24th July 2023

Requirements when charities dispose of property: the Charities Act 2022

James Letchford

Partner

Trustees of charities will be aware that they are subject to a number of obligations when running the charity. There are strict requirements that must be complied with before a charity may dispose of land which charity trustees need to be aware of. These are broadly intended to ensure that the property is sold at the highest possible value.

The Charities Act 2022 (the "Act") has brought a number of changes to the rules for disposing of charity property, most of which should allow more flexibility for charities. These came into force on 14 June 2023.

Charities falling within the Act

The Act has clarified that dispositions of land by a charity will only fall under the Act and thus be subject to its rules if the whole of the land being sold is held by the charity solely for its own benefit or in trust solely for the charity.

This will mean that where the property being sold is partially owned by or in trust for others, the rules will not apply.
Obtaining advice

Charities are no longer required to instruct a RICS qualified surveyor to produce a report on the proposed sale of any charity land. This rule has been relaxed to allow "a designated advisor" to produce the report. The definition of designated advisor includes trustees, officers and employees of the charity so long as they meet the stated requirements.

The new rules have also simplified what the report is required to cover. The charity trustees must be content that, having considered the report, they are obtaining the best price reasonably possible for the charity.
Short residential leases granted to employees

Generally speaking, disposals of land by a charity to a "connected person" require the consent of the Charity Commission or a court order. A connected person includes, amongst others, any employee of the charity. However, the new legislation allows a tenancy of one year or less to be granted to a charity employee if they are to use it as their residential home.

If you have any questions or concerns regarding the subject of this article, our Real Estate department team will be happy to advise you.