The Charities Act 2022 from a property perspective - what are the key changes?

Whilst the Act covers a broad range of topics, this article will focus on the changes to dealing with charitable property to provide an overview on how the Act may impact your dealings with charity land. Many of the changes relate to the requirements for disposing of charity land whether via selling, mortgaging, or leasing the property.

Changes that have been implemented already

Restrictions on disposing of charity land

The scope of the restrictions when disposing of charity land have been reduced so they now only apply if the whole of the land being disposed is held:

• by a charity solely for its own benefit
• in trust solely for a charity

This means that the restrictions no longer apply if the land has been appropriated under a will to multiple beneficiaries including one or more charities, nor will it apply if the charity is holding land as joint tenants or tenants in common and the entire land is being disposed of (and not just a charity's share).

Requirement for a Qualified Surveyor’s Report (QSR) when disposing of land as a charity

The biggest change to the QSR regime is the extension to who is permitted to provide the report. The Act has widened the pool so that "designated advisors" may now also provide a report rather than solely being limited to qualified surveyors. The Designated Advisors Reports Regulations 2023 define the general contents of the report, and although this is less specific than the statute it replaces, it will help guide what should be included.

Another benefit is that the designated advisor providing the report can be a charity trustee, officer or employee. The advice can be provided within the course of their employment by the charity. This will enable charities who are fortunate enough to already have links to such professionals to utilise their existing connections where previously they could not.

Amendments to requirements for residential tenancies granted to employees

If your charity has property that is used to grant fixed term or periodic tenancies (both of one year or less) to employees to use as their home, you will be pleased to hear that the definition of connected person in this context has changed so that employees of a charity are excluded. This will simplify such tenancies as trustees may rely on advice in relation to such tenancies rather than always requiring Charity Commission consent to grant these. This should save charities time and cost.

Changes yet to be implemented

The final phase to implementing the Act is expected to take place by the end of 2023. This phase will include two key changes to charity land:

Exceptions to restrictions

Exceptions to the general restrictions relating to sales, leases and mortgages will be expanded to exclude dispositions or mortgages of charity land by liquidators, receiver mortgagees or administrators.

In addition, the existing exception regarding disposing of land to another charity will be amended to make clear that the exception is limited to disposals to another charity for the sole purpose of furthering the transferor charity's purposes; so, for example, a transaction intended to achieve a social investment will not fall under this exception (unless it is for the sole purpose of furthering the transferor's purposes). The requirement that this disposition is authorised by the trusts of the charity will also no longer apply, although it is important to be aware that this does not circumvent a charity's governing document if it does not allow a certain disposition.

Amendments to the statements

When disposing of charity land there is a requirement to include a statement which confirms that the charity (or its trustees) have the authority to make the disposition and that they have complied with the requirements of the Act. Once introduced, the amendment will make the statement clearer and require that a statement is included in contracts for disposal of charity land. Presently, strictly speaking a statement is only required in the document that effects the disposition, for example, the transfer or lease (and not in a contract that is entered into before a transfer or a lease), although the changes will mean that the relevant statement will need to be included at an earlier stage i.e. in the contract at the point of exchange, as well as at completion.

Summary

The changes being brought in by the Act are intended to save charities time and money when dealing with charitable land. Charity trustees need to be aware of the changes so that they ensure that they comply with the new regime when dealing with charitable property.

If you have charity land that you plan to dispose of and you would like further advice on complying with statute, please contact Lily Langlois in our Charities team on 0117 314 5467 or complete the form below.