Disposal of Local Authority Land

Helen Lisney

by Helen Lisney, Legal Officer

In the current economic climate local authorities are always looking for ways to tighten their belts and may look to realise assets to enable them to continue to carry out their services.

The Government policy is currently that local authorities should dispose of surplus or underused land.

If a local authority is minded to dispose of any land in its ownership it will need to take into consideration the provisions of the Local Government Act 1972

Section 123 of the Local Government Act 1972 provides that a principal council (including a district council) has a general power to dispose of land in any manner they wish, subject to the conditions imposed by that section.

Section 127 mirrors the provisions in relation to land held by parish councils.

The following dispositions are classed as disposals:-

  • A sale of freehold
  • The grant or assignment of a lease exceeding seven years
  • The grant of an easement.

Whereas most private land owners are free to sell their land at whatever price they choose, a local authority is in effect acting as trustee for the community. Section 123(2) provides that a council shall not dispose of land for any consideration less than the best that can be reasonably obtained in the market except with the express consent of the Secretary of State.

Open Space – under section 123(2A) of the Act if a local authority wish to dispose of land held for open space purposes then they are required to advertise their intention in a local newspaper for two consecutive weeks and to consider any objections received. It is important that this is done before any final decision is taken on the disposal so it can be shown that proper consideration has been given to any objections raised. It is important to note that this requirement will relate to any lease of local authority open space land even if the lease is to be granted for a period of less than seven years.

The consideration at best value is calculated on a purely financial basis and often a local authority will wish to take other matters, such as ethical issues or community benefit into consideration when disposing of land.

If a local authority considers that it is appropriate to dispose of land at less than best value then it will need to obtain the consent of the Secretary of State. The Secretary of State has granted a general disposal consent in relation to local authority land. The Local Government Act 1972 General Disposal Consent 2003 enables a local authority to dispose of any interest in land that it considers will help to secure the promotion of the economic, social or environmental well-being of its area.

The general consent will not apply to any transactions where the undervalue is in excess of £2 million pounds, in which case a specific consent will need to be applied for.

The general consent will also not apply to land held for housing purposes, although there are general consents relating to types of disposals relating to this land.

Assets of Community Value

It is not unusual for land owned by Local Authorities to be registered as an Asset of Community Value under the provisions of the Localism Act 2011. Whilst this does not prevent the disposal, if does confer additional duties on the land owner (e.g notices to interested parties and moratorium periods). Any local authority seeking to dispose of such land will need to ensure that the provisions of the Localism Act 2011 are followed.

When determining whether to disposing of land the local authority should take the following steps:-

  • Ensure that it complies with any procedural requirements (e.g in relation to open space)
  • Either market the property, or obtain a professional valuation of the property and any undervalue to ensure that you are aware of the best consideration.
  • Ensure that any legal or other professional advice has been considered, and that any decision to dispose of land at an undervalue has been documented and is capable of justification.
  • Ensure that any disposal is in line with the Council’s policies.
  • Ensure that any decision to dispose of land at an undervalue falls within the General Disposal Consent.
  • Ensure that if the land is listed as an Asset of Community Value, all of the notice and moratorium requirements are followed.

Provided that these steps are followed, and the appropriate legal and property advice is obtained, then a local authority should be able to dispose of any land surplus to its requirements.

Assets of Community Value

The Localism Act 2011 introduced Assets of Community Value (formerly the community right to bid) with the idea behind it to give communities more involvement in the way local services are delivered. In essence, it gives community interest groups an opportunity to purchase local land that has been registered as having a community purpose. This article will look at the process from registering land as an asset of community value through to the landowner disposing of it.

What is an Asset of Community Value (ACV)?

Land of community value is land in a local authority area that is considered to be of value to the local people, for example village halls, churches and pubs. ‘Land’ can be open spaces but can also be buildings or part of a building. When land is placed on the ACV list, it places restrictions on the landowner when they want to sell it.

Who can apply to have land registered as an ACV?

Only a ‘community interest group’ can apply to their local authority to have land registered as an ACV. These groups can include a body designated as a neighbourhood forum, a parish council, an unincorporated body with at least 21 members, a charity, a company limited by guarantee, an industrial and provident society, community benefit societies or a community interest company.

How does a community interest group make an application?

A community interest group can apply to the local authority, nominating a piece of land and giving reasons why they believe it should be listed as an ACV. The local authority will then consider the application and will decide whether to include the land on its ACV list. If it does not, then the community interest group and landowner will be informed. If it does, then again the community interest group and landowner will be informed and the land will be placed on the list for 5 years. A restriction on the property title will be entered as well as a local land charge. The landowner does have a right to ask for the decision to be reviewed.

What if the landowner wants to sell?

When the landowner notifies the local authority of their intention to sell the ACV land, it will trigger a process. A 6 week period will begin in which before anything can happen, the nominating group or another community interest group can make known that they wish to be treated as a bidder. (If no intentions to bid are received then the landowner has an 18 month protected period from the date of notification in which to sell the land.) If a group decide that they do want to be treated as a bidder, the landowner has to wait 6 months from the date of notification to allow the community interest group to make an actual offer. The landowner does not have to accept the offer and the community group do not have to make a formal bid. After the 6 months, the landowner can chose who they wish to sell to (either the group or a private buyer) and they have 1 year after the 6 months to sell the land without any issue.

What happens if the landowner does not sell within that time?

The process restarts, and another 6 week period will begin.

What if the landowner sells the land without following the correct procedure?

If the landowner proceeds without following the correct procedure, the sale will be void and not recognised in law.