Community Right to Bid

1. Community Right to Bid Big Society and Community Rights Division August 2012

2. Context • Over the past decade many communities have lost local amenities and buildings that are of great importance to them. • As a result, many communities find themselves bereft of the assets that can help to contribute to the development of vibrant and active communities. • However the past decade has also seen a significant rise in communities becoming more active and joining together to save and take over assets which are important to them • The Right to Bid (Assets of Community Value) seeks to encourage more of this type of community-focused, locally-led action.

3. Community Asset Transfer • Local Authorities can already transfer of management and/or ownership of land or buildings from a public body to a community-based organisation, at less than market value, in order to promote social, economic or environmental well-being. However the existing rules differ from Right to Bid in that. • Community Asset Transfer is the transfer of ownership or management of publically owned assets only. • Community Asset Transfer is the transfer of management or ownership at less than market value. • Community Asset Transfer is a voluntary process entered into proactively by public bodies.

4. The Legislation • The legislation for the Community Right to Bid (known as Assets of Community Value) are contained in the Localism Act 2011. • This act provides new freedoms and flexibilities for local government but also gives new rights and powers for individuals and communities to take over public services, community assets and influence planning and development. • The Assets of Community Value Regulations (which give the detail of the scheme) are currently going through Parliament with a view to commencing later in the Autumn.

5. Overview of the Scheme • Allows communities the right to nominate buildings or other land for listing by the local authority as an asset of community value. • When a listed asset comes to be sold, a moratorium on the sale 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. • The moratorium will be up to six weeks in the interim, to allow a community group to express an interest, then up to six months from the time the owner decides that a disposal will take place, if the community enforce the full moratorium period. • Following the moratorium, the asset can be sold on the open market at the market rate

6. Nomination • Voluntary or community bodies to nominate assets to their local authority. These bodies are: • A Parish Council • An unincorporated group whose members include at least 21 members on an local electoral register, and whose activities are concerned with the area in which they are nominating or an adjoining area • The neighbourhood forum designated by the local planning authority • Community interest groups with a local connection which are either a charity or a community interest company, or (so long as they do not distribute profits to their members) a company limited by guarantee or an industrial and provident society.

7. Listing • Local Authorities will maintain a list of Assets of Community Value. A building or other land may be considered an asset of community value if its main use has recently been or is presently used to further the social wellbeing or social interests of the local community and could do so in the future. • If the council decides that the nomination doesn’t meet the above criteria, then they must write to the group who nominated the asset and provide an explanation • Assets will remain on the list for at least 5 years. • A local authority must make every effort to give notice of the nomination both to the owner of the land as defined under the scheme, and to all others with a legal interest in the site (and to the local parish council where there is one).

8. Exclusions From Listing • There is a general exclusion from listing of residential property including residential caravan sites. Operational land of statutory undertakers, as defined in s263 of the Town and Country Planning Act 1990, is also excluded. This covers land used for transport networks and utilities. • The exception to the general exclusion of residential property from listing is where an asset which could otherwise be listed contains integral residential quarters, such as accommodation in a pub. In such a case the asset may be listed.

9. Moratorium • If an owner wants to sell property/land that is on the list, they must tell the local authority. This triggers an interim moratorium of 6 weeks during which time a community organisation can decide if they want to be considered as a potential bidder • A community interest group can the trigger the further 4 ½ months to make the full moratorium of 6 months. They must be one or more of: • A charity • A community interest company • A company limited by guarantee that does not distribute profit to its members • An industrial and provident society that does not distribute profit to its members • During this time the owner cannot proceed to sell the asset (unless to a community organisation)

10. Exemptions from the Moratorium • There are a number of these, please consult the full regulations when available. However, the main exemptions are: • Disposals of part-listed land - where the landowner wants to sell a plot of land which includes a smaller part which has been listed. • Where the identity of the purchaser is a foregone conclusion - for instance under a pre-existing option or right of first refusal or under a statutory compulsory purchase. • Gifts, disposals to family members, and transfers between connected companies. • Between businesses where the asset remains a going concern • Disposals due to insolvency or by a lender exercising a power of sale. • NHS or state funded education land

11. Appeals • Owners will have the right of appeal against both the listing of an asset and compensation refusals or the amount of awards • An owner who disagrees with a listing decision or an owner or former owner who has made a claim for compensation, and is not satisfied with the local authority’s response may request a review by the local authority of its decisions. • The local authority must review their decision, and notify the claimant of the result within 8 weeks of receiving the request with reasons • If still not content with the local authority’s review then an owner may appeal to the First-Tier Tribunal (within 28 days of the authority’s decision) • A compensation appeal may only be made by the person who requested the review, whereas a listing appeal may be made by the person who requested the review or by a subsequent owner

12. Compensation • Where a local authority considers that compensation should be paid, it is left for the authority to determine how much compensation will be appropriate. • There is no restriction on what type of loss or expense may be claimed, but may include a claim arising from a delay in entering into a binding agreement to sell which is wholly caused by the interim or full moratorium period; and for legal expenses incurred in a successful appeal against the local authority’s decisions • We have reflected the estimated costs of compensation within the new burdens funding • However the Government will meet costs of compensation payments of over £20k in a financial year up to March 2015

13. Available Support • DCLG Advice Note – Due Later in September • “Making the most of local assets – A councillors’ guide” – Locality/LGA • mycommunityrights.org.uk – Locality/DCLG • www.atu.org.uk – Asset Transfer Unit