The Government has brought into effect in England provisions of the Localism Act 2011 relating to assets of community value.  These were an important part of the Government’s approach to community empowerment in the Localism Act 2011.  Local authorities will need to ensure that they have systems in place to enable them to manage their lists relating to assets of community value and to respond to requests to include land on their lists.

The Localism Act 2011 (Commencement No 1) (England) Order 2012 brought into force for England on 21 September 2012 Chapter 3 of Part 5 of the Localism Act 2011, subject to specified exceptions.  The specified exceptions are provisions relating to Wales.

The Assets of Community Value (England) Regulations 2012 (“the regulations”), which also came into force on 21 September 2012, and apply in relation to England only, introduce some particular requirements relating to the rights contained in the Localism Act 2011.

Localism Act 2011

The chapter of the Localism Act 2011 which has been brought into effect by the latest commencement order introduced an obligation on local authorities to maintain lists of land in their areas that is land of community value.  These lists are to be known as their lists of assets of community value.  Parish councils and voluntary or community bodies with a local connection have the right to nominate land for inclusion in a list of assets of community value.  If a nomination is unsuccessful, the local authority must give written reasons to the person who made the nomination and must also maintain a list of land in its area that has been the subject of unsuccessful nominations.  A local authority is required to give notification of the inclusion or removal of land from its list of assets of community value to the owner and occupier of the land, the person who made the community nomination if applicable, and any person specified in regulations.  An owner of land which has been included in a list of assets of community value may ask for a review of the local authority’s decision to include the land on the list.  Local authorities are required to publish their lists of assets of community value and their lists of land nominated by unsuccessful community nominations, as well as making them available for inspection and providing one free copy of each list if requested.

Land which has been included on a local authority’s list of assets of community value is subject to restrictions on its disposal.  There is an interim moratorium period of six weeks beginning with the date on which the local authority receives notification of a proposed disposal, and a full moratorium period of six months beginning with that date. There is a protected period of 18 months beginning with the date on which the local authority receives notification of a proposed disposal.  A landowner may not dispose of land included on a list of assets of community value unless:-

  • the local authority has been informed of the proposed disposal;
  • the interim moratorium period has ended without a written request having been received from a community interest group to be treated as a potential bidder; or the full moratorium period has ended;
  • and the protected period has not ended.

A local authority must publicise receipt of a notice of intended disposal of land. A local authority must also inform a landowner of a request from a community interest group to be treated as a bidder for the land.

The Assets of Community Value (England) Regulations 2012 have introduced detailed requirements relating to: amending lists of assets of community value; land which may not be listed; bodies with a local connection; definition of voluntary and community body; community nominations; maintaining and reviewing lists; compensation; review procedures; exclusion from moratorium requirements; and entries on the land register.

Amending lists of assets of community value

The regulations make various provisions requiring local authorities to amend entries on their lists of assets of community value.  If within six weeks of being notified of a landowner’s wish to dispose of land on the list of assets of community value, a local authority receives a request from a community interest group with a local connection to be treated as a potential bidder in relation to that land, the local authority must as soon as practicable amend the list to record that.  The local authority must also record the name of the community interest group and the fact that restrictions will apply for a period of six months beginning with the date of receipt of the notice from the landowner but after that will not apply for a period of twelve months.

A local authority is also required to amend its list as soon as practicable after receiving relevant information, so as to exclude any land which has been the subject of a relevant disposal other than one of a type specified in section 95(5) of the Localism Act 2011.

Land which may not be listed

The regulations contain a schedule which sets out details of land which is not land of community value and therefore may not be included on a local authority’s list of assets of community value.  These are:

  • A residence together with land connected with that residence.  (Land is connected with a residence if the land and the residence are owned by a single owner, and every part of the land can be reached from the residence without having to cross land which is not owned by that owner.  The requirement to reach every part of the land in this way will be satisfied if part of the land cannot be reached from the residence only because of intervening land in other ownership on which there is a road, railway, river or canal and it is reasonable to think that the requirement would be satisfied if the intervening land were to be removed leaving no gap.)  However, a residence may be listed if the residence is a building that is only partly used as a residence.
  • Land in respect of which a site licence is required under Part 1 of the Caravan Sites and Control of Development Act 1960 or would be if paragraphs 1, 4, 5 and 10 to 11A of Schedule 1A to that Act were omitted.
  • Operational land as defined in section 263 of the Town and Country Planning Act 1990.

Bodies with local connection

For the purposes of the Assets of Community Value (England) Regulations 2012 and section 89(2)(b)(iii) of the Localism Act 2011 (which allows a voluntary or community body with a local connection to make a community nomination), a body other than a parish council is defined as having a local connection with land in a local authority’s area if:

  • The body’s activities are wholly or partly concerned with the local authority’s area or a neighbouring authority’s area.
  • In the cases of an unincorporated body with at least 21 individuals as members, a company limited by guarantee or an industrial and provident society which do not distribute any surplus they make to members, any surplus they make is wholly or partly applied for the benefit of the local authority’s area or a neighbouring authority’s area; and
  • In the case of an unincorporated body with at least 21 individuals as members which does not distribute any surplus it makes to members, it has at least 21 local members.  (A local member means a member who is registered as a local government elector at an address in the local authority’s area or a neighbouring authority’s area.)

A parish council has a local connection with land in a local authority’s area if any part of the boundary of the first council’s area is also part of the boundary of the other council’s area.  A parish council has a local connection with land that is in a local authority’s area but is not in any parish council’s area if the council’s area is within the local authority’s area or any part of the boundary of the council’s area is also part of the local authority’s area.

Definition of voluntary or community body

For the purposes of the legislation relating to assets of community value, voluntary and community bodies include a wide ranging type of organisations.  The regulations define “voluntary or community body” for the purposes of section 89(2)(b)(iii) of the Localism Act 2011 (which identifies the types of body which may make a community nomination) as:

  • A body designated as a neighbourhood forum pursuant to section 61F of the Town and Country Planning Act 1990.
  • A parish council (even though parish councils are already eligible to make community nominations relating to land in their area).
  • An unincorporated body whose members include at least 21 individuals and which does not distribute any surplus it makes to its members.
  • A charity.
  • A company limited by guarantee which does not distribute any surplus it makes to its members.
  • An industrial and provident society which does not distribute any surplus it makes to its members.
  • A community interest company.

The regulations say that a public or local authority may not be a voluntary or community body but this does not apply to a parish council.

Community nominations

The regulations require that a community nomination should include:

  • A description of the nominated land, including its proposed boundaries.
  • A statement containing all the information which the nominator has regarding the names of the current occupants of the land, and the names and current or last-known addresses of all those holding a freehold or leasehold estate in the land.
  • The nominator’s reasons for thinking that the local authority in whose area the land is situated should conclude that the land is of community value.
  • Evidence that the nominator is eligible to make a community nomination.

Matters relating to maintaining and reviewing lists

A local authority that receives a community nomination relating to land in its area must make a decision within eight weeks of receiving that nomination about whether the land should be included on its list of assets of community value.  The local authority must take all practical steps to inform the following persons that it is considering listing the land: a parish council if any of the land is in that parish council’s area; the owner of the land; if the owner is not the freeholder, the holder of the freehold estate in the land, and the holder of any leasehold estate in the land other than the owner; and any lawful occupant of the land.

Section 91 of the Localism Act 2011 requires a local authority to give notice of the inclusion of land in or removal of land from its list of assets of community value to the owner of the land, the occupier (if different) and the person who made a community nomination if that led to the inclusion of land on the list.  The regulations require that a local authority should also give notice to the holder of the freehold estate in the land, and the holder of any leasehold estate in the land other than the owner; and any parish council in the area of which any of the land is situated.

If a landowner wishes to exercise the right to request a local authority to review a decision to include land in its list of assets of community value, the request must be made within eight weeks beginning on the day on which the responsible authority gave written notice of inclusion of the land on the list or such other longer period as the responsible authority allows in writing.  If the responsible authority takes reasonable alternative steps to bring the notice to the attention of the landowner, the deadline for making a request for a review is eight weeks beginning with the day on which the authority completes the taking of such steps.

Compensation

Subject to specified exceptions, a landowner or former owner of land is entitled to compensation from a local authority if, at a time when that person was the owner of the land and the land was listed on the local authority’s list of assets of community value, the person incurred loss or expense which would be likely not to have been incurred if the land had not been included on the list.  The amount of compensation is determined by the local authority.

A claim for compensation must be made before the end of thirteen weeks after the loss or expense was incurred or finished being incurred.  A claim must be made in writing to the local authority, must state the amount of compensation sought for each part of the claim and must be accompanied by supporting evidence for each part of the claim.

The local authority must give a claimant written reasons for its decisions with respect to a request for compensation.

A claimant for compensation has the right to ask a local authority to review either or both of its decisions in response to a claim, as to whether compensation should be paid and, if so the amount of compensation.  The authority must give the person who asked for the review written notification of the decision on the review and the reasons for the decision.  The person who asked for the review may appeal to the First-Tier Tribunal against any decision of the local authority on the review.

The following are not entitled to compensation under the regulations:

  • An authority or other body in respect of loss or expense incurred at a time when it has accounts which are required by section 2 of the Audit Commission Act 1998.
  • A department, authority or other body in respect of loss or expense incurred at a time when section 6 of the National Audit Act 1983 applies to it.
  • An authority or body in respect of loss or expenses incurred in any of its financial years if its use of resources in that year is examinable under section 7 of the National Audit Act 1983.

Review procedures

If a local authority receives within the relevant deadline a request to review a decision to include land in its list of assets of community value or a decision on compensation, the local authority must conduct a review using the following procedure:

  • The review must be carried out by an officer of the authority who did not take any part in making the decision which is to be reviewed.  That officer (“the reviewer”) must make the review decision.
  • The landowner may appoint any representative to act on his or her behalf in connection with the review.
  • The local authority must provide to the landowner’s representative any document which is required to be sent to the landowner and need not provide that document separately to the owner.
  • As soon as is practicable following the written request for the review, the local authority shall notify the owner of the procedure to be followed in connection with the review.
  • An oral hearing must be held if the owner makes a written request for one.  If no such request is made by the owner, the local authority may decide whether or not to include an oral hearing in the review.
  • The owner and the owner’s representative may make representations to the reviewer orally or in writing or both orally and in writing.
  • The local authority must complete the review by the end of eight weeks beginning with the date when the local authority receives the written request for the review, or such other longer period as is agreed with the owner in writing.

Exclusions from moratorium requirements

The Assets of Community Value (England) Regulations 2012 allow a land owner to dispose of  land on a local authority’s list of assets of community value to a community interest group at any time in the eighteen months beginning with the date when the local authority receives notice of the landowner’s intention to dispose of the land.

For the purposes of the regulations and section 95(3) of the Localism Act 2011, a community interest group is defined as:

  • A parish council in relation to land in the parish council’s area.
  • A body which is a charity or a company limited by guarantee which does not distribute any surplus it makes to its members, or an industrial and provident society which does not distribute any surplus it makes to its members, or a community interest company and which has a local connection with the land.
  • The regulations exclude the moratorium requirements of the Localism Act 2011 from applying to the following types of disposal of listed land, which are set out in a schedule to the regulations:
  • A disposal pursuant to an order made by a court or by a tribunal established by or under an Act.
  • A disposal pursuant to a separation agreement between spouses or civil partners.
  • A disposal pursuant to an agreement between spouses or civil partners in connection with their separation, or between former spouses or former civil partners and relating to the care of a child dependent on a party to the agreement.
  • A disposal made under or for the purposes of a statutory provision relating to incapacity.
  • A disposal pursuant to a requirement to dispose of land to a particular person under a planning obligation entered into under section 106 of the Town and Country Planning Act 1990.  However, this does not apply if the land was in a list of assets of community value when the obligation was entered into.
  • A disposal made as a result of the exercise of a legally enforceable option to buy, nomination right, right of pre-emption, or right of first refusal.  However, this does not apply if the land was in a list of assets of community value when the option or right was granted.
  • A disposal to a former owner if the transferor a predecessor in title to the transferor acquired the land by a statutory compulsory purchase and has made a first offer of the land to the former owner in accordance with an obligation to make such an offer.
  • A disposal in exercise of a power of sale of the land by a person who has that power by way of security for a debt.
  • A disposal pursuant to insolvency proceedings.
  • A disposal by a statutory compulsory purchase.
  • A grant of a tenancy pursuant to Part 4 of the Agricultural Holdings Act 1986.
  • A disposal by a body corporate to another body corporate which is a group undertaking in relation to it.
  • A part-listed disposal where the land is owned by a single owner and every part of the land can be reached from every other part without having to cross land not owned by that owner.  (As with the provisions relating to residences, the requirement about reaching every part of the land is satisfied if part of the land cannot be reached from every other part only because of intervening land in other ownership on which there is a road, railway, river or canal and it is reasonable to think that the requirement would be satisfied if the intervening land were to be removed leaving no gap.)
  • A disposal to a church, together with any land annexed or belonging to it, pursuant to a scheme under Part 6 of the Mission and Pastoral Measure 2011.
  • A disposal for the purpose of enabling health service provision to continue to be provided on the land.
  • A disposal of land held for the purposes of a school, a 16 to 19 academy or an institution within the further education sector.  (This does not include an independent school, other than one in respect of which academy arrangements have been entered into by the Secretary of State under section 1 of the Academies Act 2010.
  • A disposal subject to a statutory requirement which could not be observed if the moratorium requirements of the Localism Act 2011 were complied with.

Land Register

The Assets of Community Value (England) Regulations 2012 require a local authority which removes land from its list of assets of community value to apply to cancel an associated restriction on the land register.

The regulations also impose requirements on owners or mortgagees applying for first registration of listed land to apply for a restriction on the land register.  They require a person who has become an owner of the land following a disposal to inform the local authority and provide ownership details.

Consequences of failure to comply

The regulations provide that a disposal of listed land that contravenes section 95(1) of the Localism Act 2011 (ie that does not comply with the moratorium requirements) is ineffective.  However, this does not apply if, having made all reasonable efforts to find out if land is listed, the person making the disposal does not know at the time of the disposal that it is listed.

Government Advice Note

The Government has published an advice note on the legislation relating to assets of community value.  The note, Community Right to Bid: Non-statutory advice note for local authorities, includes sections on: the scope of the advice; how the scheme works; lists of assets of community value; who may nominate; contents of nominations; procedures when considering listing; the procedure to be followed for a listing review; appeal against a listing review; moratorium; compensation; internal review of compensation; and enforcement.  There are also annexes, containing details of exemptions and a glossary.

On the subject of compensation, the advice note says that the Government has reflected the estimated costs of compensation within the new burdens funding.  The compensation elements of new burdens funding are estimated on the basis of 40 successful claims for compensation across all administering authorities over a year.  The advice note says that in addition to the amount included within the new burdens assessment, the Government will meet costs of compensation payments of over £20,000 of compensation costs in a financial year.  This could occur through a local authority paying out over £20,000 in one financial year either on one large claim or as a combined total on a number of smaller claims.  The advice note provides contact details for local authorities to use to request financial support to meet the costs of compensation payments.

The guidance is available at: http://www.communities.gov.uk/publications/communities/righttobidadvicenote

Conclusion

The making of regulations which explain in detail how the obligations contained in the Localism Act 2011 regarding assets of community value operate should be of practical help to local authorities.  Nevertheless, any local authorities where the communities intend to be active in exercising their rights relating to assets could find the effort of complying with their obligations demanding.  They will need to ensure that they are able to respond efficiently to community nominations and to requests for reviews of compensation.  They will need to ensure that they are effective in monitoring compliance with restrictions on the disposal of land on their lists of assets of community value.  They may find it challenging to balance the expectations of groups within their communities that they will be able to protect land that they regard as important for the community with the expectations of landowners that they will be compensated for any loss or expenses incurred as a result of their land being listed as being of community value.