Charities to get more flexibility when disposing of land

The Charities Act 2022 includes a new set of provisions on land disposals that come into force on June 14, 2023. The provisions make several changes to the legal requirements for selling, transferring or leasing charity land and also give trustees more powers in relation to permanent endowments.

Simplifying land disposals

The new provisions simplify the process that charities must follow to dispose of land.

When a charity is disposing of its land, trustees must obtain and consider a written report on the proposed disposition from a qualified individual instructed by the trustees. The aim of this regulation is to protect charities from unwise decisions which would not be in the best interests of the charity.

Under the new provisions, the criteria for individuals who can provide trustees with the report is wider. Previously, trustees had to get a written report from “a qualified surveyor” (a surveyor qualified with the Royal Institute of Chartered Surveyors, the RICS). 

Now, charity trustees commission the written report from a “designated advisor”, a category which includes fellows of the National Association of Estate Agents and of the Central Association of Agricultural Valuers.

In addition, charity trustees, officers and employees will now be able to provide the required reports - where they are qualified to do so. 

These measures should reduce the costs to charities of disposing of small parcels of land. However, trustees should continue to ensure that anyone providing advice on property disposals has appropriate professional indemnity insurance and that there are no conflicts of interest.

Further measures on land disposals

The requirements for the written report have also been simplified. There is also no longer a legal requirement to advertise a proposed disposition of charity land.
Additionally, trustees now have the discretion to decide how to advertise the disposal of charity land and charities are no longer required to get Charity Commission permission to grant a residential lease to a charity employee for a short periodic or fixed-term tenancy.

Some further provisions relating to charity land have been delayed until the final implementation of the Charities Act.

The Charity Commission has updated its guidance document, entitled Sales, leases, transfers or mortgages: what trustees need to know about disposing of charity land (CC28)  to reflect these changes.

Other changes: Permanent endowments and charity names

The provisions coming into force also affect the powers of charities power to spend, borrow and invest in relation to permanently endowed properties. Permanent endowment relates to assets or funds of the charity where there is a restriction as to how the capital can be spent

New provisions also give powers to the Charity Commission to direct a charity to stop using a working name if it is too similar to another charity’s name or is offensive or misleading. The Commission can delay the registration of a charity with an unsuitable name.

Gradual implementation

1. The Charities Act 2022 gained Royal Assent in February 2022. The current updates are part of a phased introduction of changes brought in by the Act. The final changes introduced by the Charities Act 2022 are due to be implemented by the end of 2023.