Harry Spurr answers questions on the rules applying to Assets of Community Value and how they affect property owners
Q: As landowner of a number of sites occupied by a small chain of pubs, I am anxious about the implications of the new rules on Assets of Community Value. Is this something I need to be concerned about?
A: In principle, yes. The new rules apply to land that is “of community value” and impose restrictions on the sale of such land. The idea is to protect facilities that are of local importance, and the term “community value” is defined widely in the legislation so as to catch all land and buildings that are put to a use that “furthers the social wellbeing or social interests of the local community”. The term “social interests” is also defined to include, in particular, “cultural interests, recreational interests and sporting interests.” So there is no question that the typical public house is entirely capable of falling within this definition. This is the case even if the pub contains a residential element – a category of use normally excluded from the rules.
Q: Who is to decide whether in practice an individual site is of community value?
A: That is a judgement that the council will reach if there is a “community nomination” made by a parish council or other local voluntary or community body. The exercise of judgement will need to include, plainly, an analysis of any given pub’s place within the community and the extent to which it performs a role as a recreational facility. The new system is as yet untried and untested, but it seems likely that pubs will feature prominently on lists compiled by councils around the country.
Q: If a nomination is made, will I have a chance to object?
A: There is no formal right to object, but as the landowner you would be notified of the nomination and, presumably, there is nothing to stop you from making representations to the council against it. Bear in mind that the council will be under a duty to make a decision within eight weeks, so time is of the essence. Where the decision goes against you, you will have the right to request a review, involving an oral hearing, so long as you act within a further eight weeks. There is a right of appeal from this review, but assuming you are unsuccessful at this stage too, you will have to wait 5 years, after which the entry on the list will be removed. There appears to be nothing, however, to stop a subsequent nomination resulting in a fresh listing once those 5 years have elapsed.
Q: If my land is included on the list, what are the resulting restrictions?
A: The rules are designed to prevent land or buildings that accommodate local facilities from being sold without giving local communities the opportunity to bid for them. So the rules require you to notify the council in the event you plan to sell. This will trigger an ‘interim moratorium’ period of six weeks during which no sale can take place. At the end of those six weeks the moratorium falls away unless by then the council has received notification from a ‘community interest group’ (a term to be defined by individual councils) that it wishes to be treated as a potential bidder. In such circumstances there is then a ‘full moratorium period’ – a further 4½ months – during which, again, you may not sell, designed to allow local people the time to work up a bid. At the expiry of the full moratorium period, all restrictions fall away; you are then free to deal with your property as you choose. There is, for example, no obligation to sell to any community bidder, or indeed anyone else. Bear in mind that this unrestricted period (the ‘protected period’) will last only 18 months, after which any decision to sell will trigger an ‘interim moratorium’ period all over again.
Q: I fear that the rules have the potential to frustrate any deal that I want to do, particularly if time is of the essence. What would be the position if I sold one of my pubs without complying?
A: The rules here are tough but simple. A disposal of land will be rendered ineffective if carried out in breach of the requirements – HM Land Registry will simply decline to register the transaction. Importantly, however, and on a more positive note, there are compensation arrangements. These provide for the payment of compensation for losses or expenses that arise out of land being listed, whether as a result of delay during a moratorium period or otherwise.
Q: Do these rules apply even to deals reached some time ago? For example, in relation to one of my pubs I have already agreed to sell it to a developer if he secures planning permission to convert the building. How is this affected?
A: The position is very different in relation to certain agreements that pre-date inclusion in the list. So assuming your agreement is a formal and legally enforceable option to buy, then it may be exercised without compliance with the rules so long as it was entered into before the date of listing.