A Community’s Right To Bid For Assets of Community Value

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Assets of Community Value (‘ACVs’) result from relatively new powers created under this government’s localism initiative intended to bring more power to local communities. This new right gives community groups a right to identify properties such as shops, pubs, sports grounds and community centres or other properties that they believe to be of importance to their community with the aim that if that property comes up for sale then the community will be given a fair chance to make a bid on the open market. This is done by giving community groups a 6 month period in which to put together a bid for the property.  Whilst an owner can never be forced to dispose of its property to a community group, owners should be aware of the potential delay in transactions that this can cause whilst community groups appreciate their added ability to preserve local amenities.

What is an Asset of Community Value?

Buildings or land can be listed as ACVs if their main use is either presently or has recently been used to further the ‘social wellbeing’ or ‘social interests’ of the local community and will realistically continue to be used as such. As the term ‘social interests’ includes the cultural, recreational and sporting interests of the local community this can cover a wide range of properties. Certain properties, including residential houses, hotels and caravan parks, are however excluded from being ACVs.

Who can nominate Assets of Community Value?

Only certain community groups can make a nomination. These groups are limited to parish councils, community councils or a ‘voluntary or community bodies with a local connection’ which includes charities, certain forms of companies that do not distribute profits to members and not-for-profit unincorporated associations with at least 21 members.

The List of Assets of Community Value

If a local authority considers that the nomination was made from a group entitled to make a nomination and that the property fulfils the community value requirements then it must declare it an ACV.  It will be included on a list that the local authority must maintain of ACVs in its area for 5 years (after which time the property must be re-nominated) and notice is given to the owner of the property.  A local authority is required to publish its list of ACVs and make it available for free inspection.

Owners of the property can appeal and ask local authorities to review the property’s inclusion on the list. Compensation can also be available for owners.

What is the purpose?

Once a property is declared an ACV and placed on the list nothing further will happen until the owner decides sell the property or grant a lease of it of more than 25 years. At this point owners of ACVs cannot proceed without letting the local authority know first and then waiting at least 6 weeks after giving the local authority notice. In this time ‘community interest groups’ are given the opportunity to express a non-binding interest in bidding. If no community interest groups bid an interest then the owner can proceed as normal. If however a community interest group does bid an interest then a further pause of 6 months from the original notice to the local authority is required. The purpose of this 6 month pause is to enable the community interest group to raise finance and put together a bid for the acquisition.

The right for the community interest group to bid does not give the right of first refusal to buy the ACV or restrict in any way to whom the ACV can be sold. It only causes a 6 month suspension in proceedings to enable the community interest group to raise its own finance and bid proposals. At the end of the 6 month period the owner is free to consider all bids.

There are exceptions to all of this for certain transactions. These include gifts of the property, certain trust transactions, transfers where the ACV only forms a part of a larger estate, sales of businesses where the ACV is a business asset and transactions between group companies.

What if the procedure is not followed?

A disposal of an ACV (that does not fall within the exceptions) which does not follow the set sale procedure above (6 week and potential 6 month moratorium) will be ineffective. The fact that an asset is an ACV will however show up on those property searches of local authority records and will be a restriction on the property’s title at the Land Registry to ensure that it is not disposed of in breach of the rules.

Whilst a sale of ACVs to community groups cannot be forced, the provisions do need to be borne in mind by both owners of certain property valued by the community and community groups wishing to preserve certain local properties. Forbes’ Property Solicitors can advise you further in detail on the applicability of the provisions, the nomination process or the appeal and compensation process.

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