Advice for developers following Court of Appeal decision on Assets of Community Value

26th September 2018

The Court of Appeal has considered the Assets of Community Value (ACV) regime for the first time. Walker Morris reviews Banner Homes v St Albans City and District Council (1) and Verulam Residents’ Association (2) [1] and offers some practical advice for developers.

The ACV regime

The Localism Act 2011 (the Act) and the Assets of Community Value (England) Regulations 2012 (the Regulations) allow local communities to bid for land and facilities in their area, with the aim being to protect assets deemed to be of local value and importance. The regime can be summarised as follows:

• A local community group can nominate an asset.
• Provided the nominated asset satisfies the ACV definition, it should be included on the list of ACVs maintained by the local authority. It is open for the landowner to request a review of the listing at this stage, provided it acts within the statutory time-frame.
• The threshold for listing is relatively low. The local authority is simply required to have a realistic belief that (1) the building or land’s main use furthers the local community’s social interests or wellbeing; and (2) it is realistic to think this use will continue. The decision is therefore rather subjective.
• Once the ACV is listed, the next ‘trigger’ arises if/when the owner decides to either sell the freehold or grant or assign the lease (that is, if the lease is granted for at least 25 years). Then a moratorium will apply [2].
• During an initial six-week interim moratorium (the Initial Moratorium), the qualifying community group has the opportunity to express an interest in bidding for the ACV. If it does so, a six-month moratorium comes into play (which includes the Initial Moratorium) (the Moratorium). The Moratorium gives the group the opportunity to compile a bid to acquire the ACV.
• The owner is under no obligation to sell or utilise the ACV in any particular way and can also reject the group’s bid if desired. Once the Moratorium has elapsed, the owner can sell to whomever they chose.
• However if the land or facility is disposed of without compliance with the Act and Regulations, the transaction will be deemed invalid.
• Since the Act and the Regulations came into force, a wide variety of properties have been listed, ranging from car parks, hospitals, pubs, football grounds, school playing fields, bowling clubs and village halls to nature reserves, parks and, as in the recent Banner Homes case, open land.

Court of Appeal case

Banner Homes owned some undeveloped land which was bisected by public footpaths. The land was used by the public for various recreational activities.  That use, being without the landowner’s permission, constituted a trespass.  When the land was listed as an ACV, Banner contended that the “actual use” for the community’s social interests or wellbeing as defined in section 88 of the Act, must refer to lawful use. (Otherwise, Banner argued, the regime would reward the unlawful actions of the community).  The listing decision was appealed to the First-tier Tribunal, the Upper Tribunal and ultimately to the Court of Appeal.  The Court of Appeal allowed the listing to stand, explaining that Banner was asking the court to read into section 88 a “bright line rule which is neither specified in the section nor appropriate“.  The court was unwilling to do that, as to impose such a rule would mean that any unlawfulness, no matter how slight, could prevent use from qualifying, and could thereby undermine the whole ACV regime.

WM Comment and practical advice

This case is a useful reminder that, whilst the intentions behind the ACV legislation are no doubt noble, community groups can utilise the regime to put landowners and developers to additional cost and delay. Apart from the obvious financial and scheduling frustrations that can follow the imposition of the Moratorium, ACV listings can be treated as a material consideration when it comes to future planning applications and they may therefore indirectly affect or inhibit development.  The case is also a salutary warning that uncontrolled open land, in particular, is at risk.  The Court of Appeal noted that, as a consequence of the listing of this land, Banner Homes erected fences, thereby preventing public access to its land from the footpaths.  Other landowners/developers may be well-advised to do the same in order to minimise the risk of ACV nominations and to protect development potential and value.

ACV listings are just one of several risks or potential impediments to development to which uncontrolled open land is vulnerable. Others include town and village green registrations [3], trespass, adverse possession and the establishment of new public rights of way.  In the majority of cases, landowners/developers will be able to take some very straightforward, pre-emptive steps to guard against these risks.  However the most appropriate solution will differ on a case-by-case basis, depending on a variety of factors including the characteristics of the land itself and the landowner/developer’s plans.

Please contact our Banking Litigation team if you would like any strategic advice or assistance in relation to open land risk management, or if any ACV, TVG or other application is already threatening proposed development on your land.

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[1] [2018] EWCA Civ 1187
[2] The asset already has to be listed before the disposal begins. If there is subsequent listing as an ACV, the moratorium will not ‘bite’.
[3] See our earlier briefings for further information and advice.