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Community Asset Transfers – Something for Nothing?

by Ridley&Hall in Commercial property, David Amies, John Royle, Ridley & Hall Solicitors posted March 4, 2016.

Why are local authorities giving away buildings?

Towns and villages across the country will have community buildings and land, which are intended for use by the wider community, whether it be recreation grounds, theatres, civic halls or otherwise. Many of these assets will be underused.

In most instances, these properties will be owned by the local authority. For many years the authority will have been required to demonstrate the effective use of assets. Local authorities have wide powers to manage such assets, which have included the power to transfer or sell such assets, where appropriate.

The Quirk Review of 2007 suggested that locally based community organisations may be better placed to manage such land and buildings – both in terms of the amount of usage, and in obtaining value for money in maintaining such properties. In fact, local authorities may find management of such land and buildings to be burdensome, and be willing to dispose of something, which it regards as an expense.

Since the review, local authorities have increasingly looked to undertake community asset transfers, whereby such assets can be sold at an undervalue or even given to properly constituted organisations. From our work with community organisations we know this to be the case and we are able to provide specialist advice to community organisations looking to acquire land and buildings from local authorities or other statutory bodies.

It is essential that any such community organisations are properly constituted; particular thought needs to be given to the legal status of such bodies, whether they be managed by trustees, incorporated as community interest companies, companies limited by guarantee, charitable incorporated organisations or other types of legal entity. Often, community organisations will be able to attract third party funding in circumstances where a local authority would be unable to do so.

Asset transfers will seldom be made on an unconditional basis – a local authority will be anxious that the relevant community organisation continues to use the land or buildings for its stated purpose. It might be that the land and buildings are leased by the local authority, enabling the council to enforce restrictions on the use of the land by remaining as a landlord. Alternatively, a council may seek to impose restrictive covenants or even a legal charge over the property. Further, the local authority would usually expect to see a business plan, which demonstrates that the community organisation is able to funds its plans and the ongoing maintenance of buildings.

Whilst the ability of local authorities to undertake community asset transfers is longstanding, it is only in recent years that they have become more prevalent.

David Amies Commercial Property 2Something for nothing? No – land and buildings will only be transferred to organisations, which are able to demonstrate the ability to manage the asset on a long-term basis. Such community based organisations will be run on a not-for-profit basis by people with a strong commitment to the community, and a willingness to devote a substantial amount of time to the project.

Ridley & Hall has developed a relationship with some key third sector organisations and social enterprises and is well placed to assist in assisting the transition of community assets – please do contact David Amies on 01484 538421 if we can help.



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