Land & Building Assets

These are the frequently asked questions for community-led buildings.

We have separated these questions out into three categories:

– Community Asset Transfer and Community Right to Bid
– Assets of Community Value
– Transfer of green spaces

Community Asset Transfer and Community Right to Bid

What are the options for Community Asset Transfer?

A range of agreements can be entered into – but the most common form is a long leasehold. Often, local authorities will explore shorter-term agreements with newly formed community organisations.

Any voluntary or community group interested in asset transfer will need to:

  • Gather evidence to show how the community and local people will benefit from the transfer
  • Gather evidence of community support for the transfer
  • Check to see if your local authority has a Community Asset Transfer Strategy and if there have been other transfers nearby from which you can learn – check our stories for inspiration examples of good practice
  • Check that the land and buildings in question really are assets and not liabilities – they are liabilities if they cannot generate enough income due to fund repairs, maintenance and ongoing operational costs.

Details of the options for community management and the ownership of assets can be found in the resource linked below.

Options for community management/ownership of assets

What’s the difference between Community Asset Transfer and the Community Right to Bid?

Community Asset Transfer and the Community Right to Bid are sometimes confused, but they function in different ways:

Community Asset Transfer Community Right to Bid/Asset of Community Value
Transfer of ownership and/or management of publicly owned assets Listing of most public and privately owned assets
Transfer of management and/or ownership at less than market value Gives a community organisation a window of time to raise the funds to buy the asset on the open market
Voluntary process entered into pro actively by public bodies Community right that may or may not result in a transfer as the interests of the community need to be balanced against the rights of asset owners

What are the key issues that groups should be thinking about when considering a community asset transfer?

You need to consider whether your organisation has the skills, enthusiasm and person power to own and manage the building and whether there is strong community support. You will need to look at the finances – what is the likely income, what are the running costs, how will you repair and refurbish the building in the long term. There is extensive written information to help you to think through these issues.

What if the lease period offered by the local authority is too short?

For example: The local authority has agreed to a five year lease on a Community Asset Transfer.

Find out why the council is offering a five year lease – this will allow you to address any issues. Length of lease can be very important if you need to raise capital funding. Many funders will expect a lease of 20 or 25 years – some even longer. Some councils offer a short lease so that the community or voluntary organisation can test out managing the building with the option of moving to a longer lease if it works well.

How do we protect against a council selling community assets for profit?

Community Asset Transfers are usually only made to organisations which have an ‘asset lock’ – that is a clause in their governance which restricts asset disposal. Generally this would apply to registered charities, community interest companies and charitable community benefit societies (a type of Industrial & Provident Society).

Restrictions may also be written into the lease.

How can a council be sure it’s getting the best value out of a community asset transfer?

The Government’s best value guidance recognises the importance of social as well as economic and environmental value in the achievement of best value. Community Asset Transfer can contribute to achieving the policy objectives of the local authority.

Disposal to secure a capital receipt must therefore be considered alongside other options in order to secure best value.

Why should a council develop a Community Asset Transfer strategy?

Developing a strategy should ensure consistency and fairness.

Linked processes should detail the application process and likely timescales.

Consultation with the local community and voluntary sector on the development of the strategy should ensure that it meets local needs.

Should there be a competitive process for every asset transfer?

Some local authorities advertise all Community Asset Transfer opportunities to ensure fairness. Others will consider transfer requests from organisations which currently manage a property without seeking other bids. The council’s approach should be set out in its Community Asset Transfer Strategy.

How should the local authority deal with competing interests in respect of a particular asset?

The first test is which proposals are viable and sustainable in the long term. Community Asset Transfer should contribute to the policies and targets of your authority.

Deal with competition for a specific building by identifying the local authorities key objectives in that area –using, for example, deprivation indices, local priorities and the current mix of buildings and services in the area – and assess which bid best meets those objectives. Many authorities use a scoring system.

How can a community organisation run a building profitably?

There are no guarantees but developing a good business plan should give you enough certainty to proceed.

If you already manage the building but are taking on responsibility for the property through a Community Asset Transfer, then you already have a lot of the information you need. If you are starting from scratch, look at the kinds of facilities and services you will offer, what you will charge and who will pay. Guidance on business planning can be found in To Have and To Hold. Try to visit similar projects – this is one of the best ways to get practical information.

Why should public assets be disposed of at less than market value?

Local authorities are usually required to dispose of land and building on the basis of the best ‘consideration’ reasonably obtainable.

However, best consideration means achieving maximum ‘value’ from the disposal, not just maximum price. Disposal at less than market value must contribute to the ‘promotion or improvement of the economic, social or environmental wellbeing of the area’.

If an asset is surplus to the council’s requirements, why shouldn’t they just sell it for the highest price?

You need to consider whether your organisation has the skills, enthusiasm and person power to own and manage the building and whether there is strong community support. You will need to look at the finances – what is the likely income, what are the running costs, how will you repair and refurbish the building in the long term. There is extensive written information to help you to think through these issues.

What’s the difference between a long leasehold and a freehold?

Most local authorities choose to transfer on a leasehold rather than a freehold basis, so that the property remains in public ownership whilst the long-term management of the asset transfers to a community organisation.

A long leasehold (over 25 years) will be acceptable to most funders – though some loan funders expect a longer lease.

The council have offered us a discount on the market value, we thought community asset transfer meant transfer at no cost?

Some asset transfers are on a long leasehold at nil cost, but many others are based on allowing a community organisation to purchase the building at a discount.

Terms of transfer will depend on a range of issues including the sale value of the property on the open market and the social value to be generated through the proposed transfer.

The council is placing conditions on the transfer – do we have to accept them?

Any conditions should be part of negotiating the terms of the transfer.

Common conditions are to set out minimum opening hours or to restrict the types of activity which can take place in the building.

You need to consider whether you can fulfil the conditions – for example consider the practicalities of opening the building for the hours suggested, is it viable?

If the conditions don’t fit with your resources or business model, then you need to renegotiate.

Where can I find capital funding to refurbish the building?

There are a range of options including grant funding, loans and community shares.

Which sources are most appropriate will depend on your business plan and the services you intend to provide. Grant funders will be most interested in the outcomes of your service delivery. A loan will only be an option if your business plan shows you have the resources to pay it back.

Will having the property on a leasehold basis mean the council will be able to take the property back?

Your lease will set out the limited circumstances in which the council will be able to take back the property during the term of the lease.

These will be negotiated as part of agreeing the lease, so it is important to take legal advice on this issue and to fully understand your obligations.

Assets of Community Value

What happens if an asset is nominated which includes land within more than one local authority area?

The Act requires the local authorities concerned to co-operate in fulfilling the requirements of the Act, but leaves it to their discretion to decide how to do this in their local situation.

It is likely that one of the authorities will act as the lead and manage the nomination process.

Does listing an asset place a restriction on what the owner can do with it, while it remains in their ownership?

Planning policy determines permitted uses for particular sites. However, the fact that the site is listed may affect planning decisions – it is open to the Local Planning Authority to decide that listing as an asset of community value is a material consideration if an application for change of use is submitted, considering all the circumstances of the case.

Also, pubs that are listed as Assets of Community Value (ACVs) require a planning application to change their use or demolish them (the same protection applies pending a decision from the point when the pub is nominated for ACV status). If the pub is listed as an ACV, these requirements will be effective for the duration of the listing.

 

What is an ‘exempt disposal’?

An exempt disposal is exempt from the moratorium periods set out in the Act. It is the responsibility of the owner not the local authority to decide whether a particular disposal is exempt.

Can any local community group nominate assets?

Parish Councils, Neighbourhood Forums, unconstituted community groups of at least 21 members and not-for-private-profit organisations (e.g. charities) whose activities are wholly or partly concerned with the area, or with a neighbouring authority’s area, can nominate Assets of Community Value.

What is an ‘asset of community value’?

An ‘asset of community value’ is an asset that furthers the social wellbeing or social interests of the local community (or has done in the recent past).

‘Social interests’ can include cultural, recreational and sporting interests. So, for example, assets of community value could be village pubs and shops, community centres and library buildings.

What does ‘nominating’ an asset of community value mean?

Nominating an Asset of Community Value means proposing that a building or land is included in a list of buildings and land of community value maintained by the local authority.

This type of listing should not be confused with the listing of buildings of special architectural or historic interest. Local authorities will be required to maintain a list of land and buildings which meet the definition of an ‘asset of community value’.

What does the moratorium period involve?

If the owner of a listed asset wants to sell it they must inform the local authority of their intention to do so (if it does not fall into one of the excluded categories). Relevant local organisations then have up to six weeks to express an interest in becoming potential bidders to buy the asset. If an expression of interest is received during this six week interim moratorium period, a further four and a half month pause in the sale process is triggered, providing 6 months in total. During the six month moratorium period the owner cannot conclude a sale.

The Community Right to Bid does not give a right of first refusal to community groups to buy a listed asset. And at the end of the moratorium period the owner can sell the asset for whatever price they wish to whoever they want. What the scheme does do, however, is that it provides a window of time for community groups to pull together the funding necessary to bid to buy the asset on the open market.

Questions about green spaces

Are there some examples of green space solutions?

Parks are often a real challenge as it can be very hard to generate an income from them.

Shared Assets created a microsite with case study films profiling community enterprises that are ‘making land work’ in different ways – www.makinglandwork.co.uk.

Some other great examples, include:

But these are often fairly special cases – and may often have external funding. One of the big challenges is going to be finding ways of supporting the valuable neighbourhood parks that people rely on but that may have very limited ways of raising money.

What can we do to protect green spaces for the future?

The first questions to ask are:

  • Is it owned by the local authority or by a private owner?
  • Do you know if it has any nature conservation designations on it?
  • Is it referenced at all in the local plan?
  • Has it been registered as an Asset of Community Value?

The more you can get a site recognised as being of value for nature and the community, the more likely it is to be protected in the long term and not sold off for development.

In terms of practical ways of protecting it, the more active and used the space is the better. We did some research for the Forestry Commission looking at community management of woodlands and there are some short case studies in our report here that might give you some ideas.

Some Shared Assets case studies:

If your group is interested in beginning to trade or earn income to support the site somehow, then there is a new funding programme which hasn’t quite opened yet, called Making Local Woods Work – you can sign up for more information here.

Where do we start with an open space asset transfer?

The first thing we encourage groups to do is to think about their own motivations – why do you want more control of the park? Is it a response to a threat (this is often the case), or is it because you see opportunities? Different members of your group may have different motivations and aims – one of the key tensions within land-based groups can be the one between the people who want to act in their spare time to save or preserve something, and between those who want to generate a livelihood for themselves from the land in some way.

The next thing to do is to look at the park itself:

  • What are the challenges?
  • What are the opportunities?
  • What assets does it have?
  • Where could you do things differently or better?

The next thing will be to approach your local authority. Some, like Lambeth in London, are actively open to community management of their parks others have already signed management contracts with the private sector.

Parks often have multiple contracts, contractors, leases, concessions and council budgets that affect them. It can be very hard for councils to disaggregate the budget for one particular park (which can be a similar issue to buildings) but considering this, starting small may be appropriate. Are there corners of the park that you could turn into food growing space? Is there a building to take on? Could your group hold part of the reactive maintenance budget, for example, to respond more quickly when certain things need doing?

It will all depend on two key things though:

  1. The motivations, energy and skills of your group: why would you want to do this and what are you aiming at?
  2. The willingness of the council to engage with you in a constructive way – remember that councils are multi-headed beasts and are often unclear within themselves about these things.

What are the main differences between asset transfer of buildings and of parks?

The use of and access to green spaces is often more important than the actual ownership of them. The local council often wants to retain ownership of its parks but transfer the management of them and that management can come with significant liabilities, like the need for public liability insurance.

With that, it is recommended that these transfers often start from the point of view that the kind of leases and legal agreements that are used in the transfer of buildings may not be appropriate, and that a more shared approach, between the community and the landowner, could work better.

A main difference is that it can be much easier to make money from buildings: whether through workspace, events, cafes etc. You can also control who comes into your building and have more easily enforceable codes of conduct and behaviour.

Parks are a resource that are open to all, and mean many different things to different people. The business models needed to manage parks outside of the public sector are likely to be different: you can’t charge people entry, you usually can’t fence of parts of the park as office space. Conflict is inherent in public space, with many different users using parks for different things and at different times, and managing that conflict can take resources and time.

So you may need to look at things like acquiring other assets to support the running of a park, having enough of a critical mass of space to be able to offer things like grounds maintenance services to others, being very tight about concessions and sports and fitness activities in parks.

Does public liability insurance transfer with an open space asset transfer?

We would always encourage groups to push the council to retain public liability insurance, partly because they can get it so much cheaper, in the main. It’s also a nice way of keeping them involved in a specific way.

There really isn’t any best practice around this at the moment, and it’s all happening on a case by case basis – there’s no standard way of doing things yet. So it will be up to the group/s to negotiate (perhaps by demonstrating that the business impact on the council of retiring the PLI liability is minimal, but would be big for the group). I believe the High Line in New York works on the basis of the city paying for the insurance and security and the “Friends” doing the rest.

As parks are for everyone (or everyone is a park user), there needs to be a closer role with the local authority, through such things as public liability insurance, then there might be with a building in a similar location.