Charities Act 2022 Update

We have previously covered the Charities Act 2022 (‘CA22’) here but can now provide an update on the provisions relating to charity land, which are intended to make the disposal of charity land easier and less administratively cumbersome.

1. Simplification of requirements for disposal

Under previous legislation (the Charities Act 2011 (‘ChA 2011’) trustees who are considering a disposal of land were required to:

• Obtain and consider a written report on the proposed disposition from a qualified surveyor, containing information prescribed by regulation (section 119(1)(a), ChA 2011);
• Advertise the proposed disposition for such period and in such manner as the surveyor has advised in their report (section 119(1)(b), ChA 2011); and
• Decide that they are satisfied, having considered the surveyor’s report, that the terms on which the disposition is proposed to be made are the best that can reasonably be obtained for the charity (section 119(1)(c), ChA 2011).

CA22 makes changes to the requirements of a qualified surveyor’s report and the form of advertisement.   Reports may now also be provided by certain qualified estate agents (members of NAEA Propertymark) and fellows of the Central Association of Agricultural Valuers (‘designated advisers’).  The specified content of the report is set out in broad categories:

• The value of the relevant land.
• What, if any, steps can be taken to enhance the value.
• Whether, and how, the land should be marketed.
• Advising what, if anything, can be done to ensure that the terms of any disposition are the best that the charity can obtain.
• Any other matters that the designated adviser believes the charity trustees should know.

Designated advisers are able to self-certify that they have the ability in and experience of the type and location of the land in question and that they have no interest that conflicts (or may conflict) with the interests of the charity.

2. Removal of the requirement for charities to get Charity Commission authority to grant a residential lease to a charity employee for a short periodic or fixed term tenancy

Employees of a charity will no longer be classed as a “connected person” when the disposal is of a short, fixed term or periodic tenancy (of one year or less). This means that charity trustees will no longer be required to obtain consent from the Charity Commission to grant these tenancies to employees for use as their home. The Trustees must still obtain advice on the grant of such leases.

3. Changes to certificates of compliance in disposal documentation:

Formerly only the document effecting the disposition or mortgage of charity land had to include a statement either that the disposition has been sanctioned by an order of the court or of the Charity Commission or that there is power under the trust of the charity to effect the disposition and that sections 117 to 121 of ChA2011 have been complied with.  There was no requirement for such a statement to be made in the contract for the disposition.

CA 2022 now requires such statement to be included in both the contract and the document effecting the disposition.  The person executing the contract or the transfer must be the person who provides the statement.

Buyers and mortgagees from charities are also given added protection from the possibility that a charity might rely on its own failure to comply with the requirements and avoid completing a contract.  The changes provide that:

• A statement in a contract for a disposition or a mortgage is conclusively presumed to be true in favour of any person seeking to enforce the contract; and
• If the contract does not include the requisite statement, the contract will still be enforceable by the person who entered into the contract in good faith.

4. Future changes

Implementation of the third tranche of reforms is expected by the end of 2023.  We shall keep progress of implementation under review and report when details and dates are available.