Regardless of their legal structure, all charities have to comply with certain requirements when dealing with land. Most of these duties set out in the Charities Act 2011 (the Act), will apply to the trustees of the charity.
Shorthold tenancies (ASTs)
However, many trustees are unaware of these rules, especially when they are granting short term lets or assured shorthold tenancies (ASTs).
The grant of a lease is treated as a ‘disposal’ for the purposes of the Act. So whatever the length of the lease, certain procedures must be followed by the trustees before a lease is granted.
Before granting a lease for 7 years or more, the charity trustees must:
obtain and consider a written report on the proposed lease from a qualified surveyor, who must be a member of the RICS and have experience in the relevant area
advertise the proposed letting if advised to by the surveyor in their report. Note that it may not be in the best interests for the charity to advertise if it is a simple lease
decide that they are satisfied (having considered the surveyor’s report) that the terms of the lease are the best that can be reasonably obtained.
Before granting a lease (including ASTs) for less than 7 years, the charity trustees must:
obtain and consider advice from an appropriate person. This does not need to be a qualified surveyor (although this would make sense!) and the advice does not need to be in writing
decide that they are satisfied (after considering the advice) that the terms of the lease/AST are the best that could be reasonably obtained for the charity.
Charities Act
Once these steps have been taken, the letting document itself must include the relevant Charities Act statement and/or certificate prescribed by the Act.
Certain transactions are excluded from these procedures, notably a scheme made by the Charity Commission or a court, or any disposal expressly authorised by statute, for example, the Housing Act.
Trustees should, therefore, ensure that they are aware of the requirements of the Act before they grant leases and ASTs. If they don’t, they run the risk of being found to have disposed of charity land without considering whether this was in the charity’s best interests.
Commercial property partner Alasdair Garbutt deals with a wide range of work in relation to sales & acquisitions, development transactions, landlord and tenant and property management matters. He has particular expertise in property investments, property management, clawback, overage, options, business leases and development and security documents.
A recent High Court decision has shone the spotlight on material adverse change (MAC) clauses and their effectiveness. What is a material adverse change clause? You will most likely come…
Despite the chief economist of the Bank of England’s reassurances that the post-COVID economy is “poised like a coiled spring”, current market conditions are undoubtedly making traditional mergers and acquisitions…
In the Chancellor’s first Budget speech last year, made as COVID-19 started to take hold in the UK, Rishi Sunak promised to do “whatever it takes to support the economy”.…
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL cookies.
This website uses cookies to improve your experience while you navigate through our website. Out of these cookies, the cookies that are categorised as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyse and understand how you use our website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies but it may affect your browsing experience on our website. You can find our cookie policy here.
Necessary cookies are absolutely essential for our website to function and enable core functionality such as security and accessibility. These cookies do not store any personal information. You can block these cookies by changing your browser settings, but this may affect how the website functions.
We use performance cookies such as Google Analytics to help us count the number of visitors and to see how visitors move around our website when they are using it. This helps us to improve the way our website works, for example, by ensuring that users are finding what they are looking for easily. The cookies collect information in a way that does not directly identify anyone. For more information on how these cookies work, please see our cookie policy.