The Chancellor has announced in the Budget today a Community Ownership Fund under which local people will be given the opportunity to collectively bid and acquire public houses and other community venues (paragraph 2.124, HM Treasury Budget 2021).
How the fund will work and interact with the Localism Act 2011 as amended by The Assets of Community Value (England) Regulations 2012 (SI 2012/2421), is yet to be known.
Assets of Community Value
Under the Localism Act 2011 (as amended), in England, a number of community organisations can already nominate land and buildings for inclusion on what is known as the “Assets of Community Value” list. The purpose behind this is to protect buildings or other land which has value to the local community, because its main use has recently or is presently used to further the social well-being or social interest of the local community and could do so in the future. The Localism Act 2011 includes cultural, recreational and sporting interests as ‘social interests'.
Once the land or building is registered as an "Asset of Community Value,” members of the community are given the opportunity to develop a bid and raise capital to purchase the Asset of Community Value, before a ‘relevant disposal’ is made by the owner of the land or building.
Relevant disposal
A ‘relevant disposal’ of an Asset of Community Value includes: (a) the sale of the freehold property with vacant possession, (b) the grant of a lease for a term of 25 years or more with vacant possession; or (c) an assignment of a lease of the property where the lease was initially granted for a term of 25 years or more with vacant possession. If, the land or building falls within these categories, the owner is restricted from disposing of it until a certain period of time has passed and conditions are satisfied; basically, in order to offer members of the community the opportunity to acquire the Asset of Community Value. Exemptions apply, but a failure to follow the correct procedure under the Localism Act 2011 (as amended) may result in the disposition being held void.
Ensuring the Asset of Community Value is disposed of in accordance with the statutory requirements under the Localism Act 2011, is not the only factor which owners, prospective purchasers or tenants need to consider.
Future impacts
If a property is registered as an Asset of Community Value, this can also impact on planning and development rights. Such properties, may no longer have the benefit of certain permitted development rights. Therefore, if the property is still within the five year period during which it is registered as an Asset of Community Value - regardless of whether it is still used for the reason it was initially registered (i.e. it could be vacant) - the local authority may still be dissuaded from granting planning permission to convert the property from its ‘protected use’ to another use, for example, a public house to a supermarket. This could hinder any future sales or long lease of the property, or impact on value.
Having said that, the ability for local members of the community to safeguard assets of value to the local community is a positive step. Although, it will be interesting to see how this will operate, and whether the community-owned businesses acquired by the fund will be subject to similar protection as Assets of Community Value.
Community groups will be given up to £250,000 to help take over struggling pubs in their area which will be part of a £150m could also include sports clubs, theatres and music venues.