Listeners to Radio 4’s The Archers are familiar with the idea of a community-run village shop. Last year’s Localism Act paved the way for the Ambridge experience to be replicated around the country as it put in place provisions to help community interest groups take over local amenities — “assets of community value” — that are threatened with closure. Assets may be nominated for inclusion on a list and the disposal of listed assets is delayed to allow local groups time to put together a bid to acquire them. This could delay a proposed disposal by up to six months. However, it may be that many disposals will not in fact be caught by the rules as the moratorium appears not to apply as long as the property is occupied at the time of the disposal, the draft regulations exempt intra-group disposals, and the sale of shares in the property owning company appears not to be affected. Compensation will also be payable for loss or expense incurred as a result of the property being listed.
What is an Asset of Community Value?
Land or buildings can qualify as assets of community value if their current or recent use “furthers the social well-being or social interests of the local community” and it is realistic to think that such a use can continue, whether or not in the same way. The examples given on the Department for Communities and Local Government website are a village shop, pub, community centre, children’s centre, allotments and library. Under the draft regulations, residential property is excluded but a building only partly used as a residence is not. So, for example, a shop or a pub with living accommodation above could be listed. Hotels and holiday homes count as residential for this purpose. However, simply having planning permission for a residential development does not bring property within the exclusion, even if construction of the development has started.
Compiling the List
Local authorities will have a duty to compile a list of assets of community value. Nominations for listing may be made by a parish council, a community council in Wales, or a “voluntary or community body with a local connection” as defined in the regulations. Once a nomination is made, the local authority must notify the owner and occupiers of the property and will have eight weeks to decide whether to list the property. If the property is listed, there is an eight week period during which the owner can request a review of the decision. The review must then be carried out within eight weeks and if the decision is still to list the property, the owner has a right of appeal to the First-Tier Tribunal. Once listed, property will remain on the list for a maximum of five years.
Which Disposals Are Affected?
The rules apply to disposals of the freehold or a leasehold of at least 25 years, in either case with vacant possession. It appears, therefore, that the moratorium will not apply as long as the property is occupied at the time of the disposal. Certain disposals are exempt, such as gifts, disposals to family members or by personal representatives and a disposal of part of a business sold as a going concern. The draft regulations add some further exemptions including disposals in pursuance of a planning obligation, option or pre-emption right made before the land was listed, disposals by a mortgagee under a power of sale and, most notably, intra-group disposals. The disposal of shares in the property owning company appears not to be covered. Therefore it seems many disposals will not be affected by the rules as currently drafted.
If the owner of a listed asset of community value wishes to make a disposal to which the rules apply, the first step is to notify the local authority of the owner’s wish to enter into a relevant disposal. There appears to be no requirement to give details of the price or any other terms of the proposed disposal. There is then a six week interim moratorium on entering into the disposal to give community interest groups an opportunity to make a written request to be treated as a potential bidder for the property. If such a request is made during that six week period, then a full moratorium comes into effect, which lasts until six months after the original notification was made. The full moratorium is to give the community interest group time to make a bid for the property. If the group makes a bid, the owner is not obliged to accept it, even if it matches or exceeds the owner’s asking price or terms which the owner has agreed with a proposed purchaser. Once the full moratorium has ended, there is a protected period of eighteen months from the original notification during which the relevant disposal may be entered into, but after that period has ended the procedure must start again.
A disposal is “entered into” when an agreement for the disposal becomes binding, which means that it will not be possible to exchange an agreement during the moratorium to be completed afterwards. It is not clear whether an agreement conditional on no bid being made by a community interest group would be regarded as “binding” for this purpose.
The timing of the notification to the local authority is important. It seems it is not necessary to wait until terms are agreed in principle before giving the notice and the longer the owner waits before giving the notice, the longer the delay before the disposal can proceed. However, if notice is given too early it will start the eighteen month protected period running, with the risk that time could run out before agreements are exchanged and the whole process would have to be gone through again.
If a disposal is made in breach of the rules, the draft regulations provide that it will be ineffective unless the owner was unaware that the property was listed, having made all reasonable efforts to find out if it was.
Compensation can be claimed for loss or expense incurred as a result of the property being listed. That may include loss resulting from a delay in disposal caused by the moratorium and also reasonable legal expenses incurred in a successful appeal to the Tribunal (but not costs in connection with a review of the authority’s decision on listing or on compensation). The claim must be made to the local authority within 13 weeks after the loss or expense was incurred and must state the amount claimed and include supporting evidence. Once the claim is decided, there is an eight week period to request a review of the decision. If a review is requested it must be carried out within eight weeks. There is then a right of appeal to the First-Tier Tribunal.
The draft regulations apply only in England and are expected to come into force in the autumn.
The procedure for the disposal of listed property is summarised on the following flowchart.
Disposal of Assets of Community Value Flowchart
Click here to view