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Community Right to Buy

 

The Community Right to Buy was introduced in the Localism Bill published in December 2010. If enacted, the Right will give local communities new powers to bid to take over land and buildings that are important to them and to save facilities that may be threatened with closure.

The Right to Buy covers assets (land and buildings) only. Under it a community may bid to take over a building (e.g. a library) but it would need to use the Community Right to Challenge if they wish to bid to take over the service that operates from the building (e.g. a library service).

A consultation on the details of the ‘Community Right to Buy - assets of community value' will run in parallel with both a consultation on the Community Right to Challenge and the Localism Bill's passage through Parliament.

Background
The Community Right to Buy is a key part of the Government's Localism and Big Society agendas, which seek to devolve power to local people.
Existing legislation1 allows local authorities and certain other public bodies to transfer assets to community ownership at less than market value without seeking the Secretary of State's consent. However this is entirely at the discretion of the local authority and a community organisation has no specific rights to this. The Community Right to Buy extends the law on asset transfer by:
 Extending the scope to privately owned as well as public assets
 Giving local people the ability to identify and list assets of community value
 Providing the community with time to prepare to buy them at the going rate (ie on the open market).

How is it proposed to work?
The Government has set out a process for how the Community Right to Buy will work. This is an outline of the process. Some of the details of how it will work are included in the consultation.

1. Community groups will be entitled to nominate public or private assets to be included on the local authority's list of assets of community value.
Nominating an asset to be put on the list will not commit the community group to bid for it if it is put up for sale.
Some assets will be excluded from the list for example residential properties and other types of land that may be specified as a result of the consultation.

2. The local authority will have to decide whether or not the nominated asset meets the definition of ‘community value'. If it does the asset will be added to the list.
How ‘community value' is defined and how much flexibility local authorities will be given to interpret it will be set out in guidance following consultation.
Regulations may require the authority to contact the landowner to inform them of the nomination and seek their views.

3. Local authorities must:
 Notify the owner that their property or land has been placed on the list.
 Add the asset to the Land Charges Register.
 Notify the occupier of the land (if different from the owner).
The owner will have a right to request that the authority carries out an internal review of the decision.

4. An asset will normally remain on the list for five years.
Reasons for removing an asset from the list before five years is up can be set out in regulations.
If removed the group who nominated it and the owner must be informed.

5. Local authorities will have to publish the list of assets of community value. They will also be required to publish unsuccessful nominations.
Both lists will be made available for anyone who wants one to view them (including a free printed copy per person).

6. If the owner decides to sell the asset, or make a ‘relevant disposal', they must inform the local authority of their intention.
Some exemptions are planned under the scheme, for example transfer under court order or in the event of insolvency proceedings.

7. The authority must notify the nominating community group and publicise in the local area when an asset has come up for sale.

8. Community interest groups (to be defined in the regulations) will have an interim window of opportunity to put forward their intention to bid for the asset.

9. If such a group (or groups) does state their intention to bid within the interim window of opportunity they will then have a full window of opportunity to put the bid together.
This prevents the owner selling the asset (or disposing of it) until this period is over. However there may be some circumstances where an asset may be allowed to be disposed of within the guidance, for example:
 To a local parish council
 To a community interest group that has a local connection and meets two or more of the following requirements:
o They are incorporated
o They have charitable status
o They have an asset lock4 in another legal form
o They include in their constitution that they are non-profit distributing
If more than one community interest group makes a bid for an asset it will be up to the owner to decide who they will sell to (if they choose to do so).

10. At the end of the full window of opportunity the owner will be free to sell to any bidder.

11. If the owner does not sell the asset within the relevant window of opportunity (interim or full, depending on whether there is a community bid or not) they will be permitted to sell within a longer ‘protected period' without triggering another delay.

Throughout the whole process the owner of the asset will be under no obligation to sell to a community interest group at any time.

Restrictive covenants

The Government is aware that some types of land or building may have a restrictive covenant placed on them by the owner, which may limit how the property can be used once it has been sold (e.g. that a pub can no longer be used as a pub). A specific consultation on the issue of restrictive covenants is due to be completed over the Summer.

Support for community bidders
It is recognised that community groups bidding to take over assets need to plan how they are going to access resources to maintain the asset. This may require support with fundraising, developing business plans, constituting themselves as an incorporated body or registered charity etc.
It is also important that groups understand other community rights - neighbourhood planning, Community Right to Challenge, Community Right to Build - and how these all fit together. For example the prospect of a contract to deliver a service, gained through the Community Right to Challenge, may be an important source of income to maintain a building.
The consultation provides groups an opportunity to express what support they would find helpful.

The consultation

The consultation on the Community Right to Buy invites views on the proposals for the detailed workings of the scheme, which may be included in regulations. Government wants to get feedback on:

 Whether or not the proposals achieve the appropriate balance between all communities having an effective process and local authorities having the flexibility to cater for local circumstances.
 Which elements should be prescribed in the regulations and applied consistently across all local authorities and which elements should be open to local flexibility.
 How can the right balance be struck between the retaining of community assets and the rights of property owners. This balance depends on factors such as:
o The length of the window of opportunity
o Rights of appeal for property owners
o Compensation available to property owners for costs arising from the operation of the scheme

The areas included in the consultation are:
 Definition of an asset of community value
 Ways in which an asset may be nominated or listed
 Information to be included in community nominations
 The procedure for listing assets
 Notification about inclusion and removal of a listed asset
 The content and publication of the list of assets of community value and list of unsuccessful community nominations
 Rights of review and appeal for owners
 Length of the window of opportunity periods and protected period
 Exempt disposals and permitted sales in the full window of opportunity period
 Compensation for owners
 Enforcement of the regulations
 Support and guidance

The consultation will be open until 5pm on 3rd May 2011.
Subject to Parliamentary approval, it is expected that the provisions will commence from either April or October 2012.

Further information
The Community Right to Bid consultation document, including a full list of consultation questions can be found at:
http://www.communities.gov.uk/publications/localgovernment/righttobuyconsultation

Nick Bird
February 2011

 

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