Gemma Smith and Ben Cowdry, in our Commercial Property team, explain the possible impact of changes in the Charities Act 2022 on charities from a property perspective.
The series of Charities Acts were implemented to alter the regulatory framework in which charities operate. The Charities Act 2022 (“the Act”) was guided by Law Commission recommendations, intending to make life easier for trustees of charities. In this article we look at some of the changes which are likely to be implemented this spring relevant to charities dealing with properties
General changes
Confirming the appointment or election of trustees and vesting land in them
Under a new provision, the Charity Commission will have the ability to confirm the appointment/election of trustees and vest property in them, even if there is a defect in the selection process. This may prove useful for unincorporated charities who struggle with appointing trustees and determining their identities.
The removal of section 267 – 268 of the Charities Act 2011
The Spring changes are set to completely remove provisions which allowed charities to avoid obtaining landlord consent to transfer their lease as part of transferring assets to a CIO. Such consent will be required as it was not intended that the Act would negatively impact third parties i.e. Landlords.
The intra-charity disposal exception
Some previous requirements will no longer apply when disposing of property. e.g. if the trustees of one charity authorise the sale of land to another charity for a below market value, then valuation report requirements will not need to be met provided this disposal furthers their charitable objectives. However, if the sale of land is subject to any charge as consideration, valuation advice will need to be obtained due to the financial motivation behind the disposal.
Connected persons
If a charity disposes of a property to an employee to use as a home, for a fixed term of a year or less, the employee will no longer be a ‘connected person’ and can avoid obtaining Commission approval to complete the transaction. Subsequently, short-term tenancies can be granted to employees as if the property were let to an unconnected person living on the premises. This will prove to be useful in employment relationships where a service occupancy would be inappropriate.
Changes increasing flexibility
Greater flexibility in relation to advertising
The new provisions will remove the strict obligation to advertise a disposal in the prescribed format instructed by the designated adviser. Trustees of the charity will be granted greater discretion in relation to advertisements. However, it may still be advised to follow the recommendations.
Greater flexibility for the valuation report
The Charities (Qualified Surveyors' Reports) Regulations 1992 implies that at present, every requirement must be included for a valuation report to be valid. These regulations are very detailed, so replacement provisions will instead require advice on how to market the land, what sum the charity should expect to receive, how to ensure the best terms are achieved and whether the land value could increase. This new regime will reduce the time spent preparing valuation reports and therefore the cost to the charity.
Greater flexibility to instruct surveyors
The upcoming change in wording in section 119 of the Act from ‘qualified surveyor’ to ‘designated advisor’ means individuals of the National Association of Estate Agents, the Central Association of Agricultural Valuers, RICS qualified surveyors, trustees, officers and employees of the charity can prepare the necessary reports provided they obtain the necessary qualifications/memberships.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
