Charity trustees have a general duty to act in the best interests of their charity. This general duty has been supplemented by legislation, and in respect of disposals of land by non-exempt charities, by ss117-121 Charities Act 2011. ‘Disposals’ of land held by or in trust for a charity include sales, leases, surrenders and the grant of easements. Before entering into a binding agreement for a disposal the trustees of the charity are to consider the written advice of a qualified surveyor acting for the charity and decide they are satisfied, having considered their advice, that the disposal is in the best interests of the charity. Regulations (Charities (Qualified Surveyors’ Reports) Regulations 1992) govern the scope and form of the surveyor’s report. The 1992 Regulations are prescriptive and, among other categories, require opinions on the value of the asset and the marketing strategy. Transactions that proceed without the proper advice having been followed are vulnerable to being rendered void.

A Law Commission Report published in 2017 considering ‘Technical Issues in Charity Law’ [1]commented on the need to ‘reduce unnecessary bureaucracy’ and looked to improve red tape which ‘hampers charities’ day to day activities.’ This included examining whether, in all cases, disposals by non-exempt charities should be preceded by a surveyor’s report complying with the 1992 Regulations. Examples of areas of concern given in the Report included where the cost of the report was disproportionate to the value of the transaction, or where land rich charities making a number of disposals in a year face bearing the costs of multiple reports where the risk of selling at an undervalue was minimal.

Part 2 of the Charities Act 2022, which comes into force in June 2023, does not dispense with the need for a report, but has tweaked the wording of the provision requiring the advice of a ‘qualified surveyor[2]’ so the advice can now be given by a ‘designated adviser.’ The adviser can be a charity trustee or an officer or employee of the charity. The Law Commission report did not go so far as to recommend that the adviser could be anyone whom the charity considered could give the appropriate advice and has instead suggested extending the pool of advisers to include fellows from the National Association of Estate Agents and fellows of the Central Association of Agricultural Valuers. The report no longer needs to be as prescriptive, although new regulations are expected which should clarify the scope.

Shorter leases (7 years or less) are still treated differently and although advice must be sought prior to a binding contract being entered into, the adviser need only be ‘a person who is reasonably believed by the trustees to have the requisite ability and practical experience to provide them with competent advice on the proposed disposition.[3]’ There are no requirements for the adviser to have any surveying qualifications.

Other tweaks to the 2011 legislation include clarifying that the disposition restrictions only apply where the charity is the sole owner of the land and there is no longer a statutory requirement for the charity to advertise the proposed disposal for the period recommended in the surveyor’s report. The legislation now requires prescribed wording to be included in any contract for the disposition of land (if there is one) in order to protect purchasers against a charity’s failure to comply with Part 7 of the Charities Act before entering into that contract.

It will be interesting to see what, if any, impact the ‘relaxation’ in the qualifications of the pool of advisers has on property transactions agreed by charity trustees. Some may still prefer the safety net of a RICs qualified surveyor to safeguard against any suggestions that they have made a bad deal. Others may feel liberated at being able to proceed with low value transactions without the added cost of a surveyor’s report.

[1] Law Commission Report 2017

[2] 119 (1) (a) of the Charities Act 2011

[3] S120(2)(a) Charities Act 2011