Assets of Community Value – A speed bump in your transaction?
The Localism Act 2011 has made a number of changes in order to give local people more control over what happens in their neighbourhood. One such change is the ability to designate a property as an asset of community value.
An asset of community value is an asset that furthers the social well-being or social interests of the community. Examples include school playing fields, village halls, sports grounds, parks and public houses.
An asset is put forward by a community nomination. There are strict guidelines on who can make this nomination and what it must include.
This nomination is submitted to the Local Authority who will make a decision on whether it should be placed on the list of assets of community value.
How do I find out if my asset is on the list?
The Localism Act places a duty on each Local Authority to maintain a list of land that is of community value. This should be available for free and is commonly found on the Local Authority’s website. Further, once the asset has been registered a restriction will be noted on the Title documents.
What impact does this have on me?
If you are buying or selling an asset of community value there are restrictions on its disposal. If you do not meet any of the exemptions you must notify the Local Authority in writing of the intention to dispose of the asset. A six week initial moratorium period is then established. If at any time during that six week period a community interest group declares its (non-binding) intention to bid for the property a six month moratorium period is established.
During this time you are unable to proceed to an exchange of contracts, although you can continue to market the property. In most cases this will inevitably grind the transaction to a halt.
What options do I have?
It is possible for the owner of the asset to ask the Local Authority to review their decision to place the asset on the list. However, this is by no means guaranteed to be successful.
The other way to avoid the moratorium periods is to fall within the limited number of exemptions contained in S.95(5) of the Localism Act 2011. Arguably the most useful of these exemptions is the argument that the disposal of the property is as part of, and to the same person as, a disposal of the business as a going concern.
If you suffer loss as a result of the registration of an asset as an asset of community value there is a compensation procedure and you may apply for this compensation from the Local Authority. This must be made within 13 weeks of the loss being incurred.
Conclusion
Assets of community value have largely gone under the radar since the introduction of the Localism Act 2011. It is not a complex area of law but it is necessary to understand what you can and cannot do in order to avoid a disposal that is ineffective for non-compliance with the restriction on the Title.
If you need assistance with a sale, purchase or let of an asset of community value or any other commercial property transaction please do not hesitate to contact either Santokh Singh or George Williams.