Community Ownership Fund and ACVs: saving the local pub?
Among the measures announced in the Budget was the Community Ownership Fund which will provide match funding to ‘community groups’ to assist in the purchase of local facilities, community assets and amenities.
The scheme will open with the first round of funding in June 2021 when a ‘bidding prospectus’ will be produced by government. In the meantime the details are sketchy but commentators have been quick to speculate that this new fund will energise the Asset of Community Value regime that was brought into existence by the Localism Act 2011.
From my experience of practice in this area since the regime came in, I doubt the COF will be effective in expanding the number of community owned assets. Inherent limits in the ACV regime and in the proposed COF system will hamstring it.
The Asset of Community Value regime has its antecedents in the Conservative opposition’s 2009 promise of a ‘community right to buy’. The ACV regime is not such a right to buy but rather a ‘right to bid’. It provides for parish councils and community groups to apply to ‘list’ properties as assets of community value. The tests for listing are in s.88 of the Localism Act 2011. Once listed there is a review process with appeals to the First Tier Tribunal.
The effect of listing is not to prevent sale but rather to delay it. Listing leads to a moratorium process (s.95 of the LA) whereby, the seller having given notice of an intention to sell, sale is initially delayed by six weeks and if a community group expresses a wish to bid the moratorium is further extended for a total period of six months. However, the point remains, this is only an opportunity to organise and put together a bid. The owner is under no obligation to engage with the community group or consider any bid, let alone to sell to them.
The ACV process often engenders significant animosity between owners and community groups. Often the first time an owner has heard of the ACV system is when the application is made. It is unsurprising that more than one owner has told me, ‘I’d sell for a quid rather than sell to those people’.
This is the fundamental issue with the ACV process which will not be resolved through the proposed Community Ownership Fund. There is no obligation upon owners to sell or engage with bids but community groups believe that achieving ACV listing ‘saves’ the asset. The public have understood the ACV regime to be delivering on the ‘right to buy’ promise. It hasn’t and too often the metaphorical cork popping when an asset is listed is followed by a hangover when the former pub or shop is converted to flats only a few months later.
What do we know about the COF? The first round of funding will open in June 2021 with guidance for bidding at the same time. The initial tranche of funding will be £150m and will be open to community groups but not parish councils. This shouldn’t be much of an impediment as a parish council establishing a separate community group will not face significant requirements. There are limits on the sums that can be bid for. The government advises that bids will be limited to £250,000 of match funding and in relation to sports related assets up to £1m.
We don’t know the details of the bidding process but to be effective it will have to be able to award funds quickly. A community group that moves fast to apply will only have a maximum of six months to secure COF funding and persuade the owner to accept their bid.
Assuming that the COF proves to be quick and responsive there remains, I think, a fundamental issue with the maximum funding levels. £250,000 will only ever be perhaps 10% of the development value of decent sized country pub.
I am sure an applicant will appreciate any support but the limits on individual awards mean that it will not lead to a sea change in the effectiveness of the ACV regime or a significant growth in community ownership.
Anthony Gill is a specialist Planning and Environmental Barrister at Kings Chambers. He provides advice to and acts for developers and local authorities at public inquiries, hearings, local plan examinations and in court. In recent years, he has developed a speciality in the law surrounding Assets of Community Value advising both the owners of nominated assets and listing authorities.