Raising a glass to Assets of Community Value

20th April 2015

The Localism Act 2011 (the Act) and the Assets of Community Value (England) Regulations 2012 (the Regulations) came into force on 21 September 2012, bringing with them the right for local communities to bid for land and facilities in their area – the aim being to protect assets deemed to be of local value and importance. At the time, the regime raised widespread concerns regarding its potentially negative impact on the construction and development industries. Would ACVs become the ‘new’ Town and Village Greens? Would they create delays? Would they unnecessarily stall development? Over two years on, and following recent legislative changes, Walker Morris’ Richard Sagar considers whether we should be ‘raising a glass’ or drowning our sorrows at the mention of ACVs.

The ‘basics’ of ACVs

The ACV listing process can be summarised as follows:

• A qualifying community group can nominate an asset. The group must have a local connection to fulfil the criteria, but can include a variety of voluntary or community organisations.
• Provided the nominated asset satisfies the ACV definition and has been nominated by the group, it should be included on the list of ACVs maintained by the local authority. It is open for the owner to request a review of the listing at this stage, provided (s)he acts within the statutory time-frame.
• The threshold for listing is relatively low. The local authority is simply required to have a realistic belief/understanding 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.
• 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. The asset already has to be listed before the disposal begins. If there is subsequent listing as an ACV, the moratorium will not ‘bite’.
• During an initial six-week interim moratorium (the Interim 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, subject to the process detailed in the Regulations.
• The owner is under no obligation to sell or utilise the ACV in a particular way during the period of ownership. The owner can also reject the group’s bid if desired. Once the Moratorium has elapsed, (s)he can sell to whoever they chose.
• However if the land or facility is disposed of without compliance with the Act and Regulations, the transaction will be deemed invalid.

Listings in practice

The successful listing of a building or land depends on whether, “in the opinion” of the local authority, the asset meets the statutory criteria in section 88 of the Act. The decision is therefore rather subjective.

The recent case of Evenden Estates v Brighton and Hove City Council [1] confirmed the relatively low threshold required for a nomination to be successful. Evenden Estates had submitted an application for conversion of a public house to residential accommodation. The First Tier Tribunal found that, as the application had not been determined, the tavern’s future was simply “uncertain”. A relevant community use in the next five years was therefore realistic. Something would inevitably have to be done with the property and to put it on the market for sale would not be fanciful. The tavern would most likely not be left standing idle, so to sell as a public house or for another ‘social interest’ use were alternative possibilities that were not unrealistic. This was despite Evenden Estates’ arguments that (1) trading figures had been low and (2) the community group did not necessarily have the funds to purchase the tavern.

A proliferation of such decisions in recent years has given encouragement to action groups looking to preserve assets in the face of development and bring local properties, such as public houses, back into community use. In addition, a significant loophole exists regarding re-nomination. The Act and Regulations do not specifically prohibit re-nomination or limit the number of times a building / piece of land can be nominated after an initial unsuccessful application. While some authorities have seemingly introduced their own limitations, others inevitably dedicate resource to handling subsequent nominations where there has been no material change which would warrant altering the initial listing decision.

The Commons investigates

Since its introduction, the ACV regime has had varied up-take and elicited mixed responses. During summer 2014 a Commons select committee was tasked with investigating the operation of community rights, to consider communities’ use of the powers and examine the legislation’s efficacy. The committee published its report in early 2015 (the Report). The Report highlights that over 1,800 assets have been listed since introduction of the right in 2012, including (amongst other things) community centres, playing fields, churches, allotments, sports-grounds, parks and various public spaces, and a post office. Over 500 of those listed comprise public houses, with the subject of the first successful acquisition in fact being The Ivy House pub, Nunhead. Leeds City Council currently has fifteen listings, including a former library, three allotments, a cricket club and four public houses.

The Report concludes that the regime has had some ‘success’, with the initial listing phase serving to “bring[s] people together and give[s] them the opportunity to have a say in what happens to valued pubs, shops or community centres if they are put up for sale”. However, the Report also emphasises the high number of listings challenged via review or appeal. For example, nine out of the eleven appeals concerning pubs having been successful. In addition, almost fifty percent of bids to purchase the ACV do not complete.

In light of this, the Report suggested a number of reforms. The key recommendations were to:

• change permitted development (PD) rights applicable to ACVs;
• make ACV-status a material consideration in planning applications;
• increase the Moratorium to nine months;
• immediately end the Moratorium if a community bid has been abandoned;
• give nominators the right to appeal if a local authority decides not to list an asset; and
• make sales as a going concern subject to the Moratorium.

Permitted development rights for ACVs

PD rights allow for certain development, alterations and change of use without a full planning application being made. For example, there can be a change of use on this basis from a drinking establishment/public house (Class A4) to a shop (Class A1) or restaurant and cafe (Class A3). In May 2013, a range of time-limited PD rights were also introduced. This expanded the PD rights available, allowing for temporary change of use subject to certain conditions. This particularly gave additional situations in which it became possible to convert a drinking establishment.

The Report recommended the removal of demolition rights and PD rights for land/buildings listed as ACVs, limiting the possibility for change of use. The suggestion seems to partly have been fuelled by public concerns regarding the high occurrence of pub closures and conversions of drinking establishments to convenience food-stores. The change was proposed as the way for the Government to protect public houses and other ACVs, without unduly preserving those which are simply unviable.

The General Permitted Development (Amendment) (England) Order 2015 was subsequently passed through Parliament, coming into force on 6 April 2015. This does not remove PD rights for all ACVs. However, it confirms the following changes:

• The Government has disapplied the national PD rights for change of use or demolition of Class A4 (drinking establishments) for those formally listed as an ACV. There cannot be:
  • automatic change to Class A1 (shops), A2 (financial and professional services), A3 (restaurants and cafes);
  • temporary change for two years to A1, A2, A3 or B1 (business); or
  • demolition.
• A planning application will therefore now be required for the above. Disapplication of the PD rights is for a period of five years, unless the local authority removes the building from the ACV list after a successful review/appeal or as it is no longer considered to have community value.
• For any drinking establishment not listed, the developer must obtain the local planning authority’s (LPA) confirmation that it has not been nominated for listing before any change of use or demolition can take place.
• If there has been a nomination, the PD rights will be disapplied for 56 days from the request-date. During the time the nomination is being considered, local people will be able to comment on the proposals. If the asset is not nominated, the proposed work can take place – provided it does so within one year from the request- -date.
• The past few years have seen a proliferation of ACV-listing applications made by local groups in respect of public houses, often thwarting or at least delaying owners/developers wishing to close or develop the property.

In light of the recent change, it seems likely an even higher number of groups will seek to list public houses as ACVs simply to prevent a change of use or hinder development applications.

Consideration of ACVs in the planning process

If a building or land is included on a local authority’s ACV list, it remains on the list for five years. When an LPA then considers planning applications in its area it is “open to the LPA to decide whether listing an asset of community value is a material consideration”. The fact an asset is listed therefore may or may not be a significant factor in the balance when the LPA considers applications.

This is also the case when ACV-status is considered in the planning appeal process. For example, in a recent appeal against refusal for a north London scheme of 53 apartments, replacement pub and community uses, Inspector Brendan Lyons found the loss of the ACV-listed pub did not justify refusal. A replacement pub could potentially meet the local community’s needs. In any event though, the harm to surrounding heritage assets and conservation area-setting was enough for the scheme to ultimately be rejected.

This situation creates inconsistencies and uncertainty for all involved, be it nominators, landowners, developers or the local authority. A key recommendation in the Report was that DCLG’s non-statutory guidance should be amended so an ACV listing is always a material consideration for LPAs on planning applications (except applications for minor works). This would come in addition to the National Planning Policy Framework’s (the NPPF) existing focus on the need to avoid unnecessary loss of valued community assets (NPPF, Paragraph 70). The NPPF directs that planning decisions and policies should positively plan for the provision and use of shared facilities, community spaces and local services, so residential environments and communities are enhanced.

In its subsequent response to the Report, the Government dismisses the need for any such amendments to its guidance. If progressed, LPAs would no longer be able to exercise discretion as to whether an ACV listing should be a material consideration. This could significantly inhibit an LPA’s ability to respond on a case-by-case basis, taking individual circumstances into account for each permission application. A ‘dubious’ listing could in turn thwart development, even if the ACV’s ongoing operation as a community facility was not realistically viable.

Additional changes

The Government has also not accepted the committee’s recommendations regarding extension of the Moratorium; brining an immediate end to the Moratorium if a bid is abandoned; or the need for changes where the ACV is a going concern. However, it is to “consider” giving nominators the ability to appeal a listing decision. For local authorities this could mean they face an appeal of every unsuccessful listing decision, bringing increased burdens on time and monetary resources. There will also inevitably be instances where an appeal will be pursued by nominators, even when the outcome will be the same.

A further review of community rights has been promised for later in the year.

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[1] [2015] (24 March 2015)