The recent Court of Appeal decision in Banner Homes Ltd v St Albans City and District Council and another serves as a warning of the risks to a landowner of permitting public access to undeveloped land. It also highlights the danger to local residents of applying to list undeveloped land as an asset of community value, being that access may be immediately prevented.

Background

The concept of “assets of community value” was introduced by the Localism Act 2011, with the aim of giving communities the opportunity to keep buildings and amenities in public use. The Act allows for the listing of an asset which is of benefit to the community. Once the asset has been listed and the owner proposes a disposal of it, there is a moratorium period during which the community or a voluntary body can make a bid for the asset. Further details about the operation of the legislation is provided at the end of this note.

Facts of the case

Banner Homes owned a 12-acre field which, for more than 40 years, had been used by local residents for recreational purposes, including dog walking and kite flying. Two public footpaths ran across the field, but other well-trodden informal paths had also been created, opening up the whole area for public use. Banner Homes were aware that it was used in this way and, while it had not given permission for the use, it had not raised any objections or taken steps to stop it. The residents applied to list the field as an asset of community value and in response Banner Homes fenced off the public footpaths so that residents were no longer able to access any other part of the field (an action which it was entitled to take).

The local authority accepted the listing application. Banner Homes appealed, arguing that the field should not have been listed as it had never authorised public access to it, so those using the field were doing so as trespassers. It also argued that there was no prospect that the field would be made re-available for community use within the next five years.

Decision

At the first-tier tribunal it was held that for a listing to be made it is only necessary to demonstrate that there has been actual use for community purposes. There is no requirement that this use should be lawful. It also held that it was not fanciful to think that at some point in the next five years an agreement would be reached between Banner Homes and the residents to once more allow access, as Banner Homes would wish to maintain good relations with the residents. This decision was upheld on appeal and the listing continues, though the public are currently unable to access the whole field.

Consequences and commentary

This is a case where the landowner did not consider the potential implications of failing to take steps to protect its asset. It was perfectly happy for the public use of the land to continue whilst it did not want to use it for other purposes and had thought that, as this use was not permitted, no rights would arise. However, this serves as a warning to all owners and purchasers of undeveloped land: if the public is making actual use of the land for recreational purposes, there is a risk that the land may be listed as a community asset. Once a listing has been made it can become more difficult to obtain planning permission for the site, which will impact on the value.

However, a listing as an asset of community value does not prevent the owner from doing whatever he wants with his land (other than disposing of it). The listing does not give any kind of rights to the public to continue to use the land and the owner is able to prevent future unlawful access. This means that the successful listing of an asset of community value – or even the possibility that the land may be so listed – may lead to the unintended consequence that public access is prevented in cases where it would otherwise have been allowed to continue.

The Law: Assets of Community Value

Which assets can be listed?

An asset can be listed if its actual, current main use furthers a community’s well-being or social interests and is likely to continue to do so in the future. They can also be listed if there was a time in the recent past when the actual main used furthered well-being or social interetes and it is realistic to think that there will be a time in the next five years when it will do so again. There is no right to list assets which have no past or current community value even if they may have this in the future.

Examples of assets that may be listed include: community spaces (eg community centre, village hall, faith building); green spaces (eg village greens, parks, sports fields); cultural, sporting or leisure spaces (eg libraries, museums and play spaces); and landmark buildings.

Who can apply?

An application can be made by a voluntary or community body with a local connection. This may include parish councils, charities that operate within the relevant area, community interest groups, neighbourhood forums, some unincorporated bodies and some companies limited by guarantee.

How is a listing decision made?

Once the local authority receives a nomination to list it has up to eight weeks to decide whether to do so. If the listing is not approved, the nominator will be given reasons for this. There is no right of appeal for the nominator, but there is an eight-week period during which the owner can request a review, following which (if the decision is still to list) there is a right of appeal to the first-tier tribunal.

What happens once an asset is listed?

Once an asset is listed, nothing happens unless and until the owner wants to dispose of the land. In the meantime, the owner is free to do what they want with the property. The asset remains on the list for a maximum of five years, after which it can be re-nominated and re-listed.

How does the moratorium work?

When a listed asset comes up for sale (either the freehold or a lease of at least 25 years), a six-month moratorium can be invoked. This gives local community groups the chance to raise the necessary finance and make a bid to buy the asset on the open market.

When a decision is made to sell, the owner must notify the local authority. An initial six-week moratorium then applies during which community interest groups can lodge an expression of interest. If any expression of interest is lodged the full moratorium period (a further four and a half months, making six-months in total) is triggered.

During the moratorium period bids can only be accepted from community interest groups. The owner may market and discuss the sale with others but cannot exchange contracts other than with a community interest group. However, there is no right of first refusal and at the end of the moratorium period the owner can sell to anyone it chooses, at any price.

Compensation

The owner of listed land can claim compensation from the local authority where they have incurred loss or expense in relation to the land which would not have been incurred if the land had not been listed. Compensation may be payable in respect of a period of delay entering into a binding agreement to sell which is caused by the moratorium period and legal expenses incurred in a successful appeal again a local authority’s decision to list, or to refuse to pay compensation. It is not clear whether compensation is available in respect of any depreciation in the value of the land – government guidance indicates that it would be but an obiter statement in case law suggests otherwise.

Conclusion

The assets of community value regime is in place to give local residents the ability to protect and acquire land and buildings which provide a social benefit. However, landowners and developers need to be aware of the problems which a listing may cause them. Conversely, residents who are currently making unauthorised use of land should be aware that an application to list the land as an asset of community value may end up being the trigger for access being lost.

If you require advice about the assets of community value regime, whether as a landowner, developer, or local interest group, please contact any one in our real estate or planning teams.