Charities and Property
Successive Charities Acts have relaxed the restrictions upon the sale of land by charities. The Charities Act 1992 introduced provisions that were repeated in the 1993 Act to enable a charity to sell or mortgage land or to grant leases without an order from the Charity Commission provided that it complies with the procedure set out in the Act.
Charities now have much more freedom to deal with their land but the statutory procedure cannot always be used and can be difficult to apply to more complex land transactions.
Charities must consider
- Is the transaction within the powers of the trustees?
- Is the land is investment property, land that is required to be held for the purposes of the charity or permanent endowment?
- Is the sale is to a "connected person", which would require an order of the Charity Commission?
- Whether the statutory procedure can be used and if so ensure that it is followed
- If the transaction is complex, could the charity be trading?
Taxation and planning may also be an issue; VAT and Stamp Duty Land Tax in particular must be considered. Mortgages of land must also follow a statutory procedure.
The acquisition of land is less regulated but the trustees must nevertheless ensure that they have complied with the duties imposed on charity trustees by the general law.
Our charity law team works closely with our specialist property lawyers in any land transaction involving a charity to ensure that the transaction is fully compliant with charity law and takes account of all the issues relevant to a charity.
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