The Regulator for Charities in England and Wales
In this section...
SMALL CHARITIES: DISPOSAL OF CHARITY LAND AND BUILDINGS
| Purpose | This guidance sets out our position regarding disposals of land and buildings owned by small charities. |
Functional responsibility
| For action | Charity Services | For information | Legal Division |
1. Applying proportionate regulation to small charities
2. Can we apply proportionality and "de minimis" or materiality principles to disposals?
Glossary of Terms used in this Guidance
Index to further related information
 |
 |
 |
| The Law | Refer to a lawyer | Refer to an accountant |
 |
 |
1. Applying proportionate regulation to small charities | |
| The aim of our proportionate approach is to give trustees much more freedom in taking straightforward but important decisions, freeing them from the need always to justify their actions to us in detail. For a full explanation of the principles involved see OG 200, Small Charities: Principles of Commission Policy. | |
| OG 54 explains the regime for disposing of land. It gives a full description of all the requirements laid down by the 1993 Act for disposals other than by way of a mortgage, which are dealt with in OG 22, Borrowing and mortgages. | |
| This guidance, however, guides caseworkers to the few passages in OG 54, that describe instances where we may eliminate the need to comply with certain requirements, although in such cases our consent will be needed. | |
|
|
2. Can we apply proportionality and "de minimis" or materiality principles to disposals? | |
| In practice, most disposals which fall within s36 of the 1993 Act do not require our consent; in these cases the trustees must comply with either s36(3) or (5), depending on the type of disposal (unless they are excluded or exempt from these requirements under s36(9) or (10)). These requirements are to ensure the trustees achieve the best terms reasonably obtainable for the disposal or, where the disposal is intended to further the objects of the charity, that the disposal is expedient in the interests of the charity. | |
| These are legal requirements and there is no scope for us to relax them for small charities. Also, just because the charity is small it does not mean that the value of the transaction for the land or buildings will be low. It is for this reason that trustees of whatever size of charity must still comply with s36. Occasionally it may appear to be simpler for a charity to obtain our consent instead of complying with these requirements. In principle our policy is to insist on charities complying with section 36(3) or (5). However, in some exceptional cases, we may eliminate the need for compliance by a small charity with some of the requirements by giving our consent to the disposal by a simple order. | |
| For example, if the cost of obtaining a surveyor's report appears to be out of all proportion to the value of the transaction we may not insist on one but we would need to make an Order to give our consent. | |
| Alternatively, where there is a problem obtaining such professional advice in some areas then advice from a non-qualified surveyor (such as an estate agent) may be sought but again we would need to make an Order to give our consent. | |
| Otherwise we should normally advise the trustees to obtain the report as required by section 36(3). | |
| In cases where the proposed disposal will be to a connected person, we would need to be satisfied that the trustees had taken reasonable steps to ensure that the connected person was paying the market rate. We can, however, take a proportionate approach so that in exceptional cases we will not insist upon production of a surveyor's report, because we will not seek the same degree of assurance or detail for a small value transaction as we would for a larger one, and be prepared to give our consent by Order. | |
| A more complete explanation of disposals of charity land and building can be found in OG 54. | |
|
|
Glossary of Terms used in this Guidance | |
| 1993 Act | |
| connected person | |
| De minimis | |
| Order | |
| trustees | |
Index to further related information
|