Assets of Community Value: impact on commercial property and development

Assets of Community Value (ACVs) are becoming an increasingly important consideration in today’s commercial property market, particularly as local authorities place greater emphasis on protecting community uses amid development pressure.

For commercial property owners, developers, investors and local authorities, ACV listings can materially affect transactions, redevelopment proposals and planning decisions.

Understanding how the ACV regime operates is therefore essential when managing risk and strategy across commercial property portfolios.

What are Assets of Community Value (ACV’s)?

AVC’s were introduced by the Localism Act 2011 and ACV Regulations 2012 with a view to supporting community ownership of valued local property assets.

The regime allows local community organisations to nominate (generally non-residential) land and buildings to be listed as ACVs where they further community interests in the area.

To be listed, an asset must pass two key statutory tests: firstly, there must be a non-ancillary current or recent community use of the property and secondly it must have a realistic prospect of its future community use in the next 5 years.

Where a property is listed, there will be a moratorium on certain disposals of it, comprising of an interim 6-week period for a community group to express an interest in the property followed, where appropriate, by a full 6-month moratorium if interest is expressed.

At the end of such moratorium, there is an 18-month protected period, during which time no further moratorium can be triggered.

Property owners do have a right to appeal listing decisions, where appropriate.

Typical examples of Assets of Community Value

Assets commonly listed as ACVs include buildings and land that are used for, or support, social, cultural or recreational activity within a local area, such as:

• Public houses and other community‑focused hospitality venues
• Village halls, community centres and libraries
• Sports grounds, leisure centres and playing fields
• Cultural and heritage venues, including theatres and music venues
• Local shops or services that play a significant social role in rural or isolated communities

What does not usually qualify for Assets of Community Value listing

By contrast, assets are unlikely to qualify for ACV listing where:

• The use is wholly or mainly residential
• Any community use is ancillary or incidental to a primary commercial use
• The asset has not been used for a qualifying community purpose in the recent past and there is no realistic prospect of such use resuming within the next five years

How do Assets of Community Value affect commercial property transactions and development?

ACV listing does not necessarily prevent a transaction or development, but they have become a material consideration for some parties and for local planning authorities.

The moratorium only applies to relevant commercial property transactions, being freehold sales and leases with terms over 25 years. The community does not have a right of first refusal, but just the right to bid within the moratorium period. Certain transactions are excluded from the regime, such as intra-group transfers, gifts and insolvency sales.

In relevant commercial property transactions, the risk of a property being listed as an ACV is commonly considered in the due diligence process; in some cases, contracts may need to include conditional and/or delayed completions, warranties and/or indemnities to mitigate the potential risk.

In the context of development, local planning authorities and inspectors may rely on ACV status when resisting change of use and redevelopment, particularly in the case of pubs, sports facilities and cultural venues.

Nominations for listing of parts of buildings, such as community areas within larger schemes, may cause complexities in mixed use developments.

In practice, this means that a proposed sale of a listed property can be delayed by several months, which may affect deal timetables, funding arrangements and purchaser certainty. While the community does not have a guaranteed right to buy, the delay itself can be commercially significant.

The future of Assets of Community Value

More than a decade on from the Localism Act 2011, Assets of Community Value are becoming increasingly embedded in commercial property strategy rather than remaining a niche regulatory consideration.

Regardless of whether formal reform follows, commercial property owners, developers and investors should expect continued – and in some cases heightened – scrutiny of assets with an identifiable community function, particularly where redevelopment or change of use is proposed.

In this context, proactive management of ACV risk is likely to become more important, with early assessment, stakeholder engagement and strategic planning playing a key role in protecting value and maintaining transactional certainty.

Disclaimer: This article is for general information purposes only, is not intended to constitute legal or other professional advice, and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances. No warranty, whether express or implied, is given in relation to this article and the author accepts no responsibility for any loss which may arise from reliance on information in this article.

How can Morr & Co help?

Assets of Community Value can raise complex issues for property owners and developers. Morr & Co’s Commercial Property team provides clear, pragmatic advice to help clients understand ACV risk, navigate increased scrutiny and make informed commercial decisions. Please contact our team on 0333 038 9100 or email info@morrlaw.com

Disclaimer
Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.