The current rules on charity land disposals divide opinion. Some argue that they protect charities, others that they are a bureaucratic obstacle course.
The Charities Bill, expected to become law in 2022, will make important changes to existing advice requirements, introducing greater flexibility as to who can provide advice, what the advice should cover and the requirement to advertise. These changes are particularly interesting for charities that regularly dispose of property, but will be relevant for all land-owning charities.
At present, trustees take advice from a fellow or professional associate of the Royal Institution of Chartered Surveyors. The bill proposes a broader range of ‘designated advisers’, expected to include fellows of the National Association of Estate Agents and Central Association of Agricultural Valuers, and suitably qualified trustees and employees. An adviser will need to certify that they have the appropriate expertise, which will allow greater flexibility when selecting advisers.
The current regulations can be challenging for complex transactions. Simplified rules will require trustees to obtain a report covering the value of the land, steps that could be taken to enhance that value, how the relevant land should be marketed and anything to ensure the terms are the best that can reasonably be obtained.
Happily, this will allow greater flexibility. However, it will also herald an increased risk that inexperienced advisers could overlook important but less obvious matters.
The bill removes the automatic requirement to advertise a disposal. Instead, charities must consider any advice on advertising, but with no requirement to follow that advice.
The key takeaway is that while the bill does not represent a complete overhaul of the rules, it nevertheless makes significant changes. Welcome flexibility will be provided, but the need for trustees to keep in mind their legal duties, including those in the general law, will also be underscored.
James Maloney is partner at Farrer & Co