Charities can become ‘inadvertent’ landowners as a result of gifts and legacies, as well as through active investment. These gifts can be valuable if the land turns out to have development potential. However, holding land will not always enable a charity to profit from potential development. The expertise to promote land for the purpose of obtaining planning permission will usually need to be harnessed.
There are a number of ways in which charities can benefit from development value whilst minimising the costs and risks involved in obtaining planning permission. These include:
- entering into a ‘promotion agreement’ with a promotor, who will apply for planning permission and pay the professional fees and costs associated with doing so. Once planning permission has been obtained, the proceeds of sale will be split between the charity and promotor in pre-agreed proportions;
- granting an ‘option’ to a promotor, giving the promotor the option to purchase the land at a pre-agreed discount once planning permission has been granted; and
- entering into a conditional sale agreement, obliging the promotor to purchase the land at a pre-agreed price if planning permission is granted.
Threats and protections
Land will require active management whilst awaiting the outcome of the planning process, which can be lengthy. There are particular risks associated with open land, as public rights can be acquired through long use by the public. If significant numbers of local people use land for recreation for at least 20 years, an application can be made to the commons registration authority under the Commons Act 2006 to register the land as a ‘town or village green’. An application, if successful, is likely to impede any development, and have a devastating impact on value.
Similarly, there is a risk that a member of the public might apply to the highway authority under the Highways Act 1980 to record public rights of way over a route crossing land, if the route has been used by the public for at least 20 years. A public right of way can be established though a shorter period of use if the applicant can show an intention on the part of the landowner to dedicate the route as a highway.
Charities can protect themselves against these risks in a number of ways. These include:
- depositing a ‘statement and map’ under Section 15A Commons Act 2006 with the commons registration authority and Section 31(6) Highways Act 1980 with the appropriate council to stop time running against the landowner and bring qualifying use by the public to an end. However, this will not assist a landowner where 20 years qualifying use has already accrued, and may precipitate an application. Where a statement and map is deposited with the commons registration authority, a member of the public must make an application to register the land as a green within one year of the deposit;
- actively managing the land to prevent physical public use of it. Use of the land by the public will only qualify for the purpose of an application if it is of a particular character: the use must be ‘without force, secrecy or permission’. Access which involves removing physical obstacles to entry or passage does not count as qualifying use;
- prohibiting access by erecting appropriate signs. Contentious use will not qualify for the purpose of an application;
- permitting access to particular groups. Any use by groups accessing land pursuant to a permission is not qualifying use;
- using the land in such a way so as to interrupt use by the public or in a way which is inconsistent with their use (for example, actively farming the land); and
- making an application for planning permission, which is one of a number of events specified on Schedule 1A Commons Act 2006, which suspends the right to apply to register land as a green.
Charities are alive to the need to manage the reputational risks of taking these steps, whilst acting in their charity’s best interest and maximising the value of its assets.
If an application is made to register public rights, it is important to investigate the history of the land use and assess the merits of the application at an early stage.
