Dealing with Charity Property: Charities Act 2022 changes are imminent

What is the current law in relation to disposals of charity land and property?

The Charities Act 2011 imposes certain restrictions on disposals of land by charities and their trustees to ensure that charities obtain the best terms before disposing of land. With limited exceptions, the statutory regime involves obtaining the advice of a qualified surveyor on any proposed disposal and advertising it as advised in the surveyor’s report (with a lighter touch regime for leases of not more than 7 years). Without this, an order of the court or the Charity Commission is required to make the disposal.

What will change in June 2023?

The new regime to come into effect in June will:

• widen the categories of potential advisers charities can use and simplifies the framework for the contents of their reports;
• give more discretion to charities when considering advice obtained; and
• make it easier to grant short residential leases to employees.

The Charity Commission has said it will publish updated guidance on these topics the day the provisions are implemented.

Changes to Qualified Surveyors’ Reports

The changes will enable charities to choose from a wider range of “designated advisers”: whereas currently only RICS surveyors may provide the required advice, in future charities will also have the option of choosing a fellow of the National Association of Estate Agents or the Central Association of Agricultural Valuers to provide the advice, if they consider this would be more appropriate in the circumstances. In addition, although charity trustees will still have to consider advertising the proposed disposal in the manner advised, they will no longer be obliged to follow that advice if they have good reasons not to.

Obtaining advice in-house

New provisions brought in by the Charities Act 2022 will make it clear that trustees, officers and staff of a charity can provide the necessary reports for the purposes of satisfying the statutory requirements above, subject to their being appropriately qualified and to any specific restrictions in the charity’s governing instrument. However, it will not always be appropriate to use such “in-house” advisers, and careful consideration would need to be given before doing so, for example to managing conflicts of interest, insurance and liability.

Relaxation of requirements for certain Leases to employees

Under the current regime, Charity Commission consent is required for any disposal to a charity employee. The new provisions will remove this requirement where a charity wishes to grant a short fixed-term or periodic tenancy to an employee to use as their home. Charities, will, nevertheless, still need to obtain suitable advice on the grant of any such lease.

Delay to the Implementation Timetable for Other Changes

Some of the changes expected to come into effect in Spring 2023 will now be delayed, although they are still expected to come into effect by the end of 2023. They include changes relating to the statements and certificates for disposals and mortgages and clarification of when disposals from one charity to another are excluded from the regime in Part 7 of the Charities Act 2011. These changes have been delayed to allow more time for the Land Registry to update its practice guides and make the necessary changes to the Land Registration Rules 2003.

Amendments to the Universities and College Estates Act 1925 will also now be included in the commencement regulations due by the end of 2023 (postponed from June 2023). However, they will not come into force until Spring 2025.

Until those changes come into effect, the current requirements will continue to apply:

• All documents relating to a disposal by the charity must contain a statement in accordance with the Charities Act 2011 confirming how the land is held and whether the restrictions on dispositions apply.
• In addition, the charity trustees will still need to sign the transfer, lease or other deed effecting the disposal, and within this they must give a certificate confirming appropriate authority to make the disposal and compliance with the requirements of that Act.

Next steps

We recommend that those responsible for charity governance and administration should:

• ensure that they, and relevant staff and officers within their charity, are aware of these changes;
• keep an eye on updated guidance from the Charity Commission once the changes come into force; and
• consider whether changes to their policies and procedures may be needed, particularly in relation to the selection of suitable advisers and use of “in-house” staff or trustees.

We will publish updates to this blog as and when further provisions of the Charities Act 2022 come into force, and provide links to the new and updated guidance provided by the Commission whenever possible. In the meantime, the Commission’s implementation plan can be read in full here and here, and the Charities Act 2022 and its explanatory notes can be read in full here.

If you have any queries about the topics discussed above, or there are any other issues we can help you with, please do get in touch with Gina Cheetham or Rachel Sales.