An asset of community value (ACV) is a building or other land considered to be land of community value if:
(a) the actual current use (or use in the recent past) furthers the social well-being or social interests of the local community; and
(b) it is realistic to think that there can continue to be (or will be in the next five years) use of the building or other land which will further the social well-being or social interests of the local community.
Examples from case law include former pubs that were capable of re-opening as community hub cafes. Residential premises (apart from living quarters) and operational land of utilities and statutory undertakings are excluded from listing.
The intention of listing an asset as an ACV is to give communities a right to identify a building or other land that they believe to be of importance to their community's social well-being which can cover cultural, sporting and recreational activities.
If a nominated asset meets the definition of an ACV, the local authority will list the asset and that listing will last for a period of 5 years (unless renewed). It does not however amount to a right to buy.
If an ACV is to be sold or leased (and it qualifies as a "relevant disposal"), the owner of the asset will need to have followed the prescribed notification process which will give community groups an opportunity to bid to buy that asset on the open market.
The owner of the ACV will only be able to dispose of the asset after the following specific windows have expired:
- An interim period of 6 weeks from the date on which the local authority receives notification of the intended disposal which allows community interest groups to express a written intention to bid. If none do so, the owner is free to sell the asset; or
- A full moratorium period of 6 months from the date on which the local authority receives notification of the intended disposal which is only triggered if a community interest group expresses an intention to bid.
After the full moratorium period has elapsed, the owner is free to sell the asset and no further window can be triggered for a protected period of 18 months from the date on which the local authority receives notification of the intended disposal.
A "relevant disposal" is a freehold sale with vacant possession (i.e., not subject to an existing lease), the grant or assignment of a lease (granted originally for at least 25 years).
There are various exempt disposals which do not trigger this process, such as a disposal by way of a gift; or a disposal of land on which a business will continue to be carried out and disposals to certain family members.
The local authority may give compensation to owners to claim for costs or loss incurred as a direct result of complying with the procedures required by these provisions.
What to watch out for?
Whether an asset is listed as an ACV will be revealed through standard legal due diligence as follows:
- Seller's replies to Commercial Property Standard Enquiries (CPSEs)
- Restriction on title usually restricting any transfer or lease without a certificate signed by a conveyancer that the transfer or lease did not contravene section 95(1) of the Localism Act 2011 (see below for the procedure to be followed in order to satisfy this restriction)
- Registration of the asset as a Local Land Charge disclosed on a Local Authority Search
What do you need to do?
- If you are looking to acquire an asset that is already listed as an ACV and that acquisition qualifies as a "relevant disposal" you will want to ensure that the correct procedure has been followed.
- The owner of the land has notified the local authority in writing of its intention to enter into a relevant disposal of the land. You will need to see a copy of the notification letter from the owner / owner's solicitor to the local authority, in particular to confirm the date of notification (as this triggers the various moratorium periods and the protected period) and the extent of the land; and
- Either:
(a) The interim moratorium period has ended without the local authority having received during that period, from any community interest group, a written request for the group to be treated as a potential bidder in relation to the land; or
(b) The full moratorium period has ended; and - The protected period has not ended.
In each case of (a) and (b) above, you will want to see a copy of the local authority's reply letter to the owner confirming that no community interest group expressed an intention to bid for the asset and that the relevant moratorium period has ended.
2. If the asset you are looking to buy is at risk of being listed as an ACV, then:
(a) Check online for any community interest groups active in the area and opposed to your /your client's development proposals.
(b) Consider making the sale contract conditional on the land not being listed as an ACV. The local council has eight weeks from receipt of an application whether or not to list and if it is listed the landowner has 28 days within which to lodge an objection.
If you would like any advice or to discuss any matter referred to in this article further, please contact the team.
