Community Rights - Communities and Local Government Committee Contents

Conclusions and recommendations

The Community Right to Bid: the start of the process

1.  The Community Right to Bid process has achieved some success because the first phase, listing local land or property as an Asset of Community Value (ACV), is relatively straightforward. It brings people together and gives them the opportunity to have a say in what happens to valued pubs, shops or community centres if they are put up for sale. But if, as it appears, almost 50% of attempts to buy ACVs are unsuccessful, there must be scope for enhancing people's chances of success with the second and most important—bidding—phase of the Right. (Paragraph 7)

2.  Community groups need to register prized local buildings and land as Assets of Community Value before they are sold. If they do, they will have the opportunity to bid for assets if they are then put up for sale. That is one way of potentially preventing such assets being acquired by developers and converted to other uses or demolished. To protect valued community facilities in this way, local people need to be more aware of the Community Rights, including the Right to Bid. We discuss in chapter 6 how awareness might be improved. (Paragraph 10)

The Community Right to Bid: permitted development

3.  The Government has consistently said that removing permitted development (PD) rights in respect of change of use from all pubs would amount to a disproportionate change in planning regulations that could blight town centres and prevent development. Removing PD rights from only the relatively small number of assets listed as Assets of Community Value (ACVs) would not be disproportionate, however, and their ACV listing would suggest they may have a viable future under community ownership. In our view what does appear disproportionate is to require local people and local authorities to nominate and list an asset as an ACV and then to go through an Article 4 direction process to remove PD rights from that same asset. It would be more efficient to integrate the Article 4 process into the ACV process. We recommend that the Government consult on removing PD rights in respect of change of use from ACVs for the duration of the listing or for five years, whichever is the longer. The issue of any compensation for owners should also be considered. (Paragraph 12)

4.  The Government has not been amenable to the automatic removal of PD rights from ACVs. It prefers the targeted use of Article 4 directions to remove PD rights from specific buildings. To underpin this approach, however, local authorities need more reassurance that imposing an Article 4 direction will not mean costly compensation payments to affected property owners. If the Government's preferred approach to the removal of PD rights continues to be the use of Article 4 directions, we recommend that it consider establishing a fund—similar to that for compensation payments relating to properties listed as ACVs—for compensation claims in relation to Article 4 directions. (Paragraph 14)

The Community Right to Bid: planning applications

5.  Community groups, developers and property owners would welcome greater certainty about the status accorded to ACV listing when planning authorities are considering planning applications. If developers knew ACV status would be considered, they would have greater certainty about the process that might take place after they had acquired an ACV and submitted a planning application for change of use. Equally, such certainty would provide community groups with the knowledge that registration provided them with a further potential protection against what they saw as unwanted development. Obliging local authorities to consider ACV status would not mean the inevitable refusal of planning permission, and ACV status should not be a mandatory material consideration in applications for minor changes to property. We recommend that the Government, as part of its review of Community Rights later in 2015, consult on a proposal to amend its guidance so that ACV listing is a material consideration for local authorities in all planning applications other than those for minor works. (Paragraph 16)

The Community Right to Bid: moratorium

6.  Bidding for an Asset of Community Value (ACV) is a complicated process requiring time, organisation, effort and resources to put together business plans and find funding. This burden may have a particular impact on disadvantaged communities, whom the Government, rightly, wants to target to make the Rights more accessible. Extending the moratorium on a sale to nine months would strike a better balance between the rights of the community and of property owners. Owners would still be entitled to lodge a compensation claim for any loss they believed they had incurred due to a delay in the sale. We recommend that the Government extend the moratorium on the sale of an ACV to nine months. (Paragraph 20)

7.  If it becomes clear during the moratorium that a community group bid has been abandoned, it should be possible to end the moratorium immediately so the owner can proceed with the sale. This will ensure owners do not incur any unnecessary delay in selling their asset, and local authorities are not subject to excessive compensation claims due to unwarranted delays in sales. We recommend that the Government ensure the moratorium on a sale can be brought to an immediate end if a community group bid has been abandoned. (Paragraph 22)

8.  Determining the market price for an asset without putting it on the open market is problematic. A property can be valued, but it is always an estimate, and owners have a right to achieve the selling price they want by testing the market. In our view an extension to the sales moratorium to give communities greater opportunity to raise money to bid against a commercial competitor or developer is sufficient. Communities might also seek to achieve preferred-bidder status with the property owner so that, as long they are not outbid, they have first refusal on an asset—and, in effect, a proxy for a right to buy. (Paragraph 24)

The Community Right to Bid: right of appeal

9.  Owners have the right to ask a local authority to review its decision to list their property as an Asset of Community Value (ACV) and, if necessary, the right to appeal against that review to the First-tier Tribunal Property Chamber (Residential Property). If a community group wishes to challenge their council's decision not to list an asset, the best course, where new and material information comes to light, is to submit a fresh application for nomination. If new evidence comes to light or the situation materially changes all groups should be able to re-nominate immediately. If they wish to challenge a decision, however, including if they believe the authority has not applied the statutory test correctly, they should be able to appeal to an independent tribunal. We recommend that the Government consult on (i) allowing for immediate re-nomination where new and material information arises and (ii) the introduction of a nominator's right to appeal against a local authority's decision not to list an asset as an ACV. (Paragraph 26)

The Community Right to Bid: sale as 'going concern'

10.  We recommend that the Government, as part of its review of Community Rights later in 2015, bring forward proposals to close the loophole in the current legislation which allows an Asset of Community Value to be sold as a going concern when the buyer has no intention of retaining it in its current use. (Paragraph 28)

The Community Right to Bid: nature of support for communities

11.  Communities will continue to require support as they seek to acquire Assets of Community Value from community and private owners, and from public bodies in areas of high land value. But public bodies facing spending reductions, or those in areas with lower land values, may look voluntarily to transfer more public assets to local people. If more community groups are offered assets, more support may be required to ensure they have sound business plans in place and are aware of the costs of running the asset. If, as a result of that process, the group decides it is not equipped or the asset is in fact a liability, the time and money should not be considered wasted; it may in fact prevent waste. Resources should be directed at preparation for transfer and prevention of problems, but there may also be a case for setting aside a small amount as a safety net for groups struggling to maintain community assets. We recommend that Government consider whether a greater proportion of overall funding to support Community Rights be directed to ensure local people are adequately prepared to take on the public assets they are offered. (Paragraph 32)

The Community Right to Build

12.  The Community Right to Build is clearly not the most popular way of starting a community-led housing project. It has been described as complicated, adversarial and risky, and, based on funding applications, it appears that nine times as many groups opt to apply for planning permission as choose to use the Right to Build process. The referendum requirement also seems disproportionate to the scale of development. It is difficult to see any significant benefits to its retention in its current format. We consider that it would be better to incorporate the Right to Build process into the larger-scale Neighbourhood Plan process and referendum. (Paragraph 37)

13.  Community-led housing groups need a more straightforward means of starting their projects with funding at the start, in order to prepare their business plans and financial models and to secure an interest in property. They do not emerge as fully fledged organisations that require funds simply to secure a Right to Build Order or planning permission. In short, funding is needed to build capacity and skills. Local people also need support, primarily from housing associations, to work out which way of developing their project is right for them, rather than being directed down a complex path, such as the Right to Build. We recommend that the Government reconsider its approach to community-led housing, focusing on funding that enables communities, in conjunction with local partners such as housing associations, to build their capacities and skills, and to choose the means that is right for them for developing community-led projects. (Paragraph 40)

14.  We recommend that Government reconsider, as part of its appraisal of the Community Right to Build in 2015, how community-led housing groups access capital funding. Whatever way local people choose to pursue housing and other projects, there needs to be a more straightforward process for them either to access capital funding directly themselves or to work in partnership with housing associations to access funding. (Paragraph 42)

The Community Right to Challenge

15.  Community groups have not taken up the Community Right to Challenge in significant numbers. This may not necessarily mean the Right is not fit for purpose, as in certain cases it may have prompted communities and local authorities to enter into constructive discussions and working arrangements that, prior to the Right's introduction, might not have occurred. It is unclear what has happened to those groups that have received financial assistance, and to the majority of those that made expressions of interest (EOI). An analysis of what stage they have reached, including whether the EOIs have been successful and if not, why not, would no doubt be useful in helping to understand the effectiveness of the Right. Other groups have been put off using the Right in the first place, however, because of its adversarial connotations or because of the resultant procurement process, which can pit community groups against larger, more established service providers. We recommend that the Government find out what has happened to groups receiving capacity-building assistance and to those that have made EOIs under the Right to Challenge process. (Paragraph 46)

16.  The adversarial elements of this Right could be diluted if it were rebadged as something other than a Right to Challenge, though without the removal of the right to trigger a tendering exercise for local services. We are not convinced that communities require a formal right to design services. This should happen as a result of a community group's discussions with its local authority or, if this is ineffective, as a result of raising the prospect of expressing an interest in tendering for a service. Recourse to the Right should not be the first step. Instead, local authority procurement processes need to change. Specifically, commissioning services need to involve the community more as a matter of routine. An extension of the Social Value Act might allow for this. Certain services might also be reserved for, or made more accessible to, smaller organisations, using EU procurement rules or the Request for Quote model suggested by witnesses. Ultimately this might result in more successful bids by community groups, using either more responsive commissioning processes or through a revamped Right to tender for local authority services. We recommend that the Government work with local authority commissioners of services to involve communities routinely in the design of services; consider whether certain services might be reserved for community enterprises using either a normal tendering route or a Community Right process; and rename the Right to Challenge in order to reduce the perception that it is confrontational. (Paragraph 50)

The Community Right to Reclaim Land

17.  The disposal at less than market value of taxpayer-funded assets raises wider issues than we cover in this inquiry—for example, the structure of the body owning the land after disposal and the obligations on that body in how it uses the land. In the medium term it may be that the Right to Reclaim Land needs to be reconfigured so that a community group can demand or request that the public body dispose of it as a discounted asset transfer. But for now this may be premature. Publicising and encouraging asset transfer would be a more consensual first step than moving straight to a right to demand the transfer of land at below market value. Community groups also need a clearer idea of what unused and underused land is, and of the land public bodies own. Additionally, as with the Rights to Bid and to Challenge, some follow-up work to track the fate of applications not under consideration would help the Government understand the effectiveness of this Right. We recommend that the Government, as part of its review of Community Rights later in 2015, issue draft guidance on what constitutes unused or underused land, and consider how to improve access to information on public landholdings. It should also analyse the applications that have been made to determine what has happened to them, and why. (Paragraph 56)

Future community engagement

18.  The Government has more than two years' worth of experience to draw on as it plans the next phase of the Community Rights programme. Witnesses to our inquiry, with first-hand experience of the Rights, have provided a range of proposals on how to build on these first steps and improve people's awareness and use of the powers. Recent announcements from the Government, for example on funding member organisations and trialling new means of community engagement, suggest it is moving in the same direction. We urge it to continue on this path. We recommend the Government seek in 2015 to improve public awareness and use of the Community Rights in the following ways. First, the focus should be on what communities want to achieve, not a prescribed route they have to take. Second, there should be further investment, similar to that which the Government has provided to the Plunkett Foundation, to enable effective community group member organisations to support local people. Third, there should be investment in community group capacity, particularly in deprived areas, with new forms of community engagement that eventually should lead to communities being able to use the existing Rights themselves. (Paragraph 62)

19.  We see a good case for improved information on the take-up of Community Rights. If the Government undertakes a strategic data-gathering exercise on how Community Rights that have seen some take-up are being used, it should be able to target its resources at certain groups and areas and start to understand the reasons why some groups have succeeded and others have not. We recommend that the Government, as part of its review of the Community Rights later in 2015, propose that a basic level of data be retained by all local authorities on take-up of Community Rights. The Government should then periodically analyse that data, first, to understand which groups are using the Rights, why those that do ultimately succeed or fail, and how the Rights might be reformed; and, second, to target resources more effectively, in order to improve take-up of the Community Rights. (Paragraph 65)

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Prepared 3 February 2015