• news-banner

    Expert Insights

Charities Act 2022: Changes to the rules governing disposal of property

The rules governing disposal of charity property changed on 14 June 2023, when the latest set of provisions of the Charites Act 2022 came into force.

Charities that are non-exempt exempt (a non-exempt charity is one governed by the Charity Commission) cannot dispose of an interest in property unless (a) they obtain an Order from the Charity Commission or from the Court (expensive and time consuming), (b) the disposition falls within one of the specified exceptions in the Charities Act (very rare, as these exceptions are narrow) or (c) they obtain written advice on the disposition, in the form required by section 119 of the Charities Act 2011 (often called a “Charities Act Report”) or 120 of the Charities Act 2011 (which is less stringent than a formal Charities Act Report but only applies to the grant of leases which are for 7 years or less). Option (c) is most-commonly adopted by charity trustees but is only available where the disposition is not to a connected person.

From 14 June 2023, the category of persons who may provide a Charities Act Report has been widened, from “qualified surveyor” (which meant a RICS qualified surveyor) to “designated advisor” including fellows of both the National Association of Estate Agents and the Central Association of Agricultural Valuers. In addition, appropriately qualified charity trustees, officers and employees will also be able to provide the report. Whilst this provides welcome flexibility to charity trustees (particularly on smaller scale transactions where a report from a RICS surveyor would be disproportionate), trustees do need to ensure that anyone providing the advice has appropriate professional indemnity insurance in place and that there are no conflicts of interests.

The required contents of the Charities Act Report have also been significantly simplified. Gone are the requirements to include measurement of rooms in the relevant building (something which was usually immaterial to the transaction at hand). Under the new rules, the designated advisor will instead focus on the value of the land and how it can be enhanced, marketed and anything else that could be done to secure the best possible terms for the disposition.

The definition of “connected persons” has been amended so that an employee of a charity, granted a short, fixed-term or periodic tenancy (of one year or less) to use a property as their home, will not be considered a connected person. Prior to 14 June 2023, such tenancies would have required an Order from the Commission or the Court, as is the case with all disposals to connected persons. Charity trustees must still obtain advice on any proposed tenancy from someone they reasonably believe has the requisite ability and practical experience to provide them with that advice.

The restrictions on disposition now do not apply where land is held by or in trust for multiple beneficiaries. This means that where a trustee holds the land on trust for multiple beneficiaries, only one of which is a charity, the restrictions will not bite (as opposed to the scenario where land is held beneficially solely for a single charity).

The changes in the Charities Act 2022 enact many of the recommendations made by the Law Commission in its 2017 report (Technical Issues in Charity Law). The new rules provide welcome flexibility to trustees, particularly when it comes to choosing the advisor to provide a Charities Act Report and the costs incurred in obtaining that Report. Additional changes to the rules governing charity property disposals are due to come into force at the end of 2023, and we will of course provide further detail of those at the time.

Watch our Charity Property Update webinar here.

Our thinking

  • Calculating Social Value in BTR

    Francis Ho

    Events

  • China Daily, and other titles, quote Silvia On on trends affecting Chinese HNWIs

    Silvia On

    In the Press

  • The Evening Standard quotes Rose Carey on the increase in visa fees

    Rose Carey

    In the Press

  • What next for HS2?

    Richard Flenley

    Quick Reads

  • Updates and points to note in relation to buy-to-let residential properties

    Twiggy Ho

    Insights

  • Felicity Chapman writes for Insider Media on alternatives to court for divorcing business owners

    Felicity Chapman

    In the Press

  • Investment Week quotes Julia Cox on the proposed scrapping of inheritance tax

    Julia Cox

    In the Press

  • Charles Russell Speechlys expands commercial offering with the appointment of Rebecca Steer

    Rebecca Steer

    News

  • The Times quotes Gareth Mills on the CMA’s preliminary approval of the Activision Blizzard-Microsoft deal

    Gareth Mills

    In the Press

  • Heritage property and conditional exemption

    Sarah Wray

    Insights

  • The Financial Times quotes Emma Humphreys on UK rental costs

    Emma Humphreys

    In the Press

  • Stamp Duty Refund - New Impetus To Eligible Incoming Talents

    Ian Devereux

    Insights

  • City AM quotes Gareth Mills on the CMA’s new set of principles for regulating AI

    Gareth Mills

    In the Press

  • Hamish Perry and Mike Barrington write for The Evening Standard on whether a merger between the CBI and Make UK can work

    Hamish Perry

    In the Press

  • Silicon quotes Gareth Mills on the UK consumer lawsuit against Google

    Gareth Mills

    In the Press

  • Common construction claims in Bahrain

    Mazin Al Mardhi

    Insights

  • Government Press Pause on the Renters (Reform) Bill

    Helena Taynton

    Quick Reads

  • First Remediation Order made by the Tribunal under the Building Safety Act 2022

    Bella Stuart-Bourne

    Quick Reads

  • Property Week quotes Louise Ward on the additional support required by aspiring UK life sciences operators

    Louise Ward

    In the Press

  • Sarah Higgins and David Wells-Cole write for Wealth Briefing on the pitfalls of using unregulated legal services

    Sarah Higgins

    In the Press

  • Office to Lab Conversions: A new lease of life (sciences) for some of London’s offices?

    Georgina Muskett

    Quick Reads

  • Charles Russell Speechlys’ UK offices receive environmental certification

    Kerry Stares

    News

  • Case analysis: URS Corporation Ltd V BDW Trading Ltd

    James Worthington

    Insights

  • True value adjudications; don’t jump the gun!

    Christopher Busaileh

    Insights

  • Assured Shorthold Tenancies and Section 21 Notices: Should Landlords Return Tenancy Deposits by Cheque?

    Helena Taynton

    Quick Reads

  • The Family Fund: Bank of Mum & Dad 2.0

    Vanessa Duff

    Quick Reads

  • The perpetual struggle between the environment, heritage and development: the M&S decision vs 55 Bishopsgate

    Sophie Willis

    Quick Reads

  • MEES Update: Offices Missing the Mark

    Ben Butterworth

    Quick Reads

  • Gove's announcement: two staircases for new high rise residential buildings over 18 metres

    Melanie Hardingham

    Quick Reads

  • Leasehold and commonhold reform: what is the latest?

    Laura Bushaway

    Quick Reads

  • The Government has announced the introduction of the “Cladding Safety Scheme”

    Lauren Kelly

    Quick Reads

  • A new consultation on freight and logistics

    Sadie Pitman

    Quick Reads

  • Temperate Rainforests - A Naturally Biodiverse Habitat in the UK

    Titilope Hassan

    Quick Reads

Back to top