Part 5 Chapter 3 of the Localism Act 2011 provides for district and unitary councils to maintain a list of assets of community value, which can be either land or buildings, nominated by local community groups or parish councils. When listed assets come up for sale or change of ownership, the Act then gives local community groups the time to develop a bid and raise the money to bid to buy the asset when it comes on the open market. The scheme is also known as the community right to bid. The Government has said that the aim of the measure is as follows:
…to give many more communities the opportunity to take control of assets and facilities in their neighbourhoods by levelling the playing field [and] by providing the time for them to prepare a proposal.
The provisions extend to England and Wales, but the Welsh Government has not commenced the Act with regard to Wales, thus it applies only in England at present
The Community Right to Bid allows communities and parish councils to nominate buildings or land for listing by the local authority as an asset of community value. An asset can be listed if its principal use furthers (or has recently furthered) their community’s social well-being or social interests (which include cultural, sporting or recreational interests) and is likely to do so in the future.
When a listed asset comes to be sold, a moratorium on the sale (of up to six months) may be invoked, providing local community groups with a better chance to raise finance, develop a business and to make a bid to buy the asset on the open market
The Community Right to Bid does not give the right of first refusal to community organisations to buy an asset that they successfully nominate for inclusion on the local authority’s list. What it does do is give time for them to put together the funding necessary to bid to buy the asset on the open market.
If an owner wants to sell property/land that is on the list, they must tell the local authority. If the nominating body is keen to develop a bid, they can then call for the local authority to trigger a moratorium period, during which time the owner cannot proceed to sell the asset.
There are two moratorium periods. Both start from the date the owner of the asset tells the local authority of their intention to sell. The first is the interim moratorium period, which is 6 weeks, during which time a community organisation can decide if they want to be considered as a potential bidder. The other is a full moratorium period, which is six months, during which a community organisation can develop a proposal and raise the money required to bid to buy the asset.
The regulations list some situations where the Moratorium will not be applied, even when it is an Asset of Community Value on the list. These exceptions include the sale of assets from one partner or another (for example in a divorce).
A number of community organisations can nominate land and buildings for inclusion on the list: parish councils, neighbourhood forums (as defined in Neighbourhood Planning regulations), unconstituted community groups of at least 21 members, not-for-private-profit organisations (e.g. charities).
Community organisations also have to have a local connection, which means their activities are wholly or partly concerned with the area, or with a neighbouring authority’s area.
The owner of an asset of community value must inform the local authority if they wish to sell the asset. If a group wants to buy the asset, they can trigger a moratorium for six months, to give them a chance to raise the money to purchase the asset. The owner does not have to sell to a community group. The asset of community value listing only improves the chances of community groups being able to purchase by providing more time to raise funds. It does not require the owner to sell at a discount.
The listing of a property as an ‘Asset of Community Value’ lasts for five years after which it is automatically delisted and the restrictions imposed by the covenant are removed. Communities can however apply for the listing to be renewed. Care should be taken to ensure the listing is continuous- apply for renewal not less than 8 weeks before the original listing ends.
Simply being pub does not automatically mean a successful nomination as approximately 1 in every 6 public houses nominated as an Asset of Community Value are not successfully listed
The viability of a business does not restrict a nomination being successful. Pubs that have been closed for over a year have been successfully listed.
If a community organisation nominates land or buildings that meet the definition of an Asset of Community Value, and the nomination process was undertaken correctly (i.e. came from a group entitled to nominate), then the Local Authority must include the asset on its list. Assets will remain on the list for at least 5 years.
If the council decides that the nomination doesn’t meet the criteria, then they must write to the group who nominated the asset and provide an explanation. They must also keep a list of unsuccessful nominations for at least 5 years.
Landowners can ask local authorities to review the inclusion of an asset on the list, and this triggers an appeal to an independent body, called a First Tier Tribunal.