Charities Act 2022: Changes for the Disposal of Charity Land
1st June, 2023
The Charities Act 2022 ("the Act") received Royal Assent on 24 February 2022. The Act will introduce wide-ranging changes to the Charities Act 2011, with those changes coming into force gradually.
These changes are being implemented over time with the aim of increasing flexibility and reducing administrative burdens on charities. Some of the changes relating to how charities can dispose of property are due to come into force later on in June 2023.
What are the changes to the rules for charity land disposals?
Under the existing legislation, when making a disposal of land, charity trustees must:
- Obtain and consider a written report on the proposed disposition from a suitably qualified surveyor
- Advertise the disposition as per the surveyor’s advice
- Having considered the report, decide that they are satisfied that the proposed terms of the disposition are the best that can reasonably be obtained for the charity
The Act will allow charities greater choice as to who they can seek that advice from by expanding the list of professionals who are authorised to provide advice and report on proposal disposals.
In the Act, the reference to a ‘qualified surveyor’ will be replaced with ‘designated adviser’. Such advisers will now include fellows of the NAEA Propertymark (formerly the National Association of Estate Agents), the Central Association of Agricultural Valuers and RICS qualified surveyors.
The Act also removes the automatic statutory requirement to advertise a proposed disposal as advised in the surveyor’s report. The outcome of is that although charities must consider any advice on the form of advertising that is given by the designated adviser, there is no longer a statutory requirement for the charity to follow such advice and advertise in this way. However, a word of caution, any departure from the advice of the designated adviser should be evidenced by clear decision making and a written record kept of such decision.
If trustees, officers and employees of the charity meet the criteria to be a ‘designated adviser’ then they too will be able to provide the necessary advice.
What should the report cover?
At present, the charity is required to obtain a written report covering a detailed list of matters before disposing of charity land. The new requirements have been simplified and will require trustees to obtain a report dealing with:
- The value of the land
- Any steps which could be taken to enhance the value
- Whether and, if so, how the land should be marketed
- Anything else to ensure that the terms of the disposition are the best that can reasonably be obtained for the charity
- Any other matters which the adviser believes should be highlighted to the charity
Arguably this should give advisers more flexibility to advise on the matters which they regard as more significant to a particular transaction but there is also a risk that potentially important matters may be overlooked by a less experienced adviser.
Connected Person Disposals
Disposals to a “connected person” currently require specific consent of the Charity Commission. Under the new provisions, short-term tenancies (under one year) to an employee to use as their home will no longer be considered a “connected person” disposal requiring consent. Charity trustees will therefore still need to obtain advice on the grant of these tenancies but will not require consent from the Charity Commission.
Charities Act Certificates
Further changes to the requirement for certificates within disposal documents for charity trustee to confirm compliance with relevant procedures which were due to be introduced in Spring 2023 have now been delayed until the Autumn. These changes will require such certificates to be included in contracts for a disposal as well as disposal documents.
What do the changes mean for disposals of charity land?
While some requirements are to be relaxed, it is important to remember they have not been removed entirely. Importantly, charity land “disposals” are wide in scope, including the grant and surrender of a lease, grant of an easement and the sale of land. Thought should be given to whether the restrictions on disposal of land still apply, ensuring all disposal requirements are complied with and the charity has evidence of this.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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