Assets of Community Value

Nov 19, 2014

A couple of years ago the press was littered with stories and campaigns along the lines of save our pub, save our post office and save our village shop. Since the media interest has waned in recent years the popular perception might be that this was yet another issue the Government merely ignored and did nothing about.

However the Localism Act 2011 provided for a scheme called ‘assets of community value’, part of the wider Government community empowerment agenda. Since the 21 September 2012 the right has allowed community groups i.e. parish councils to nominate a community asset. To be eligible the land must further the social wellbeing or social interest of the local community either now, within the last 5 years or in the future. Certain types of land are exempt, most notably residential property. Before deciding whether to list the land the local council has to take steps to notify the owner, where this is unclear it only has to take ‘reasonable steps’ which could simply be placing a notice on the land. As such the owner may not be made aware of the application, this is important as objections have to be lodged in a set time. If accepted the land is listed for a maximum of 5 years and a charge placed on the property.

This may in principle sound like an excellent piece of legislation, safe guarding certain and often historical aspects of local communities. However the owner is free to use the land as they see fit, there is no ability to compel the owner to sell, there is no right of first refusal and it is not a community right to buy the asset, merely to bid. What it does do, unless an exemption applies, is create strict procedures should the owner wish to sell and this should be considered at the outset of any transaction so as to avoid delay.

The owner must notify the local council of the intention to sell, starting a 6 week interim moratorium period in which the local community interest groups can make written requests to be treated as a potential bidder. If such a request is made and the group meets the required standard a full 6 month moratorium is placed on any sale so that the group can organise itself. The owner can still market the property and negotiate sales, but no deal can be completed in this time except to the community group itself. Any transfer which does not comply with the legislation will be ineffective.

After the expiry of the 6 months the owner is free to deal with the land as they see fit, to sell to whomever they choose and at whatever price. If there has been any financial impact a compensation scheme is available, administered by the local council.

The most the local community can hope for is to delay any sale, but the consequences of this possible delay should not be underestimated in commercial transactions.

John Stigwood

About the author

John Stigwood

John joined Nockolds in 2012 and is an Associate in our Commercial Property Team. Before joining the firm John studied Politics at the University of ...

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