The disposal or repurposing of a building can be a challenge – but if you are a registered charity there are additional considerations to be aware of. As a registered charity you are obligated to obtain the best value and undertake a transparent process. 

Charities Act legislation

Legislation for England and Wales currently states, under s.119 of the Charities Act 2011, that trustees are required to take professional advice before a sale or a lease (for longer than seven years). This includes obtaining a Charities Act Valuation Report.

When does the charity need to obtain professional advice?

As soon as a charity has identified they have a surplus asset, the surveyor should ideally be consulted in order for the trustees to get the best benefit from the advice. However, the Charities Act report must be obtained before the charity is contractually obliged to enter into the sale or lease.

Some things to think about when repurposing

Remember the current use of the asset may not be the most valuable. Repurposing it could help drive value, or the monetary value of the building may be better or more meaningfully spent elsewhere. 

Here are the key considerations to take into account:

Planning

• Planning policy – the first thing to look into is the overarching planning policy in your area; each local council publishes a document which sets out where they want development to take place and acceptable uses in different areas of the authority. This will guide other potential uses for your asset. 
• Permitted Development Rights/change of use – depending on the current use of the property, you may not need planning permission to repurpose the asset. There are a number of changes of use that are already allowed under Permitted Development Rights. 
• Pre-application advice from the council – if you consider that another use may be permitted for your property, obtaining pre-app advice from the local authority may help give prospective purchasers more certainty as to what they might do with the property thereby driving better value for the charity. 
• Obtaining planning permission for alternative use – depending on the objectives of the charity, an option to maximise value may be for you to obtain planning permission yourself, before disposal.  

Other than planning policy itself there are a number of other planning factors to be considered. For example, the building may be listed or in a conservation area, or affected by a Tree Preservation Order or environmental designation. If so, it may restrict future redevelopment prospects and therefore reduce the value you may be able to obtain. 

Is it better to sell or let?

While a lease would provide an annual income which could support the charity, a sale could provide a capital lump sum to re-invest in other projects.

Lease

• Does the charity have a partially surplus asset? Renting surplus space may be the best solution for you.
• However, it’s worth considering whether it’s appropriate to have another occupier alongside your current undertakings. 
• Holding a property may drive greater value in the future. Although a property may not have any development potential at the present time, this may change.

Sale

If it is in the charity’s best interest to dispose of the asset and obtain a capital receipt, what is the most suitable method of disposal?

• Private treaty – if you wish to test the market without any time pressures, private treaty may be the best option. 
• Tender – selling an asset via an informal tender may help drive value in a competitive bidding scenario. 
• Auction – if a quick sale is required, auction may be the best solution. 

Getting the most from property assets and obtaining the best value for the charity is essential. So too is obtaining good early advice in what can be a complicated marketplace. 

Further information

Contact Natalie Collins or Abbey Bennett