244: Charities Act 2022 – changes come into effect for dealings with charity-owned land

A number of changes to dealings with charity-owned land were implemented on 14 June 2023 under the Charities Act 2022 (the ‘2022 Act’).

As mentioned in our previous article, the changes will make dealings with charity land easier and will give more flexibility to the rigid restrictions laid down under previous legislation.

Which changes came into effect on 14 June 2023?

1. Advertising and reporting requirements relating to the disposition of charity property

Previously, trustees who were considering a disposal by a charity obtained a written report on the proposed disposition from a suitably qualified surveyor, advertised the disposition, and had to be satisfied that the terms on which the disposition was proposed to be made were the best that could reasonably be obtained for the charity.

This has been widened by the 2022 Act to allow reports to be prepared by a ‘designated advisor’ to include fellows of:

• the National Association of Estate Agents;
• the Central Association of Agricultural Valuers; and also
• qualified charity trustees, officers and employees, including where they do so in the course of their employment by the charity.

Another change has removed the requirement for charity trustees to advertise a proposed disposition in the manner advised in the surveyor’s report. The charity must simply consider any advice on advertising that is given, but there is no longer a statutory requirement to follow that advice.

Also, the surveyors’ report itself no longer has to include the prescribed information in the Charities (Qualified Surveyors’ Reports) Regulations 1992, and these Regulations are being repealed.

2. Definition of ‘connected persons’

The 2022 Act has amended the definition of ‘connected person’ to exclude employees of a charity where the disposal is the grant of a short, fixed term, or periodic tenancy (of one year or less) to use as their home, ie these will no longer require Charity Commission consent by an Order.

Dealings between a Charity and its wholly owned subsidiary will still fall within the definition of ‘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.

3. Exceptions to restrictions on dealing with charity land

Under the previous regime, restrictions meant that charity property could not be disposed of without an order made by the court or the Charity Commission, unless either the charity obtained a report from a qualified surveyor, granted a lease of less than seven years, which has less stringent requirements, or fell within narrow exceptions.

This restriction has now been expanded so that the restrictions on dealing with charity land will not apply where:

• a charity is one of several beneficial joint tenants or tenants in common of land and the trustee of the land is disposing of the entirety;
• land which is being disposed of is left to multiple beneficiaries under a will, one or more of which is a charity; or
• a trustee holds land on trust for multiple beneficiaries, one or more of which is a charity.

This addresses situations where a charity, as one member of a group of beneficiaries, is subject to a stricter statutory regime that, in practice, came to apply to the whole group, which could not make a disposal unless the restrictions were satisfied.

Which changes will come into effect later this year?

A third tranche of Charities Act 2022 reforms is expected to be brought into force by the end of 2023. We will provide an update when they have been implemented,

There will be new provisions relating to charity land disposals and the taking out of mortgages by liquidators, provisional liquidators, receivers, mortgagees, or administrators. There will also be a new requirement to include a certificate in a ‘contract’ for the sale of charity-owned land confirming that the Charities Act has been complied with at that point rather than at the point of the actual disposition (as is currently the case).

If you have any queries about these latest changes, please do get in touch.