Valuation and management of Charities’ Estates - 2023 Update

Real Estate is an important consideration for many charities.?It can be the reason that the charity exists or the mechanism through which a charity delivers its aims and objectives.?Many charities also receive property by way of bequest, to sell or hold as an investment.?No matter why real estate is held, it is important that decisions regarding its management are carefully considered and legal, as they can have long-term implications for the sustainability of a charity.

Trustees and Officers must comply with the Charities Act 2022 when dealing with property.?This paper will help guide you in those decisions and to create new income streams for your particular Charity, as well as comply with the law.

Review the Estate to identify Value opportunities?

Many charities have held their estate for decades, with a focus on delivering their charitable aims.?However, with the squeeze on incomes and/or an aspiration to provide more services, Skinner Holden have helped many charities to review both their core holdings and legacies, to identify and enable projects such as cafes, visitor centres, rural industrial and craft uses to progress.

We have identified where properties have been under rented or better used in a different way.?Reputational risk is a key issue for many charities who rely on their membership and legacies for a significant element of their income stream.?So, the communications around any project must be managed well and a robust risk register collated and maintained at the start of each project.?A full initial appraisal will identify these opportunities and how they can be taken forward to create sustainable incomes.?

Valuations of Land and buildings on sale

When disposing of land, charities are subject to certain rules and procedures over and above those that apply to other corporate bodies.?

Trustees are now required to:

• obtain and consider a written report on the proposed sale from a designated adviser, instructed by the trustees and acting exclusively for the charity; and
• decide that they are satisfied, having considered the adviser’s report, that the terms on which the sale is proposed to be made are the best that can reasonably be obtained for the charity.

There is no longer a default legal requirement for charities to advertise the proposed sale for the period and in the manner as is advised in the report. This gives trustees discretion to decide how to advertise, although they should still consider the recommendations on advertising in the report and, if they choose not to follow these, they should clearly record the reasons for this.

This report will need to comply with S117-126 of the Charities Act 2011 and The Charities (Dispositions of Land: Designated Advisers and Reports) Regulations 2023 as amended in the 2022 Act.?To be compliant with the Regulations, the report must state:?the value of the relevant land;?any steps which could be taken to enhance that value;?whether and, if so, how the relevant land should be marketed.?anything else which could be done to ensure that the terms on which the disposition is made are the best that can reasonably be obtained for the charity and?any other matters which the adviser believes should be drawn to the attention of the charity trustees.

General Estate Management issues.

Holding an estate either for a charity’s core aims and objectives, or for investment, does require professional management.?Trustees have a duty of care to The Charity. Lease terms need to be agreed and monitored, rent reviews dealt with, properties maintained and ensure that they comply with prevailing legislation.?Boundary and ownership issues often arise, as do environmental compliance with planning law issues.?It is important that professional advice is sought.?

Skinner Holden Property Advisors have specialised in the management, valuation and development of rural property, with extensive experience in creating new income streams within a rural setting.?From new visitor centres such as Alice Holt Forest Centre and Bedgebury Pinetum to woodland burial parks and woodland lodges.?

If you have any opportunities or issues that you would like to discuss, please feel free to call Iain at Skinner Holden Property Advisors on 07827 394720 or?Email?[email protected]