It is clear that the Localism Bill’s proposals will have a significant effect on landowners. However the Bill itself contains little detail on how the proposals are expected to operate.
In February 2011, the Government published a consultation paper “Proposals to introduce a Community Right to Buy – Assets of Community Value.” This provides a fuller explanation as to the outline principles.
The Government has indicated that secondary legislation will clarify the definition of a Community Asset and exclusions from it. It will however essentially be up to each local authority to decide what should be contained on the list. Residential property will be excluded except where it is linked to the Community Asset. Assets being disposed of in specific circumstances will also be exempt:
- Assets being returned to previous owners under the Crichel Down rules.
- Assets being disposed of under a pre-existing option or pre-emption right.
- Assets being disposed of by lenders, under court orders or as part of bankruptcy proceedings.
The Government has proposed that the local authority must notify the owner of the land before deciding whether to list the asset. This is to ensure the owner is able to make representations and the owner will have 28 days from notification to request an internal review of the listing.
Matters to be considered on a review include whether the asset should be excluded, whether the nominator is not eligible to nominate, any new factors arising since the decision and any irrelevant information that the original decision may have been based on. The review is to be completed within 6 weeks of the request and there is no right of appeal by an owner to an independent tribunal against the decision to include a property on the list.
So what are the implications?
Once an asset is listed, the owner must notify the local authority of the intention to dispose of it. The community will then have a six week period to express an interest in being treated as a potential buyer. The process of nominating to bid will be open to any group or individual who has a local connection. If there are no interest groups, the owner is then free to dispose of the asset.
If an eligible group expresses an interest, there will be a 3 or 6 month period (known as the ‘window of opportunity’) in which groups can put together a viable bid and fundraise to compete with other interested parties.
Fortunately, the landowner will be compensated for administrative costs incurred in complying with the legislative procedures. However compensation is only open to private landowners who claim within 90 days of the window of opportunity and landowners will not be compensated for any loss of profit or the chance to invest.
If the proposals come into force, they are likely to discourage landowners from making their property available for public use due to the delays and potential loss of profit. The proposals may also cause difficulties with tax planning and passing assets onto the next generation.