Changes in the pipeline to charity law regulating land transactions

Review of the Government’s response to Law Commission recommendations for reform.

The Law Commission reviewed a number of technical issues in charity law in 2017 and set out recommendations for reform. The Government has now issued its response (March 2021).

This article summarises the key changes we can expect. There is no set timetable for when a new charity bill will start the parliamentary process. The Government says it will be introduced when parliamentary time allows. Any such changes could therefore be a way off yet.  

Recommendations that the Government has agreed with:

1. For dispositions of land using the self-authorisation procedure of obtaining and following the advice of a qualified surveyor, replace the current “Qualified Surveyors’ Reports Regulations” with a more proportionate and less proscriptive advice regime. Also to expand the persons who can advise to include:

(a)     fellows of the National Association of Estate Agents, and

(b)     fellows of the Central Association of Agricultural Valuers, and clarify that any charity trustees, officers and employees with the right qualification can provide such advice.

2. In line with item 1 remove the requirement that charity trustees advertise the proposed disposition in the manner advised in the surveyor’s report.

3. The restrictions on charities disposing of land in Part 7 of the Charities Act 2011 will only apply where land is held by or for a single charity. Where 2 or more charities hold land jointly general trustee duties will continue to apply, but the specific requirements of Part 7 will not apply.

4. It will no longer be necessary to get a Charity Commission or court consent for a short residential tenancy for a charity employee. This will be an exception to the “connected persons” rule. The general restrictions in Part 7 will still apply to such transactions.

5. A contract for a disposition of charity land will be enforceable by a purchaser if:

(a)    The charity has given a certificate in the contract that Part 7 has been complied with; or

(b)   such a certificate has not been given but the purchaser has acted in good faith.

6. Disposals of land by liquidators, administrators, receivers and mortgagees will be excluded from the restrictions in Part 7.

7. The exception for charity to charity transactions will be reformulated to emphasise that it only applies to disposals that are solely intended to further the transferor charity’s purposes

8. The Universities and College Estates Act 1925 will be repealed and the institutions to which it applies will be given the general powers of other trustees and brought closer into line with other charitable institutions. 

9. The Charity Commission’s guidance on acquiring land (charities acquiring land is not restricted by statute in the same way as disposing of land) should be updated to reflect these matters where relevant.

It is worth mentioning two recommendations that were rejected by Government:

-  The proposal to remove the need to get a specific Charity Commission or Court consent for a disposal to a charity’s subsidiary. The Charity Commission and Government believe that the terms of these transactions are frequently not conducted on arms length terms and in the best interests of the charity and feel it is necessary to retain the safeguard of requiring a Charity Commission consent.

-  The proposal to remove the requirement to advertise a proposed disposal of designated land and consider any responses received. The Charity Commission and Government believe that disposals of designated land can be controversial and it is important for beneficiaries and stakeholders to be entitled to raise objections.

As a charity property specialist lawyer the proposals are pleasing and if brought into law should reduce some bureaucratic aspects of charity land transactions. However, these proposals are very much fine tuning of the existing system. This is not a more fundamental reform to charity land transactions that some had hoped for.