Changes to charity land disposal rules introduced by the Charities Act 2022 come into effect today (14 June).
These important changes will simplify some of the legal requirements which charities must comply with before disposing of charity land. In this article Ellie Williams, an Associate at Higgs LLP, explores the changes charities need to be aware of in more detail.
What was the previous position?
The Charities Act 2011 imposes restrictions on disposals of charity land to ensure that the best terms possible are obtained for the charity. Disposals include selling, transferring or leasing charity land. Aside from some exceptions, these requirements have historically included the need to seek advice from a qualified surveyor on the proposed disposal and whether the terms are the best that can be obtained, considering that advice and advertising in the way advised in the surveyor’s report. If the charity is not able to comply with these requirements an Order of the Court or Charity Commission is required.
What is the position from 14 June 2023?
The changes include:
- The category of potential advisors the charity can use has been widened and simplifies the required content of their report;
- Greater discretion for the trustees about how to advertise a proposed disposal of charity land;
- Removing the requirement to get Charity Commission authority before a charity can grant a short-term lease to a charity employee.
Changes to Qualified Surveyors’ Report
Currently, there are very prescriptive rules set out in regulations about what the ‘Qualified Surveyors’ Report must contain. The changes will relax these requirements and the ‘Qualified Surveyor’s’ report will now become the ‘Designated Advisor’s’ report. Previously a Royal Institute of Chartered Surveyors qualified surveyor was required to provide the report to the trustees. This has been expanded so that fellows of the National Association of Estate Agents and Central Association of Agricultural Valuers can also now advise. The aim is to help ease the burden on charities and to ensure they can select the most appropriate advisor for the property in question.
“In-house” advice
The changes also enable charities to seek advice and a report from suitably qualified charity trustee, officer or employee (including where they do so in the course of their employment by the charity). Although helpful, this will require careful thought in order to manage potential issues such as conflicts of interest and ensuring appropriate liability insurance is in place, for example.
Advertising the disposal
The requirement to advertise a proposed disposal in the manner advised in the surveyor’s report has been removed. Instead, whilst the trustees still have to consider advertising the proposed disposal in the way which has been advised in the report, they will no longer be obliged to follow that advice (presumably as long as there is good reason for not doing so) and will have greater discretion on how to advertise a disposal.
Leases to employees
At the moment consent form the Charity Commission is required before any disposal to a charity employee. The new rules remove this requirement where a charity wishes to grant a short, fixed-term or periodic tenancy (of one year or less) to an employee to use as their home. Charities will still need to obtain advice on the grant of those leases but will no longer need to obtain consent from the Charity Commission.
Changes which have been delayed
Further changes were expected to be brought in today, but these have now been delayed until later in 2023. These changes relate to the information that must be included in statements and certificates for disposal and mortgages and the exceptions to the general restrictions on disposing or mortgaging charity land.
Any proposal to dispose of charity land must be carefully considered to ensure that the charity law requirements are complied with and professional advice should be sought at an early stage.
