The Charities Act 2022 received royal assent last year and is designed to make a positive and practical difference to charities. It aims to make things easier for trustees seeking to dispose of land and simplify the unduly complicated legislation currently in place.
The 2022 Act amends the current Charities Act 2011 and is being brought into force in three separate phases. The second phase, which expressly deals with property related matters, is due to come into force in Spring 2023. The aim of both pieces of legislation is to essentially ensure that charities maximise the value of the land of which they seek to dispose however, the incoming legislation will uphold this aim within a less strict regime.
Current statutory regime – Charities Act 2011:
All non-exempt charities, before disposing of any charity land (including land held by way of a lease), must:
- Obtain and consider a written report on the sale from a qualified, independent surveyor (this report must contain specific mandatory information);
- Advertise the sale according to the surveyor’s report; and
- Decide that it is satisfied that the terms on which the sale is proposed to be made are the best that can reasonably be obtained by the charity.
Additionally, any contract or transfer thereafter entered into by the charity must contain a certificate that the relevant requirements have been complied with a) by the charity and b) by the individual trustees. Many consider such onerous requirements to be excessively burdensome and costly.
The new regime – Charities Act 2022:
The overarching focus of the property related changes in the new 2022 Act is to introduce “proportionality” to the statutory requirements for charity land disposals. Primarily, the changes will:
- Allow charities to take advice on the proposed land disposal from a larger group of experts (i.e. an extension from surveyors only) and could now include a charity’s own suitably qualified trustees, officers and employees.
- Simplify the nature of the advice required to be given so that it will only need to cover relevant issues proportional to the value of the transaction.
- Remove the need for a charity’s individual trustees to certify compliance with the legislation and simply require a standard statement of compliance.
Additionally, the changes will also provide greater comfort and certainty to third party purchasers of such charity land as, where a statement of compliance is included in a sale document, it will be conclusively presumed to be true in favour of the purchaser without the need to request extraneous evidence of compliance with the statutory procedure.
By allowing charities greater flexibility and choice, the forthcoming changes should make the whole process of disposing of land simpler and more cost effective for charities.
If you are a charity and require further information or advice about the contents of this article or the disposal of charity land generally, please do not hesitate to contact Joanna McKenna or another member of the Ellisons’ property team.