Local facilities are important and valued by local communities. From time-to-time villages and towns are threatened with the loss of much loved and used venues, whether because the owner’s needs have changed or from development pressure.
When that happens, local groups often look to see if there is a way these places can be retained for community use. One way is to use the legislation which has created the concept of an “Asset of Community Value”.
We regularly advise clients on matters relating to Assets of Community Value (ACV), whether in relation to the ACV nomination process, the purchase and sale of an ACV registered property, or the general scope of ACV legislation.
The rules relating to ACVs come under two pieces of legislation:
- Localism Act 2011
- Assets of Community Value Regulations 2012
The legislation defines ACVs as buildings or other land which furthers the social wellbeing or social interests of a local community. The law provides certain local community groups or bodies unique rights to protect those assets. It also incorporates the rights and obligations of owners who may be in the process of owning or currently own an ACV. Some of the typical examples of buildings or land that have been granted ACV status include:
- Village Halls;
- School playing fields and sports grounds;
- Public houses; and
- Local parks.
Assets that cannot be listed as an ACV have to meet one of the following criteria:
- Land or buildings that serve as residence, such as private dwellings, land which is let or partly let for use as holiday homes, if it or part of it is used as a hotel and accommodates paying guests, or if it is a house of multiple occupancy (HMO).
- Any land which requires a site licence, such as caravan park; and
- Operational Land which is used by statutory undertakers e.g. utility companies, transport providers or other organisations that provide essential public services. Examples of operational land can include airports, railway stations, telephone exchanges or an electrical sub-station.
What is the process for registering an ACV?
Typically, the process begins with a nomination. Which can be made by either:
- A parish council in the local authority area; or
- a person on behalf of a community body who has a local connection with the land in the local authority’s area.
Among other requirements, the nomination must include some information about the description of the land and a statement containing the information considered which led to the nomination, the reasons why it should be considered to have community value, and if that body is eligible to make a nomination.
The Local Authority then must consider the nomination and make judgement within eight weeks as to whether the land constitutes community value. During this period, the local authority must keep the owner, any lawful occupants, or if applicable, the parish council informed of the process.
If the local authority determines the land is of community value, then it must be listed as such and all parties concerned informed of the decision. To safeguard the asset for the future, the local authority will apply for charges and restrictions to be placed against the property title, to ensure for any future sales that proper process is followed.
If the nomination is successful, the owner has eight weeks to make a request to the local authority to review its decision. If the local authority decides to uphold its decision after review, then the owner can make an appearance to the General Regulatory Chamber of the First Tier Tribunal. If successful in their appeal, then the asset must be moved to the list of unsuccessful nominations whereby the local authority will decide how long the land will remain listed.
If the nomination is rejected, then the land will be placed on the list of assets nominated but not listed. The owner and those informed of the initial nomination will be informed of the rejection and how it was reached.
How is the process of selling an ACV different from a standard property sale?
Firstly, when an owner wishes to sell an ACV there must be a relevant disposal, which must come with vacant possession e.g. sold with no lawful occupiers of the building or land. This can be either of:
- the sale of a freehold estate; or
- a grant or assignment of a lease with a minimum of a 25 year term.
Once a relevant disposal has been proposed, the owner then must satisfy three further conditions before the land can officially be disposed:
- Notify the Local Authority in writing that they wish to enter a relevant disposal of the land;
- The interim and full Moratorium periods must have ended (see below); or
- The protected period has not ended.
The first step, the interim moratorium period, runs for six weeks from the date notification of the proposed disposal is given. During this period, the land can only be sold to a community interest group. If interest has not been expressed by a community interest group during those six weeks, then the owner is free to dispose of the land to whoever they see fit.
If a community group expresses a bidding interest in that period, then the full moratorium will commence. This will last for six months, again, starting from the date notification of the disposal is given. Marketing and negotiations can occur during this time, but the exchange of contracts is forbidden unless a community interested group is a party to those contracts.
Once the full moratorium period has ended, and no community interest group has exchanged contracts to purchase the land, then a protected period will run for 18 months from the date of notification of the proposed disposal. No new moratorium periods will run during this period and will only re-trigger once the protected period has ended and the owner still wishes to sell the land. This protects the owner from any unfounded interest from community groups intended to cause disruption to the sale process.
Despite the structured moratorium periods which are in place to give community groups a chance to buy an asset, landowners can just simply choose to wait until either of the moratorium periods expire and sell to whoever they wish, at any value.
Owners of ACVs can claim compensation in respect of moratorium periods causing financial loss. For example, if market value of the land were to fall during these periods or from delay in entering into a binding agreement.
Other Considerations
To summarise, the process of listing an ACV or selling one is clearly time consuming and involves several considerations. There are also numerous obligations that we have touched upon briefly, all of which come with their own consequences if not followed correctly. Therefore, it is crucial that you seek professional advice so you can make informed decisions in whatever path you are looking to go down.
Our solicitors are experts in these matters and will offer sensible, realistic, and reliable advice.
