Assets of Community Value (“ACVs”) were originally conceived with the laudable goal of ensuring that key community resources were maintained, in particular preserving local pubs and other social resources which were outside of the scope of other protection regimes.
However, the reputation of the regime has, in some instances, become one of a tool for objectors to potentially delay development, akin to designation as a town or village green before the reform to the law surrounding those.
But what are ACVs, and what are their practical implications for redevelopment proposals?
What are ACVs?
ACVs were introduced by the Localism Act 2011 (“the 2011 Act”), which looked to give communities more power to determine how local services are delivered. The LA implemented this objective through giving communities a right to bid for (and potentially buy) local land that is considered to have community value i.e. ACVs.
When the owner of land listed as an ACV wants to dispose of it, the community is given the opportunity to develop a bid and raise capital to buy that land. The owner of that land is then restricted from disposing of it until a certain time period (the moratorium) has passed.
An ACV does not have a specific statutory definition, although ‘land of community value’ is defined in section 88 of the 2011 Act. As a result of this statutory ambiguity, the net can be cast wide, and school playing fields, pubs and even car parks have all been designated as ACVs previously.
The Listing Process
- The land is nominated by a community organisation as an ACV at which point the local authority (“the LA”) must decide whether to list the asset on their list of land in their area that is of community value. In deciding whether to list, it is important to look at the actual, primary, use of the land, as opposed to any ancillary use that might be considered to be of community value, and whether that primary use could continue in the future.
- If the LA decides not to list the land as an ACV, or the landowners’ objections to such a listing are successful, then that land will still be entered onto a list maintained by the LA of land unsuccessfully nominated for inclusion on the ACV list.
- If the land owner either does not object to the listing, or is unsuccessful in their objections, then the land will be added to the list of land that is of community value maintained and publicised by the LA. It will remain on this list for a period of five years.
- It should be noted that the land owner does have the opportunity to request a review of the LAs decision to list, and then appeal that decision.
The registration of land as an ACV does not have any immediate effect on the site or its owner. It is only when the land owner wishes to dispose of that land that the consequences become apparent.
Any land designated as an ACV cannot be disposed of without first notifying the LA. The LA will then notify the community interest group who nominated the site and publicise the information about the disposal. The notification starts an interim moratorium period of six weeks during which the land can only be sold to a community interest group, although if no such group expresses an interest in buying the land, the owner may dispose of that land at the end of the initial six weeks.
However, if a community interest group does express an interest in bidding for the site then the full moratorium period of six months will apply. During such time the land owner cannot sell the land to any party other than a community interest group.
There is not, however, any compulsion to sell to such a group, but merely a restriction on selling to any other parties during the moratorium.
In addition, there is scope to claim for compensation under the Assets of Community Value (England) Regulations 2012, where it can be shown that the listing has given rise to particular costs or losses that would likely not have been incurred had the land in question never been listed – it is important that any such claims are made within 13 weeks of having been incurred. Although this is a tight time limit in any event, as with any deadline, it is preferable to submit any claims well in advance in order to avoid disputes around limitation periods.
Some disposals simply are not caught by the ACV regimes. The first category of these are those that do not fall within the scope of a ‘relevant disposal’; the second are those that are specifically exempted.
Only the following sorts of disposal are captured by the ACV regime:
(a) a disposal with vacant possession of the freehold estate in the listed asset;
(b) a grant of a lease for a term of twenty five years or more;
(c) an assignment of a leasehold estate when the original term was for twenty-five years or more;
(d) a contract to make a disposal within (a), (b) or (c).
So any disposal which does not fall into one of the above categories is not subject to the moratorium process.
There is also a series of so-called ‘exempt’ disposals which avoid the need to engage with the moratorium period. The particular conditions of these are typically complex and need to be carefully considered in the context of the specifics of each site and listing. However, a few illustrative examples of the sorts of exemptions that are available are set out below:
- changes in trustees or partners,
- sales resulting from the enforcement of security
- disposals between group undertakings,
- distributions by personal representatives and sales by them to discharge financial liabilities,
- sales of an on-going business,
- disposals within a family,
- disposals pursuant to a planning obligation,
- disposals pursuant to a contract to sell entered into prior to listing.
It is worth noting that whilst an option agreement does not trigger a moratorium, a disposal pursuant to an option likely will.
Whilst it would seem as though designation of land as an ACV will only affect that land or building should its owner wish to dispose of it, such designation can also have an effect on any potential redevelopment of the site.
Designation as an ACV will inevitably be a material consideration for an LPA when they are considering a planning application for redevelopment of that site which may well end up weighing against the redevelopment, if other benefits cannot successfully be made out.
In the end
Whilst designation as an ACV can certainly delay the disposal of that land, and may cause an issue if the owner is planning to redevelop, it will not prevent any sale for longer than six months and the land will be removed from the ACV list after five years. As such, a disposal or any redevelopment cannot be prevented indefinitely, and may well be exempted in any event.
Furthermore, a land owner is under no obligation to accept a bid from a community interest group if they are disposing of their land. Indeed, a House of Commons Communities and Local Government Committee report on the ACV regime in 2015 found that almost 50% of bids by community interest groups are unsuccessful.