The ABCs of ACVs

A cautionary tale

As of eight weeks ago, visitors to Maida Vale have one less pub to drink in. That’s because in April, overzealous developers bulldozed The Carlton Tavern public house to the ground.  Local residents can breathe a sigh of relief, however, for the pub is going to be rebuilt brick by brick – such is the punishment meted out to the developers for bulldozing the pub in violation of planning rules. View the report on the BBC website. 

The rules on disposing of certain types of land and property known as “assets of community value” have changed recently (which may help explain where the developers who razed The Carlton Tavern went so wrong.)  What’s more, there may be further changes in the pipeline. So with the cautionary tale of The Carlton Tavern in mind, what are the key points property professionals need to know about assets of community value “(ACVs”)?

The birth of ACVs

ACVs are a relatively new creature in property law. Created by the Localism Act 2011, the title of ACV is given to certain land/buildings in order to restrict the owner’s ability to dispose of them without local community groups first having a chance to bid to buy them.

Section 88 of the Localism Act 2011 stipulates that something can be registered as an ACV by a local authority if:

1. Its use furthers community benefit and it is realistic to think that there can continue to be such use in the future; or
2. In the recent past its use furthered community benefit and it is realistic to think that there can be such use in the future.

How the ACV regime operates

Where the local authority accepts a piece of land or building onto its list of ACVs, the owner cannot dispose of it without first giving notice of their intention to the local authority. There is then a six week moratorium so that local community groups (such as local charities) can decide whether to express an interest in purchasing the ACV. 

If no local group expresses an interest in being a potential bidder for the ACV during the six week moratorium, the owner can dispose of the ACV as planned.

On the other hand, if a local group does express interest, the moratorium is extended to six months, during which time the local group can organise itself and arrange to make a bid for the ACV. At the end of the moratorium, the local group can make its bid. The owner is under no obligation to accept though, and only a few ACVs have successfully been bought by local community groups so far.

What sorts of transaction are caught

The owner of a listed ACV is not prevented from making absolutely any disposal of their land; the only disposals which are subject to the ACV regime are:

1. Disposals with vacant possession of the freehold.
2. The grant of a lease for 25 years or more.
3. The assignment of a lease whose original term was 25 years or more.
4. A contract for any of the above.

The Localism Act 2011 excludes certain disposals even if they fall within one of the above categories e.g. gifts are excluded from the ACV regime, as are distributions by personal representatives.

Who can nominate something to be an ACV

A parish council in England (or community council in Wales) can nominate something to be an ACV, as can a voluntary or community body with a local connection.

Who can bid to purchase an ACV

Bids can be made by a parish council in England (or a community council in Wales), a charity with a local connection, a company limited by guarantee which has a local connection, or a community interest company with a local connection.

Reviews and appeals

As can be seen, the listing of something as an ACV limits the owner’s ability to dispose of it.  Aggrieved owners have 28 days to request a review of the local authority’s decision. If they are unhappy with the outcome of the review, they can appeal to the First Tier Tribunal (General Regulatory Chamber) which will conduct a rehearing of the decision to list the property as an ACV.

Where a local authority refuses the request of a local group to register a piece of property as an ACV, there is no mechanism in the legislation for a review or appeal of that decision. It would appear that the only remedy is to seek judicial review of the decision.

Watch this space: changes ahead

The House of Commons Communities and Local Government Select Committee has made a number of recommendations for changes to the ACV regime, including:

1. Extending the moratorium period from six months to nine months (intended to give a greater opportunity to more disadvantaged communities where organising a bid may take longer).
2. Giving a right of appeal to local groups whose request for property to be listed as an ACV is refused.
3. Making more funding available to assist local community groups with bids for ACVs.

The special case of pubs

Drinking establishments enjoy special protection under the law: if a drinking establishment is listed as an ACV, it cannot be demolished or have its use changed. 

The Town and Country Planning (General Permitted Development) (Amendment) (England) Order 2015 (“the 2015 Order”) provides a blanket approval for certain works and changes of use for property. This blanket approval is known as the Permitted Development Rights regime.  Drinking establishments which have been listed as an ACV are specifically excluded from the regime.

However even if a drinking establishment is not listed as an ACV, any developer is legally required under the 2015 Order (which came into force on 16 April 2015) to contact the local authority to find out whether the establishment has been nominated to be an ACV.  The developer cannot carry out any works for 56 days following their contact with the local authority.

It was this latter procedure that the developers who bulldozed The Carlton Tavern failed to go through (under the predecessor to the 2015 Order: a statutory instrument which came into force on 6 April 2015 and was repealed by the 2015 Order 10 days later).  Their mistake has proven extremely costly, with the developers being ordered to rebuild the demolished pub in its entirety. 

The fast-changing nature of the law on ACVs makes it a tricky area to navigate and it looks like further change is not far in the future.  But by keeping a careful eye on the latest legislative developments, property professionals can avoid falling foul of the rules and joining The Carlton Tavern as a well-publicised example of what happens when property developers get it wrong.