Assets of Community Value

Part 5, Chapter 3 of the Localism Act 2011 provides for a little known scheme called ‘Assets of Community Value’. This requires District and Unitary Councils to maintain a list of ‘Community Assets’. It is also known as the ‘Community Right to Bid’.

Community Assets can be nominated by Parish Councils or by groups with a connection with the community, but individuals cannot nominate Community Assets. If a nomination is accepted, local groups will be given time to develop a bid and raise money to bid to buy it.

A moratorium will be applied when the asset is being put up for sale or a proposed change of ownership is taking place. There is an initial six-week interim period, during which time a community group must express interest in bidding. If one does, there is then a six-month moratorium beginning from when the asset is put up for sale, i.e. including the six-week interim period, to allow a community interest group to put a bid together. After a moratorium period has ended, another moratorium period cannot begin for a further 12 months.

Following receipt of a nomination of land or buildings, the Local Authority then has eight weeks to make a judgement on whether the land should be listed. If it decides that the nomination meets the criteria, the Local Authority must enter it on its list of Assets of Community Value. Properties remain on the list for five years, unless they are sold under the right to bid process. A list of unsuccessful nominations must also be kept; and it is up to the Local Authority how this is published. The contents of a building, or related services or business assets, are not covered by the Act. Residential property is excluded from listing, except where an asset that could otherwise be listed contains integral residential quarters, such as a pub or caretaker’s flat. Further classes of property are excluded by Schedule 1 of the Assets of Community Value (England) Regulations 2012. These include temporarily unoccupied residences, holiday lets and caravan sites. Land and buildings used for statutory undertakings (e.g. working electricity sub-stations) are also exempt. Once listed, the local authority must inform the owner of the property and other interested parties that it has been listed, enter the listing on the local land charges register and, in the case of registered land, apply for a restriction on the land register.

The Government stated in 2011 that the aim of the policy is:

“to give many more communities the opportunity to take control of assets and facilities in their neighbourhoods by levelling the playing field [and] by providing the time for them to prepare a proposal.”

A community bid does not have to come from the same organisation that listed the asset initially. Equally, there is nothing in the legislation to prevent two or more ‘community’ bids for the same asset.

Resources for local organisations that wish to pursue a community right to bid (or other routes to local ownership of land or properties) are available from the website mycommunity

The risks to local communities of nominating an asset for listing

Often a community will seek to try and prevent a Local Asset from being sold or redeveloped by nominating to list it but this is not always the most effective approach and communities need to act with caution and remember that there are also risks because:

  • an asset cannot in itself prevent it from being sold, nor does it create any restriction on what the owner can do with the property while they own it;
  • if a sale process has already begun and the asset is not yet listed, it may be possible to halt a sale if the Local Authority lists the asset before the sale concludes. But this depends on how quickly the Local Authority considers the application to list. If the sale concludes before the Authority lists the asset, then the community will not be able to trigger the moratorium procedure until the asset is next sold in the future;
  • the right to bid also only applies when an asset’s owner decides to dispose of it through a sale or change of ownership, but there is no compulsion on the owner to dispose of it once a listing has occurred;
  • the owner is at liberty to negotiate a sale with a preferred buyer during the moratorium period (but the sale cannot be concluded during that period). The owner can, at the end of the moratorium, sell to whomever they choose and at whatever price;
  • the policy does not give first refusal to the community group. It is therefore not a community right to buy the asset – as it is in Scotland – but simply the right to bid for it. This means that the local community’s bid might not always be the winning one;
  • certain types of land, most notably residential property, are exempt from being placed on the register;
  • owners of property placed on the register may appeal against its listing and can additionally claim compensation if they can demonstrate its value has been reduced;
  • for an asset to be listed it must have been used by the community in the ‘recent past’ but there is no definition in statute or in guidance of the term ‘recent past’. It is therefore for Local Authorities to decide whether an asset has been used recently enough to justify its inclusion on the list;
  • a building or land which has never been used by the community will not be eligible to be listed and so a community which wishes to use a building as a Community Asset when it has never been one in the past cannot use the Right to Bid to achieve this.

Current rates of listing

Although he Department for Communities and Local Government does not collect formal statistics on either the number of listed assets or the number bought by community groups; the Communities and Local Government Committee’s Sixth Report of Session in 2014-15 stated a total of some 1,800 have however been successfully listed (of which some 500 are pubs) and that 11 assets had been bought by community groups.

Through measures introduced in the Town and Country Planning (General Permitted Development) (Amendment) (England) Order 2015 (SI 2015/659), effective as of 6 April 2015, any property listed as an Asset of Community Value now have to apply for planning permission to change its use class, instead of being able to do so under permitted development rights. This closed the loophole in the law whereby owners of pubs which had been listed as Assets of Community Value could previously use permitted development rights to convert them to residential property.

Proposed changes to Assets of Community Value in 2016?

The Department for Communities and Local Government stated in January 2015 that it would carry out a full review of community rights in 2015 and whilst no such review has been published at the time of writing, the Government has been urged by the Communities and Local Government Committee to make Assets of Community Value listings a material planning consideration stating that:

“We recommend that the Government, as part of its review of Community Rights later in 2015, consult on a proposal to amend its guidance so that ACV listing is a material consideration for local authorities in all planning applications other than those for minor works.”

Despite the review not yet having been published, there are already examples of applications for change of use being rejected with the planning authorities citing listing as a Community Asset as a factor – these include the Peterborough Arms, Dauntsey (near Chippenham, Wiltshire).

As it currently stands, these instances take place at the discretion of the relevant planning committee because the matter is not mentioned in legislation. The Government’s non-statutory guidance note of late 2012, titled ‘Community Right to Bid: Non-statutory advice note for Local Authorities’, declares that:

“The provisions do not place any restriction on what an owner can do with their property, once listed, so long as it remains in their ownership. This is because it is planning policy that determines permitted uses for particular sites. However the fact that the site is listed may affect planning decisions – it is open to the Local Planning Authority to decide whether listing as an asset of community value is a material consideration if an application for change of use is submitted, considering all the circumstances of the case.”

Local Communities empowered to try and better protect their local pubs

Despite local communities needing to act cautiously in their attempts to protect their treasured local assets, Part 5 Chapter 3 of the Localism Act 2011 and the system for ‘Assets of Community Value’ has helped to level the playing field and, coupled with the rise of Neighbourhood Planning, has empowered local communities and councils to try and hold on to what is dear to their communities.

As we herald in a New Year, local communities across Hampshire are celebrating the news that another 20 local pubs have recently been declared Assets of Community Value.