Charity land, charity landlords

Charities Act

The Charities Act 2011, amended by the Charities Act 2022, governs the disposal of charity land. Trustees must ensure disposals are in the charity’s best interests, obtain professional advice, and comply with legal requirements to secure the best terms for their charity.

Charity Interests and powers

Charity trustees must ask themselves three questions when considering disposing of land:

• Is the lease or sale in the interest of the charity;
• Does it align with the Charity’s objects; and
• Are there powers to dispose of land.

Trustees must satisfy themselves that any disposal is in the best interest of the charity and in line with its governing document.  The charity’s governing document must also give the trustees powers to dispose of land.

Designated Land

Designated land can be either specie or permanent endowment land and must be used by the charity for a specific purpose i.e. a playing field. The charity’s governing document (or the transfer/trust deed etc) will provide confirmation on whether land held by the charity is classed as designated land and its use.  It is important to remember you may need consent from the Charity Commission to dispose of designated land.

Sales of land, leases of over seven years and granting rights

If charity trustee’s wish to sell, grant a lease of more than seven years or grant rights over charity land (which is not designated land), trustees must confirm the above three questions, along with following the next steps:

• Obtain a report from a ‘designated advisor’ which are one of the following
  • Royal Institution of Chartered Surveyors (RICs) fellow or professional associate;
  • Central Association for Agricultural Valuers (CAAV) fellow; or
  • NAEA Propertymark (National Association of Estate Agents) fellow.

The report can be provided by a trustee or employee of the charity if they meet the requirements outlined above.

• The trustees must be satisfied the terms of the disposal are the best the charity can obtain and keep a record of any decisions made. Trustees can choose to not follow the findings of the designated adviser; however, they must keep records of their reasoning for doing so.
• In some cases the trustees will (where the above two requirements cannot be followed), require Charity Commission consent. Please speak with your legal advisor should you think you may need consent.

Short leases

A short lease is for a term of seven years of less and where there is no premium payable.  Granting a short lease follows a similar process as leases for more than seven years, with one main difference regarding the report.  Trustees must obtain a report from a ‘competent advisor’ and consider its content. A competent advisor is someone who the trustees believe has the appropriate expertise to provide advice on the lease. The competent advisor does not need to hold one of the qualifications as listed above.

Once the report has been considered, the final two steps for leases of more than seven years must also be followed.

The above are just some of the land transactions which can be carried out by charities.  Should you require any advice on the above or other transactions please feel free to contact the commercial property team who will be happy to help with you upcoming matters.