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A developer's home is the community's castle

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On the 21st of September 2012 a part of the Localism Act 2011 was brought into force which was designed to further empower communities so they can have a greater say and involvement in what happens within their community. The consequence of this Act in practice means that developers who fail to consider the purpose the land once had could discover that their investment is not what it first seems.

Under section 87 of Localism Act local authorities are required to maintain a list of public and private assets which are deemed to be of community value. Section 95 states that when any property included on the list is up for disposal the community is given the opportunity over 6 months to develop a bid and raise capital to potentially buy the asset. This right to bid was brought into being with great fan fair with many commentators suggesting that the Localism Act allows communities to save the last pub in the village.

The right to bid was unsurprisingly met with great approval from the public with the perception that everyone would be a winner. The local community if they wanted to have greater involvement in the running of a community asset would be placed on a more equal footing with a commercial purchaser. Equally the seller of the community asset would be able to say that his business has excellent goodwill, a strong customer base and he has even more prospective purchasers.

Community’s Right to Bid

The community’s right to bid is approaching 2 years since it has been in force. A number of cases have focused on the properties being listed as a community asset in the first place. In cases such as Spirit Pub Co. Ltd v Rushmoor BC (Cr/2013/0003) and M Patel v LB Hackney (CR/2013/0005) the owners contested that their pubs should not be included on the list of community assets as it was unrealistic to think that the premises would be used as a pub in the next 5 years. In both cases the pubs had already been closed and the communtiy sought to have the pub listed as a community asset when they discovered that the owners were going to redevelop the premises into residential housing or a fast food restaurant.

As the owners were seeking to change the purpose of the property having the pubs listed as a community asset for the next 5 years would obviously be financially disastrous. With these cases the developers discovered that the Localism Act not only empowered the community but the Council. In listing the premises as a community asset when the property was no longer being used the Council did not have to show that the community had a robust business plan in place or that on the balance of probabilities it would once again be used as a community asset. Under the legislation the Council need only show that the future use for the Community was a realistic one.

Recent past can be 10 to 20 years

In cases where the property is no longer in use the Council must show that in the recent past the premises furthered the social well-being or interests of the community. The recent past is not simply a set period of weeks or months but is rather a determination of relevance according to the properties usage. The High Court¹ has confirmed that the term recent past is primarily a decision for the Council and it did not take issue with The Department for Communities and Local Government policy guideline which suggested that recent past for land cases can be as long ago as 10 or 20 years.

Considering the standard the Council must reach in determining what constitutes an asset of community value and what constitutes recent past, The Localism Act can be used by Councils to bolster their Local Planning Policy. In addition to this if a Community group were to nominate a property or parcel of land for listing as a community asset under section 89 of the Act the Council may be forced to take action under the Localism Act even if they were first inclined to give the developer planning permission.

This should in turn serve as a warning to any established or would be developer who in light of the current economic climate is considering purchasing and developing a disused public house, community centre or other premises or land that has in the past being used by the community for social or recreational purposes. With the continued reduction of suitable land to develop into residential properties coupled with the pressures for more housing greater numbers of developers may discover that their most recent purchase has been to the benefit of the community rather than them.