, and a chance to reimagine high streets as centres for civic life – as places not just to shop, but to live, to meet, to work and to interact.

“High streets can be vital sources of meaning which allow people to identify with the places where they live. But to make this a reality, we have to put our trust in communities to shape their own town centres.

“The evidence shows that greater community ownership of high street properties would lower the number of empty shops and be a major boost to the economy. But to take on this role, communities need support. We’re calling on the Government to back communities so they can own more high street properties and have greater influence over the places where they live.”

 James Child, Head of Retail & Industrial Research at EG, said: “This research shows that traditional real estate investment trusts (REITS) and overseas investors are clearly struggling to re-fill empty high street stores, whether that be through inactivity, malaise or inability to attract new tenants to their assets.

“On the other hand local authorities, the social sector and individuals have some of the lowest vacancy rates. This suggests that these groups are more active in terms of securing new tenants.”

“The disparate ownership of the high street goes some way towards explaining why so many of the country’s town centres are suffering. Disjointed ownership makes it difficult to create streamlined and accountable town centre plans, with the patchwork of proprietorship enabling landlords to focus their concerns on return on their individual investments rather than the wider community landscape.”

-ENDS-

Notes to editors

1. EG analysed the number of vacancies across 3,200 retail premises in 22 of the UK’s busiest high streets across 11 cities. Data was taken from Radius Data Exchange, and supplemented with data from the Land Registry and the Scottish Assessors Association. Landlord types are in conjunction with British Property Federation (BPF) existing standards. For more on data sources and analytical method, see the full report or get in touch.
2. ‘Social sector’ corresponds with the British Property Federation landlord category ‘Traditional estates, church & charity organisations’.
3. See Community Shops: a better form of business (Plunkett Foundation, 2018). And Community Pubs: a better form of business (Plunkett Foundation, 2018)
4. The recommendation is for an extension of the Right to Bid under the Localism Act 2011 to a powerful new Community Right to Buy, as under Scotland’s Community Empowerment Act. This extension would give specifically defined communities with a strong track record and a solid business case priority rights to buy land and property in which they have registered an interest, and a generous window of opportunity to raise the funds necessary to meet the price as determined by an independent valuation. In addition, the new Right to Buy should include the right for communities to force the sale of a building or land if it is in a state of significant disrepair or neglect and is contributing to the decline of a local neighbourhood.
5. The recommendation is for the Government to earmark £250m of the additional funding announced for the Towns Fund to support community-led organisations to take on buildings and land that matter to them in their town centres over the next five years. This fund would be held centrally so communities ready to take on high street assets are able to apply for it. It should include initial feasibility funding, capital funding for building purchase and critically revenue funding to support the early running costs of the building. Alongside this investment, the High Streets Task Force should provide access to capacity building for community organisations that successfully secure funding. A sum of £10m, taken from the overall £250m fund, should be made available to the Task Force to provide this support. Contributions for community buyouts would be capped at £300k per sale – any capital value required above this sum would be raised by or gifted to the community.
6. The illustrative figure of 800 commercial properties is reached by dividing the total funds available to give direct support to community buyouts (£240m) by the cap on the amount available for a single property (£300k). Any capital value required above this figure would be raised by or gifted to the community. In some cases the value of the property will be under £300k, hence at least 800 properties will transfer to community ownership through this measure.

Spokespeople and report copies available on request. Please contact Will Brett on 07979 696 265 / will@willbrett.info