Assets of community value

Posted by John Shallcross on
Provisions in the Localism Act 2011 came into force on 21 September 2012 providing for a list to be maintained by councils of 'assets of community value'.

There is a process laid out in the legislation and regulations for the council to maintain a list pursuant to requests from local groups.

The regulations lay out the procedure for applications including an opportunity for the landowner to object to the listing with a right of appeal.

The purpose of this article is to explore two particular issues: the kind of property that can be included on the list and the consequences for the landowner of his property being included on the list.

What can go onto the list?

The statutory definition says that land and buildings are assets of community value if their use 'furthers the social wellbeing or social interests of the local community'. 'Social interests' are defined widely to include cultural interests, recreational interests and sporting interests. This means that potentially the following could count as assets of community value:

  • Community buildings such as village halls;
  • Buildings or land of local historical value;
  • Public houses;
  • Sports grounds; local parks and Farm or village shops.

The land could be in private or public ownership.

Consequences of going onto the list

The council will register a local land charge against the property. This would come up on the local search that a buyer would normally commission. Also if title is registered the council will enter a 'restriction' on the title, which a potential buyer of the property would see when investigating title.

The legislation is intended to give local groups a chance to offer to buy the property in some circumstances if a sale is intended. It places no obligation on a landowner to sell to them, nor to offer the land to them. What it does impose is a moratorium on the ability of the landowner to sell the land for a period while the local group has a chance to put an offer together.

There are a number of disposals to which the provisions do not apply; some of these are illustrated in the example below.

Otherwise before the landowner makes a disposal (which would be the sale of the freehold or the grant of a long lease) the landowner has to tell the local authority of his intention. The landowner has to wait at least six weeks (an interim moratorium) to see if any local group requests to be treated as a potential bidder. If any local group makes such a request then there is a six month period (full moratorium) during which the landowner is not allowed to sell the property.

Example of a farm shop

A farmer a few years ago set up a farm shop on his freehold farm from which he sells home grown produce and produce bought in. The shop is successful with mostly local customers. There is a seating area where customers can buy coffee and will often meet to chat. Such a shop potentially could be treated as an 'asset of community value'. For this example we will assume it has been put on the list of assets of community value by the council.

The farmer is now considering gifting or selling some assets to provide for other members of his family and is considering what he needs to do because of the shop being on the list. Here are some brief points:

If he is to sell the shop with the business as a going concern then the sale is 'exempt' and there is no moratorium. The property will however remain on the list for the time being.

The farmer might want to gift the shop to a member of his family or a family trust with a view to them either running the shop or selling it on. The gift itself should be exempt although the property will remain on the list for the time being.

If the farmer wants to sell the shop after closing the business to a developer who might try to get planning consent then the moratorium provisions are engaged. The farmer will have to tell the council who will in turn tell the local group. If it notifies the council within six weeks that it would like to be considered as a bidder, then the farmer cannot sell the property for a period of six months. Should the local group make an offer during that period, the farmer would have no obligation to consider or accept it but might choose to do so. The farmer might have a right to claim compensation from the council if he suffers financial loss as a result of the delay in the sale to the developer.

About the Author

John is an experienced real estate Lawyer with a background in agricultural and landed estate property work. He has also developed a specialisation as an adviser on the stamp duty land tax implications of property transactions.

John Shallcross
Email John
023 8085 7469

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