In our briefing of 13 March 2012 (click here to view the briefing) we outlined how the Localism Act 2011 (‘the Act’) gave communities new rights and powers that might have implications for education institutions. These were an important part of the government’s approach to community empowerment as part of its thinking on the ‘Big Society’. The provisions of the Act relating to assets of community value are important for education institutions because many, especially those sited in the heart of towns and cities, will have land and buildings which are part of the urban fabric and frequented by members of the public. Such land therefore might be subject to being nominated for inclusion in the list of assets of community value, with the resulting restrictions on disposal during the moratorium period(s) outlined below. The provisions were brought into force on 21 September 2012 in England. The Assets of Community Value (England) Regulations 2012 (‘the Regulations’) also came into force on that date. It is accordingly now possible to provide some clarification of the impact on educational institutions of the provisions relating to assets of community value.
Lists of assets of community value – who can make a community nomination?
Section 89 of the Act allows a voluntary or community body with a local connection to make a community nomination that land should be listed as being of community value. In our previous briefing we noted that it was not clear whether education institutions would be entitled to make a community nomination. The Regulations now clarify this point: while charities are included the Regulations further say that a public or local authority may not be a voluntary or community body for the purposes of section 89. The Regulations do not contain a definition of public authority but maintained schools, academies, colleges (despite recent governance changes) and higher education institutions which receive public funds are treated as public authorities for many legal purposes. It is doubtful that the government intended such bodies to be able to make community nominations. It seems that the Regulations have now put this point free from reasonable doubt and that such organisations will not be able to make community nominations.
Moratorium on disposal of assets of community value
The result of inclusion of land in the list of assets of community value is normally a moratorium on disposal, initially for six weeks after the institution has given notice of intention to dispose and then, if a community interest group informs the local authority it wishes to be treated as a potential bidder, for a further six months from the proposed date of disposal. During the moratorium period a disposal will only be possible if it is to a community interest group or if one of the exclusions from the moratorium requirements contained in the Regulations applies. These include a disposal of land held for the purposes of a school, 16 to 19 academy or institution within the further education sector. This exclusion, however, does not include land held by an independent school (other than an academy) or by an institution within the higher education sector. Such an institution would need to consider whether any of the other exclusions from the moratorium requirements applied, for example a disposal made as a result of the exercise of a legally enforceable option to buy, a right of pre-emption or a right of first refusal, granted before the land was included in the list of assets of community value.
Compensation for inclusion in the list
If land is included in the local authority’s list of assets of community value and the landowner incurs loss or expense as a result the landowner will normally be entitled to compensation, the amount being determined by the local authority. However, an education institution receiving more than half its funding from public sources will not be able to claim compensation, since its use of resources is examinable under the National Audit Act 1983 and bodies subject to such National Audit Office examination are excluded from compensation by the Regulations.
Review of inclusion in the list
Inclusion of land in the list of assets of community value is therefore a significant matter, particularly for an independent school or higher education institution which will not be able to take advantage of the exclusions from the moratorium requirements outlined above. Owners of land included in the list should be aware of the right to request a review by the local authority of its decision to include land in its list of assets of community value. This review must be completed within eight weeks of the date on which the local authority receives the written request for the review, unless a longer period is agreed with the owner in writing.
The Government has published an advice note on the legislation relating to assets of community value, community right to bid: non-statutory advice note for local authorities. This is available at: http://www.communities.gov.uk/publications/communities/righttobidadvicenote.