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How to sell off council properties properly?

Property sale 827489 s 146x219Rebecca Gilbert considers how councils can best approach the sale of their property assets.

Local authorities are increasingly selling of their surplus land with recent reports suggesting that more than 4,000 public buildings in England are being sold off to developers each year. As local authorities are continuing to see their budgets being cut they are having to consider how to make the best use of their resources including their assets to support the ever-increasing demand for services, this may include selling off any land and buildings which are surplus to requirements.

So are there any particular requirements or processes which they must follow in order to sell off their land and also to protect community assets?

There are various powers available to local authorities when disposing of land. Different powers will apply depending on the purpose for which the land is held and there are different requirements depending on the power used. For example, there are specific powers and requirements for the disposal of land held by a local authority for planning purposes, housing, allotments, open space and school playing fields.

The general power of disposal is section 123 of the Local Government Act 1972 which gives a local authority the power to dispose of land held by it in any manner it wishes provided that the local authority achieves the best consideration that can reasonably be obtained except where the disposal is for a short tenancy (the grant of a term not exceeding seven years or the assignment of a term which has not more than seven years to run) or the local authority has the consent of the Secretary of State or the Welsh Ministers.

The question of whether or not a local authority has achieved best consideration for the disposal of land can be controversial. The case law has shown that the consideration which a local authority receives in order to achieve best consideration must have an economic or monetary value. There is no particular process to be followed but there does need to be evidence to show that best consideration has been assessed and is being achieved, for example, through independent valuations or market sale.

The Secretary of State and the Welsh Ministers have issued a general consent for disposals of land under section 123 for less than best consideration. This allows a local authority to dispose of land for less than best consideration if it considers that the disposal will contribute to the promotion or improvement of the economic, social or environmental well-being of its area and the extent of the undervalue is no more than £2m. This consent can be very useful for regeneration initiatives or other projects which will be of benefit to the local area.

There are particular requirements in relation to assets of community value under the Localism Act 2011. An asset of community value is land that a local authority considers has community value on the basis that the primary current use of the land furthers the social well-being or social interests of the local community or that is has in the past and its realistic to think it could do again within the next five years. Local authorities are obliged to maintain a list of assets of community value in their area. If a local authority is disposing of land which is on the list, it will be obliged to notify of its intention to dispose of the asset. This will ensure that community interest groups are aware of the proposed disposal and can bid if they wish to do so. Moratorium periods are then imposed on the disposal to enable community groups to have sufficient time to bid and raise the necessary funds.

If there is a community building which a community group would like to acquire, this could be done through a community asset transfer which is a mechanism used to enable community ownership and management either through the transfer of land or a long lease from the local authority. This is a voluntary process undertaken by a local authority separate from the process above for assets of community value and expressions could be made at any time, not just when the local authority is considering disposing of that land. Many local authorities now have a Community Asset Transfer strategy setting out how they will deal with expressions of interest from community groups for the acquisition of community land and so it is worth the community group obtaining a copy of such strategies or speaking to the local authority if this is of interest to them. A business case will need to be put in place to demonstrate that the community group is capable of maintaining and operating the land and that the acquisition will promote the social economic and environmental wellbeing of the area.

Rebecca Gilbert is an Associate at Geldards LLP.

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