All charities have to follow rules for managing transactions involving the disposal of an interest in land eg selling or leasing. These rules are to make sure that the charity’s financial interests are protected and that the services it provides to its users are able to continue, as far as possible.
Many charity transactions involving a disposal of an interest in land do not require our authority. However, all trustees have a legal duty of care towards their charities. We strongly recommend that trustees should consider properly all reasonable options when making decisions that will have a significant effect on charity land and its use. Our general guidance on dealing with property explains when our authority is required and highlights issues to consider when selling or buying land.
Specific issues for local authorities which are charity trustees
1. Conflicts of interests
Local authorities also have to manage the conflicts of interest that can arise because of the different 'hats' they may be wearing - for example, as land-holding charity trustees, as the provider of statutory amenities, and as planning authorities.
2. Consulting the local community
Where a local authority is the trustee of charity land, there is often another important factor to take into account - the voice of local inhabitants. This is because the land is often a facility intended for local community use eg a recreation ground or public building. Proposals for a major change in the way the land is used, or for the sale or lease of a significant part, or all, of the land, will have an impact on its use by the public. There are likely to be strong local views.
We encourage trustees to review their charity's purposes regularly to check that they are still relevant to the needs of its users. A local authority as a charity trustee is entitled to consider the suitability and the viability of the charitable property it manages, and to make proposals for the future of charity land and other assets.
However, we know from our casework that, if such proposals are not managed carefully, they can create problems for the local authority, including financial loss and reputational risk.
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