How does the Charities Act 2022 affect the disposal of charity land?

The new Charities Act was passed in early 2022 and sought to reduce the unnecessary administrative and financial burden on charities when disposing of land. 

The Charities Act 2011 contains restrictions to ensure that charities are protected from imprudent decisions by ensuring that the best terms are obtained when disposing and charging land.   Charities must apply for an Order from the Court or the Charity Commission prior to disposing of their land unless certain exceptions apply or unless they follow the statutory procedure within the Charities Act.  The new legislation seeks to allow greater flexibility and a simpler process for charities.

The changes to be made are to be implemented in three stages, with the most recent changes coming into effect on 14 June 2023.  The final changes are expected to be implemented before the end of 2023, with the exception of those relating to Universities and Colleges which it is anticipated will be implemented in Spring 2025.

Advertising requirements

There was previously a requirement for charity trustees to advertise a proposed disposition in accordance with advice provided by a qualified surveyor.  This requirement was frequently not complied with as often charities did not obtain a surveyor’s advice until after the land had been advertised.  Charities are no longer required to follow advertising advice, but the charity must still consider any such advice.

Residential tenancies to connected parties

When charities dispose of land to parties who are connected to the charity, they must first obtain consent from the Charity Commission.  This remains the case for most dispositions, but charities can now grant a short-term tenancy for less than one year to an employee of the charity where this is to be used as their home.  Trustees must still obtain advice prior to granting any such tenancy.

Statements to be provided in documentation

Documents which give rise to dispositions (including contracts, transfers and leases) must include certain prescribed statements.  Under the current legislation, the statements are to be provided by the trustees of the charity.  The new legislation is to place this obligation upon the charity itself.   The wording of the statements is also to be amended to make this clearer, although the wording has little effect on how the provisions operate.

Added protection for purchasers

The current legislation potentially enables a charity to invalidate a disposition as a result of its own failure to comply with the Charities Act.  As this is unfair to a purchaser who is acting in good faith, a purchaser for value acting in good faith will be protected by the new provisions.

Universities and Colleges

Dispositions and mortgages under the Universities and College Estates Act 1925 must now comply with the provisions of the Charities Act.