Since the Charities Act 2022 was first introduced in the autumn of 2022, it has implemented changes which affect the rules that govern dispositions of charity land. 

The changes are being rolled out in stages from autumn 2022 with the latest tranche coming into force on 7 March 2024. The changes are designed to simplify the procedures under the 2011 Act and to save time, resources and costs for charities.

A number of changes relating to charity property dispositions came into force on 14 June 2023 which allowed charities greater flexibility when seeking advice on dispositions. 

The changes allowed charities to obtain advice from a wider pool of advisors as the reference to ‘qualified surveyor’ has been replaced with ‘designated adviser’. 

A designated adviser can now be:

• a fellow or professional associate of the Royal Institution of Chartered Surveyors; or
• a fellow of the Central Association for Agricultural Valuers (CAAV); or
• a fellow of the NAEA Propertymark (National Association of Estate Agents).

This also includes suitably qualified trustees, employees or officers of the charity who have the requisite skill and experience to provide advice. However, if advice is provided by these persons, conflicts of interests should be managed.

Additionally, the changes allowed trustees discretion to choose how a proposed disposition is advertised. Subsection 1 (b) of S119 of the Act has been removed which previously required charity trustees to advertise the proposed disposition in accordance with the advice provided by the charity’s surveyor. 

Whilst trustees should still consider their surveyor’s advice on how to advertise disposals, the decision on how the disposal is advertised will ultimately be at the trustees’ discretion and the focus of the S119 Report is now on market value, enhancing the value/price, marketing and any other appropriate recommendation.

The exceptions under section 117(3) are widely used on dispositions to other charities and these exceptions will now only apply to disposals to another charity that are intended solely to further the disposing charity’s purposes. This means that the exception will no longer apply to commercial transactions where the transaction is proposed with a view to achieve the best price that can reasonably be obtained or a social investment.

The new rules also allow charities to grant short-term residential tenancies for a period of one year or less to employees of the charity (who are treated as connected persons under the Act) with the right to live in the property as their home without consent from the Charity Commission. However, this does not negate the need for trustees to follow the usual procedures and requirements under the Act in respect of dispositions.

On 7 March 2024, section 23 and part of section 18 came into force. Additionally, changes were also implemented in respect of disposals by liquidators, provisional liquidators, receivers, mortgagees or administrators. 

The statement and certificates included in deeds/instruments where charities are making dispositions or mortgages of charity land have been amended and the updated form of statements will need to be used on all dispositions made on or after 7 March 2024 (unless this is pursuant to a contract entered into before 7 March 2024). 

The statement of compliance in relation to section 117-121 of the Act within the transaction deeds/instruments can now be certified on behalf of the charity (as opposed to the charity trustees). It is crucial that all requirements and procedures under the Act that relate to charity land dispositions are followed before transaction documents are signed by charities. However, this does allow charities to save time collating signatures. 

There are also various other changes implemented by the Charities Act 2022 which relate to charity land, constitutions, mergers, trustees and governance. See here to read the Charity Commission’s guidance on the Charities Act 2022 changes in full or for further information on charity land dispositions, please contact Mohamed Karim.