Assets of community value

Paul Hilsdon, Geldards, Derby

Legislation on assets of community value, the Localism Act 2011 and the Assets of Community Value (England) Regulations 2012, is intended to empower local communities to protect assets of value to the community by ensuring that they know of intended disposals and have time to bid for those assets. As a result, local authorities in England have acquired responsibilities for maintaining lists of assets of community value and lists of unsuccessful nominations for inclusion on those lists. They are also liable to pay compensation to landowners who suffer losses as a result of their properties being listed as assets of community value. Local authorities should ensure that they are familiar both with the legislation and the implications of case law so as to manage pressure on their resources and avoid challenges to their decisions.

Community nominations to include land on a local authority’s list may be made by a parish council in the area or a voluntary or community body with a local connection. If a community nomination is made relating to land which is in a local authority’s area and is of community value, the local authority must include it on the list. This is subject to exceptions specified in the Assets of Community Value Regulations, such as residences.

Section 88 of the Localism Act defines land as being of community value in two circumstances. One is that a current non-ancillary use of the land furthers the social wellbeing or social interests of the local community and it is realistic to think that there can continue to be non-ancillary use which will do so. The other is that a non-ancillary use in the recent past furthered the social wellbeing or interests of the local community and it is realistic to think that a non-ancillary use could do so in the next five years. Social interests for the purposes of section 88 include cultural, recreational and sporting interests.

For a landowner, the main implications of land being an asset of community value are notification and moratorium requirements. The landowner must notify the local authority of their intention to dispose of the land. There is then an interim moratorium period of six weeks when a community interest group, as defined in the regulations, can request to be treated as a potential bidder. If a community interest group does this, a full moratorium period of six months applies during which the owner cannot dispose of the land other than to a community interest group. The intention is to ensure that community interest groups are aware of the intended disposal and have time to prepare a bid.

In recognition of the potential impact on landowners, the Assets of Community Value Regulations give them the right to seek compensation from the local authority for loss or expense suffered as a result of the listing of their land as an asset of community value. Landowners have rights to require local authorities to review decisions to include land on their lists and decisions about compensation. If they are dissatisfied with the outcome of a review, they may appeal to the First-Tier Tribunal.

The legislation has imposed detailed requirements but the cases heard by the First-Tier Tribunal General Regulatory Chamber have given added insight into aspects that can be contentious. Some interesting points have emerged:

  • The planning position is relevant to the question of whether it is realistic to think that a property could be used for the social wellbeing or social interests of the local community. In Haddon Property Development Ltd v Cheshire East Council and Wychwood Community Group CR/2015/0017, it was found that this was not realistic for a golf clubhouse which had been built with temporary planning permission and was an unauthorised development when it was nominated as an asset of community value.
  • A fact-specific investigation must determine what comprises the land or building against which the statutory tests must be applied. The statutory tests should not be applied separately to elements of premises which have such a physical and functional relationship with each other as to make it necessary for them to be viewed as a whole. Many pubs have been listed as assets of community value and several have featured in cases before the First-Tier Tribunal.

In Kicking Horse Ltd & Anor v London Borough of Camden & Anor CR/2015/0012, it was argued on behalf of the owners that the ground floor of a pub met the statutory criteria for an asset of community value but that the basement, garden, first floor and second floor did not. The tribunal described this as leading to the ‘frankly absurd’ result that the community would be given the chance to buy the ground floor but not the cellar, which might be essential to the operation of the pub. The tribunal decided that this was not what Parliament intended. It found that the entirety of the building, together with the garden, comprised a single set of premises and met the criteria for listing as an asset of community value.

Similarly, in Wellington Pub Company v The Royal Borough of Kensington and Chelsea CR/2015/0007, the tribunal found that there was a sufficient physical and functional relationship between residential accommodation and a pub in the same premises. The local authority correctly treated the whole premises as comprising a building that was only partly used as a residence. The premises could therefore be an asset of community value and the exemption for residential premises was not applicable.

  • Religious observances were not within the scope of ‘social wellbeing and social interests of the community’ for the purposes of the Localism Act 2011 (The General Conference of the New Church v Bristol City Council CR/2014/0013).
  • It is not necessary to have a worked out business plan to show a realistic prospect of future use for the social wellbeing or social interests of the local community. What is realistic may admit a number of possibilities, none of which needs to be the most likely outcome (Evenden Estates v Brighton and Hove City Council CR/2014/0015). In Martin Moat v North Lincolnshire District Council and Keadby and Althorpe Parish Council CR/2014/0014, the tribunal referred to evidence of community intent which made it ‘more than fanciful’ that the premises could further the social wellbeing or social interests of the local community.
  • A landowner’s intentions to develop land and to restrict public access will not necessarily prevent the land from being listed as an asset of community value. In Banner Homes Limited v St Albans City and District Council CR/2014/0018, the landowner erected a fence and signs saying ‘private land no unauthorised access’. Nevertheless, the tribunal decided that, given the long history of peaceable, socially beneficial use of the land and the previous views of its owners, it was not fanciful to think that in the next five years there could be a similar use of the land.

A report published by the House of Commons Communities and Local Government Committee in 2015 on community rights commented that the community right to bid process had achieved some success because the phase of listing land as an asset of community value was relatively straightforward but that there must be scope for enhancing people’s chances of success with the bidding phase. As communities continue to exercise their rights, local authorities need to be aware of their obligations and to take account of any lessons to be learned from the tribunal cases.

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