Frequently asked questions about Community Assets

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 their local authority has a Community Asset Transfer Strategy and if there have been other transfers nearby from which you can learn
• Check that the land and buildings in question really are assets and not liabilities – they are liabilities if they cannot generate enough income to fund repairs, maintenance and ongoing operational costs

More information on the options for community management and ownership of assets can be found in the Asset Hub on My Community.

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

Community Asset Transfer

• Transfer of ownership and/or management of publicly owned assets
• Transfer of management and/or ownership at less than market value
• Voluntary process entered into proactively by public bodies

Community Right to Bid/Asset of Community Value

• Most public and privately owned assets which are of community benefit or in community use can be listed as assets of community value
• Gives a community organisation a window of time to raise the funds to buy the asset on the open market
• Community right that may or may not result in a transfer of ownership as the interests of the community need to be balanced against the rights of asset owners

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 information to help you to think through these issues in the Asset Hub on My Community.

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. Check the terms of the lease carefully. If you are expected to repair the property, think about how you could cover these costs as you may not be able to get grants or loans. 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.

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.

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: there is more information in the Asset Hub on My Community.

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

Developing a strategy should ensure consistency and fairness. It gives the local authority an opportunity to determine its approach and put in place a framework for decision making. 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.

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.

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 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.

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 assessing the feasibility of taking on an asset and business planning can be found in the Asset Hub on My Community. Try to visit similar projects – this is one of the best ways to get practical information.

Local authorities are usually required to dispose of land and buildings 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’.

Community Asset Transfer is a process which the local authority enters into voluntarily – so the council can sell any asset which is surplus to requirements. However, this may not deliver best value if the asset could be used to deliver economic, social and/or environmental benefits through Community Asset Transfer. The local authority needs to weigh the options in relation to each surplus building.

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 if you are seeking to raise capital funding – though some loan funders expect a longer lease.

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.

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.

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.

You can find more information on options for grant and loan funding in the Asset Hub on My Community.

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.

A main difference is that it can be easier to make money to cover running costs 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.

Land and green space, including parks, are resources that are open to all, and mean many different things to different people. Usually, you can’t charge for entry. People use parks and open space in different ways and there may be conflict between those different uses.

There are costs associated with managing green space, including the need for public liability insurance. For parks, you will need to cover the cost of management and maintenance of grassed areas, flower beds and infrastructure such as paths. There may be buildings associated with the park which could also be transferred to generate an income. There could be opportunities to generate income from concessions or to run charged for events.

If you are considering asset transfer of woodland or land for agricultural use, you need to explore the costs of operating the green space and the likely income to determine if it will be viable.

There is more information on ownership and management of green spaces, land and parks on the Shared Assets website.

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.

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.

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.

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.

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.

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’.

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.