Community Assets in the Localism Bill

This leader by CLA President William Worsley appeared in Country Life on 13 April 2011

In the name of the “Big Society”, the Government is exhorting us all to do what we can to help our local communities. Of course, in many rural areas landowners have been doing this for generations. In the countryside there is, after all, a great tradition of involvement with the local community. We can all think of villages in which the local landowner provides a playing field, playground, or a building to use as the village hall.

However, bizarrely, these traditional gestures of goodwill are under threat as a direct result of the Government’s policy as set out in the Localism Bill. Under its proposals for what it calls "Community Assets”, local authorities will acquire the right to forbid the owner from transferring his land, or buildings, to anyone else, whether by sale or as a gift, until the local community has had a chance to raise the funds to bid for it.

What constitutes a ‘’Community Asset’’ is not defined in the Bill, giving even greater cause for concern to the caring landowner.

As a result, the owner will lose the right to sell the asset when he or she wants and potentially to the desired person. The owner’s ability to plan ahead will suffer as will his ability to take advantage of peaks and troughs in the property market. The proposals may also cause difficulties with tax planning and passing on assets to the next generation.

To exacerbate the obvious injustice of this, landowners will not be compensated for their actual losses, only for their administrative costs. So if the delay means they lose out on a chance to invest, they will not be compensated for the profit lost. 

All this is self-evidently unjust and, sadly, will have the opposite effect to that intended. In practice, it will discourage landowners from making their property available for public use. The CLA is already aware of a number of land agents advising their clients against doing so.

Surely, the Big Society is about encouraging people to do the right thing of their own accord. In the countryside we have long-standing proof that this already happens. The last thing we need is government getting in the way.

Click here for a list of "community benefits" provided by CLA members.

To date the CLA has lobbied for Part 4 Clauses 71-88 relating to Assets of Community Value in the draft Localism Bill to be removed altogether. However, it may be that we eventually have to accept some compromise by which the right exists, but in a considerably restricted form.

The President was invited to a breakfast meeting with the Secretary of State for Communities and Local Government, Eric Pickles MP, and raised the issue with him. This meeting was subsequently followed up with a letter setting out the CLA position.

We have asked CLA members to raise the issue directly with their MPs and a number have done so using the CLA pro forma letter.

The CLA President has written a leader in Country Life and Farmers Weekly and we are continuing to raise the issue in the media and with other stakeholders.

The Head of Planning attended the Communities and Local Government roundtable on Assets of Community Value on 12 April 2011.

The CLA Guide to Community Assets

What is the Government proposing?

Under the Localism Bill the Government is proposing that local authorities will acquire the right to put anyone’s land or buildings, what it calls “Community Assets”, on a list. The owner of anything on the list is then forbidden from transferring that land or building by sale or as a gift, until the local community has had a chance to raise the funds to bid for it.

What are community assets?

We do not know. The Government has said assets include land and buildings, but beyond that it is up to each local authority to decide, although there may be specific exclusions. It is definitely not just pubs and post offices.

Is the asset the building, or what happens in it?

The asset is just the building, not the service it provides or provided. There is no right to bid for the continuation of the service that made the building valuable to the community.

The Government has talked about both a right to bid and a right to buy. Which is it?

It is purely a right to bid. The owner cannot be forced to sell to any particular person.

Does the right to bid only apply on sale?

No. The right to bid arises on any “disposal” of the asset, including a gift to a relative.

What will the impact on rural business be?

It will be bad for business. The owner will lose the right to sell his asset when he wants to, and potentially to the person he wants to. As anyone who has run a business knows, you need to be able to both plan ahead and take advantage of opportunities that arise.  All of this will become harder if the Government has its way.

Will the proposals reduce red tape?

No. They will add to it

What will the impact on tax planning be?

The Bill is not just concerned with sales, but with any transfer. So it would include a gift to your children made with tax considerations in mind.

Is there a right of appeal?

No.  Not in any meaningful sense. As matters stand, the owner does not even have the right to appeal to an independent tribunal against the decision to include his property on the list, only to have it reviewed by the local authority which made the initial decision.

Is the landowner entitled to compensation?

Only to a very limited extent.  The landowner is only compensated for administrative costs incurred in complying with the bureaucracy.  So, if the delay caused by the new bureaucracy means you lose out on a chance to invest, or have to take out a loan because you cannot sell your building to raise funds, do not expect to be compensated for your losses.  

Is this all in the name of the Big Society?

We do not know. But apart from being yet more regulation for land-related businesses to deal with, it will inevitably discourage farmers and landowners from making their property available for public use. A number of land agents are already advising their clients against doing so.   

Will the proposals work in practice?

It is difficult to see that they will. The proposals only apply to the land or building, not the service provided within it. In most cases, it will be the service that the community will value, not the building. People will want the community benefits of, for example, the pub.

Moreover, all the factors that lead to the closure of valued community assets such as lack of consumer demand, heavy taxation and too much regulation, remain.  The new owner will need the ability and resources that the previous owner presumably lacked.