Top tips for trustees when dealing with the sale of charity land

Charities will sometimes enjoy ownership or control of some or all of their land and buildings. This might include unused land or buildings, and it’s important to consider how best to utilise these in pursuance of your charity’s objects. Sometimes, the right thing will be to sell or lease such property in order to obtain some value for an asset that may otherwise be a drain on resource. 

When disposing of property, be it land that your charity owns outright (freehold land) or property occupied by the charity on a leasehold basis, you and your fellow trustees will need to consider the following points:

• Have you checked for any restrictions on how the charity can act in relation to the property?
• Do you want to dispose of the property outright, or is leasing it out an option?
• Have you obtained professional advice from a surveyor or agent on the terms of the sale, including the price, deposit and other conditions?
• If you are retaining any adjoining land, consider whether you need any rights over the land being sold, for example access rights or rights to connect into services.
• Check to see if an Energy Performance Certificate (EPC) needs to be commissioned for the property – most transactions need a certificate showing the energy efficiency of the property (although there are some exceptions).
• Discuss with your surveyor or agent whether the property is suitable for development. For example, does the property come with lots of land which could be developed, or could the property be converted to a different use? If development is possible, then it may be necessary to include a clawback or overage provision in the sale. Overage or clawback provisions allow the seller to share in the value of any potential development of the property after it has been sold. However, it will also be important to take tax advice.
• Consider whether you want to restrict any future use of the land.
• If the charity is planning to sell property which it occupies under a lease, then check whether any third party consents are needed, for example consent from the landlord or management company.
• Ensure that you comply with the requirements of the Charities Act 2011 – this normally requires a charity to obtain a report from a designated adviser before contracts are exchanged.

Get in touch with Chris Sharpe for assistance with all types of property disposals, as well as any other property related matters.