On 24 February 2022, the Charities Act 2022 (the Act) received royal assent and became law.  The Charity Commission has described this as “a moment for celebration” and say that the Act will help charity trustees “maximise the benefits their charity delivers”.

The Act has been eagerly anticipated by charities, as it seeks to implement many (but not all) of the recommendations made in the Law Commission’s 2017 report, ‘Technical issues in charity law’ (you can read the report here). The changes will be welcome for charities who are looking to sell or grant leases of their properties.

Of particular significance is the Act’s intention to simplify the process when charities wish to dispose of property. To achieve this, the Act has modified the requirement for the selling charity to obtain a “Qualified Surveyor’s Report” under the sections 117 and 119 of the Charities Act 2011. This is a detailed surveyors’ report advising on a series of factors relating to the property and the transaction. A Report is required on any disposal of charity property, except for the grant of a lease for a term of less than seven years.

Under the old law, the “Qualified Surveyor’s Report” had to be prepared as early as possible in the transaction by a RICS-qualified surveyor with experience in valuing properties of the kind that the charity intends to sell. The Report had to be detailed provide information on nine separate “advice points” prescribed by The Charities (Qualified Surveyors’ Reports) Regulations 1992. 

The Act simplifies these requirements, by allowing charities to obtain advice from a wider range of advisors (not just RICS-qualified surveyors). In appropriate circumstances where the charity has a suitably qualified trustee on its board of trustees, then that trustee could provide the advice without needing to seek external input.  Of course, if a member of the board of trustees chooses to provide the advice then they must bear in mind their duties as a trustee and they must be very sure of that the advice they are is correct and appropriate.

The criteria to be satisfied by the advice will also be simplified by the Act as it will only need to cover four matters, being the adviser’s opinion as to the property’s market value and any work that could be done to improve the sale price, the degree of marketing suitable for the property and any other information that is relevant.  The advice need only be proportionate to the size of the transaction itself.

It should be noted, however, that the Act has not implemented all of the Law Commission’s 2017 recommendations. For example, the arguably cumbersome requirements of section 121 of the Charities Act 2011 (obliging charities to publicly advertise proposed sales or lettings of land and consider representations made in respect of that land before completing the sale or letting) still remain, despite calls for these requirements to be scrapped.

By reducing and simplifying the criteria that the advice must contain and widening the pool of individuals that could provide the advice, the Act hopes to reduce the costs and time involved for charities in property sales.