The community right to buy introduced by the Localism Act 2011 (“the Act”) is based on the concept of giving local people the opportunity to take control of assets and facilities in their neighbourhoods by levelling the playing fields by providing the time for them to prepare a proposal (DCLG (2011) Assets of Community Value: Policy Statement).
The Act confers upon local communities the right to bid for land and other assets of community value to prevent such assets being lost to the community. When listed assets come up for sale or change of ownership, the Act then gives community groups time to develop the bid and raise the money to bid to buy the asset when it comes on the open market.
Land of community value is described in section 88(1) of the Act as a building or land which the local authority considers is for: (a) the social wellbeing or social interests of the local community; (b) that the use is not an ancillary one; and (c) that it is realistic that the use of the asset in this way can continue.
Residential property including sites for mobile homes and boats (which will not include property such as shops or clubs which have living quarters above them) and operational land used for transport, infrastructure or some other related purposes by statutory undertakers cannot be designated as an asset of community value.
List of assets of community value
It is for the local authority to decide the form and contents of its list of assets of community value. The local authority must publish and make available for inspection a copy of its list of assets of community value and land determined to be unsuccessful community nominations.
A number of disposals are exempt under the Act and these include, amongst others, transfers made other than for value, transfer of land between members of the family, transfers resulting from the inheritance of land and transfers related to business transactions of a going concern where the intention is to continue the existing use of the asset.
Procedure for including land as an asset of community value
A community nomination can be made by a parish council, a community council or by a person that is a voluntary or community body with a local connection. The local authority will have to assess the nomination against the criteria in section 88(1) of the Act (as detailed above). If the nomination does not fall within the criteria then the nomination must be placed on the list of unsuccessful community nominations.
What should you do if your land is nominated as an asset of community value
If your property is nominated for listing you will be informed by the local authority and you need to consider quickly whether to object as timescales are tight. The local authority must make a decision within eight weeks of receiving a nomination and they are not required to take it into account representations made by the owners but many authorities do.
The affected owner has the right to ask to request the local authority to review its decision to include its land on the list. There is also a right of appeal to the first tier tribunal on points of law or findings of fact. The deadline for appeal is 28 days from notice of the decision. Grounds for objection include that the relevant uses are ancillary to other uses or they do not further the interests of the local community.
Disposing of land and the moratorium
The moratorium on disposing of land is a critical element of the community right to bid. Section 95(1) of the Act provides that a person who is an owner of land included in a local authority’s list of assets of community value must not enter into a disposal of the land unless certain conditions are met.
When the affected land owner wishes to make a qualified disposal then each of the following conditions set out in section 95(2)(5) have to be fulfilled:
Condition A - the owner must have notified the local authority in writing of his intention to enter into a disposal of the land;
Condition B – either: (a) the interim moratorium period of six weeks from the date the local authority has been notified in writing of the intention of the owner to dispose of its land has ended without the local authority having received a written request that a community group be considered as a potential bidder in relation to the land; or (b) the full moratorium period of six months from the date the local authority has been notified in writing of the intention of the owner to dispose of its land has ended; and
Condition C - the protected period for disposal of 18 months from the date the local authority has been notified in writing of the intention of the owner to enter into a relevant disposal of land has not ended.
The legislation does not restrict in any way who the affected owner can sell his property to or at what price i.e. the community right to buy does not confer a formal right of first refusal nor do the provisions place any restriction on what an owner can do with their property, once listed, if it remains in their ownership. This is because it is planning policy that determines permitted uses for particular sites. There is also no obligation for the community interest group to make an offer or to buy the land.
If a community group does not acquire the asset of community value inside the prescribed time frame then the land can be freely sold within the remainder of an 18 month period. If the asset of community value is not sold inside this 18 month period the owner will need to repeat the procedure of allowing the community group to acquire the land.
Section 99 of the Act provides for compensation to any owners for loss and expense incurred as a result of listing and complying with the procedures required by the scheme such as expenses arising from a period of delay in selling a property due to the moratorium. There are tight timescales for submission for a compensation claim and an owner must make a claim within 13 weeks of the alleged loss or expense being incurred or having finished being incurred.
The real impact of the legislation remains to be seen but the potential for slowing down development is very real and is something developers should be alive to when considering new development opportunities.