Will Right to Manage Accelerate High Street Decline?

In recent years, the UK's high streets have faced significant challenges, from the rise of online retail to structural changes in consumer behavior. The introduction of new legislation, such as the Right to Manage (RTM) reforms and the Levelling Up and Regeneration Act, aims to address various aspects of property management and community regeneration. However, concerns are growing about whether these measures, particularly the Right to Manage, might inadvertently exacerbate the decline of the high street. This article explores the potential impact of RTM on high street properties and the broader implications for local economies.

The Context of High Street Decline

Many high streets across the UK have seen a marked increase in empty storefronts and a decrease in local business vitality. This trend is largely attributed to the shift towards online shopping and the loss of major retail anchors like department stores. The Levelling Up and Regeneration Act seeks to revitalize these areas by giving local authorities greater powers to manage high street spaces, including arranging mandatory rental auctions for vacant properties to encourage occupancy[1][5]. However, without addressing underlying issues like high business rates and changing consumer habits, these efforts might only offer temporary solutions[5].

Understanding Right to Manage (RTM)

The Right to Manage (RTM) legislation has recently been updated to allow more leaseholders in mixed-use buildings to take control of building management, provided that the commercial element does not exceed 50%[4]. This change aims to empower residents by reducing management costs and increasing transparency, but it also introduces new responsibilities, such as maintaining building safety and managing long-term maintenance[4].

Potential Impact of RTM on the High Street

While RTM primarily affects residential properties, its broader implications on mixed-use buildings could influence high street dynamics:

• Increased Fragmentation: By enabling leaseholders to manage their own parts of a building, RTM might lead to fragmented ownership structures. This could result in less cohesive management of mixed-use buildings, potentially deterring investors who prefer unified control[4].

• Reduced Investment in New Residential Developments: Developers might opt to reduce the residential components in new developments to avoid the complications of RTM, which could impact the overall investment in high street areas[4].

• Shift in Focus from Commercial Development: While RTM does not directly target commercial units, the increased focus on residential management could divert attention from revitalizing commercial spaces, which are crucial for high street vitality[4].

How RTM Might Exacerbate High Street Decline

Changing Market Dynamics

1. Less Attractive to Investors: The increased fragmentation and potential for poorly managed buildings due to RTM could make mixed-use properties less appealing to investors. This would reduce new capital flowing into high street areas, which is essential for revitalization efforts[4].

2. Shift in Community Focus: While RTM empowers residents, it might shift community attention and resources from high street regeneration to residential management issues. This redirection could slow down efforts to revitalize commercial spaces and attract new businesses[4].

3. Potential Legal and Financial Liabilities: Leaseholders taking on RTM must navigate complex legal and financial obligations, which might deter them from investing in adjacent commercial properties or supporting high street initiatives[4].

Regeneration Challenges

The Levelling Up and Regeneration Act offers tools like mandatory rental auctions to fill vacant properties, but these measures might not address underlying market conditions such as high business rates and consumer behavior shifts[5]. RTM, by focusing on residential management, does not directly tackle these key issues affecting commercial high street properties.

Ways Forward for High Street Revitalization

To avoid exacerbating the decline of high streets, several strategies could be considered:

Community-Led Initiatives

• Community Right to Buy: Implementing a Community Right to Buy, as advocated by Power to Change, would give local communities the power to purchase and manage key assets, fostering community-driven revitalization projects[2].

• British High Street Investment Vehicle: Establishing an investment vehicle to fund community-led projects could provide critical financial support for innovative high street uses[2].

Government Support and Policy Alignment

• Aligning Policies: Ensuring that policies like RTM and the Levelling Up Act complement each other is crucial. This could involve incentivizing community involvement in commercial development and using RTM to improve residential conditions without detracting from high street regeneration efforts.

• Addressing Business Rates: The government should consider reforms to reduce high business rates, which are a major barrier to new businesses setting up shop on high streets.

Conclusion

The Right to Manage legislation offers significant opportunities for residential management but might have unintended consequences on high street revitalization efforts. By focusing on community-led initiatives and aligning policies to address core issues such as business rates and consumer behavior, local authorities can mitigate potential negative impacts and work towards a more sustainable future for the UK's high streets.

Ultimately, whether RTM exacerbates high street decline will depend on how effectively local communities, government, and stakeholders can navigate these challenges and create a balanced approach that supports both residential and commercial needs. The success of these initiatives will be crucial in transforming high streets into vibrant, thriving hubs once again.