The disposal of land by parish councils
by Ian Davison, Surrey Hills Solicitors LLP
Introduction
- The purpose of this article is to describe why parish councils would want or need to dispose of land or an interest in land and the legal and practical implications in doing so. This article is part 3 of a series dealing with the acquisition, holding and disposal of land by parish councils.
- In making decisions to dispose of land a parish council must consider and comply with the following administrative law principles.
Administrative law framework - Proper and valid decision-making
- Valid exercise of functions
The valid exercise of a function must:
a) fall within the statutory envelope (functions);
b) be properly made by someone authorised to make the decision (authority);
c) follow the rules on proper decision-making.
- Functions: duties and powers
a) a local authority is a creature of statute and can only do what statute expressly or impliedly allows. Functions are duties (obligatory requirements) (‘must’ or ‘shall’) and powers (permissive) (‘may’);
b) the scope of a Council’s powers will be materially affected by its ability to exercise s1 of the Localism Act 2011 (eligible councils only).
- Authority
a) there must be authority for the transaction;
b) decision-making can be through full council;
c) decisions can be delegated to a committee or by a committee to a sub-committee or to an officer but not to an individual member.
- A valid decision must:
a) be reached in a procedurally correct way: specific steps and requirements, decision-making in public or in confidential session; and
b) itself be reasonable.
- ‘Reasonable’ means a decision which:
a) must take of account of proper considerations;
b) must leave out of account irrelevant considerations;
c) must be made for a proper purpose;
d) must be proportionate as to the purpose to be achieved and the expenditure involved;
e) must have regard to the Council’s fiduciary duty to its taxpayers;
f) must be fair – avoiding bias or the appearance of bias and taking account of opposing views.
- A decision-maker must have regard to certain specific statutory duties: reduction of crime and disorder, public sector equality duty and consider specific issues regarding consultations and legitimate expectation.
- Decisions should be properly documented and justified by reasons in reports and background papers and recorded in minutes or records of delegated decisions.
- The exercise of powers will be subject to the general law e.g., as to the obtaining of planning permission or the obtaining of consents of other bodies e.g., the Secretary of State, the Charity Commission.
What do we mean by land?
The Local Government Act 1972 s270 defines land as including “any interest in land and any easement or right in, to or over land”. Land also includes buildings and structures attached the land but not caravans or portacabins which rest on the land. A licence, which is a contractual right to use land, is not an interest in land. For certain purposes e.g., under the Town and Country Planning (General Permitted Development) Order 2015 (as amended) buildings can be treated separately from the land on which they stand but this does not affect land law.
Acquiring, holding, using, appropriation and disposal of land
- A local authority may only acquire, hold, use, develop or dispose of land within the statutory framework. Even if the transfer or conveyance by which the land was acquired does not specify the powers under which the land is acquired or is or is to be held, the land will be deemed to have been acquired or held for a statutory purpose.
- The purposes for which land is acquired or held is crucial to the purposes for which it can be used or developed or the freedom with which it can be disposed of.
- The statutory powers should be specified in any transfer upon acquisition and in transfer of lease upon a disposal e.g., section 127 of the Local Government Act 1972.
Disposal of land
- The Local Government Act 1972 provides:
127 Disposal of land held by parishes
1) Subject to the following provisions of this section, a parish…council, may dispose of land held by them in any manner they wish.
2) Except with the consent of the Secretary of State, land shall not be disposed of under this section, otherwise than by way of a short tenancy, for a consideration less than the best that can reasonably be obtained.
3) [Subsections (2A) and (2B) of section 123 above shall apply in relation to the disposal of land under this section as they apply in relation to the disposal of land under that section, with the substitution of a reference to a parish or community council or the parish trustees of a parish for the reference to a principal council in the said subsection (2A)]
4) Capital money received in respect of a disposal under this section of land held for charitable purposes shall be applied in accordance with any directions given under [the Charities Act 2011].
5) For the purposes of this section a disposal of land is a disposal by way of a short tenancy if it consists:
a) of the grant of a term not exceeding seven years, or
b) of the assignment of a term which at the date of the assignment has not more than seven years to run.
- The Secretary of State has given consent to the disposals by local authorities of land at an undervalue: The Local Government Act 1972 General Disposal Consent (England) 2003 (attached to Circular 06/03) which allows local authorities to dispose of properties at an undervalue where the local authority considers that the purpose for which the land is to be disposed is likely to contribute to the achievement of any one or more of the following objects in respect of the whole or any part of its area, or of all or any persons resident or present in its area:
a) the promotion or improvement of economic well-being;
b) the promotion or improvement of social well-being;
c) the promotion or improvement of environmental well-being; and
d) the difference between the unrestricted value of the land to be disposed of and the consideration for the disposal does not exceed £2 million.
- Disposal may be freehold (sale) by way of transfer or exchange or leasehold by grant or assignment or the grant of a right e.g., an easement. Disposal may accrue by operation of time e.g., accretion or adverse possession. Appropriation or dedication will also be classed as disposals. The imposition of a covenant might be regarded as a disposal.
- Easements are private law property rights over land (the servient land) in favour of neighbouring land (the dominant land). They attach to land and not to people. An example is to pass and repass over land to enable the owner of adjoining land to access the highway. Easements are enforceable as between the landowners for the time being. Wayleaves are similar to easements but typically enure to the benefit of utilities e.g., to run a pipeline or electricity cables across land and may not therefore benefit dominant land as such.
- Licences do not constitute an interest in land. They are contractual rights to use land and are personal to the licensee. Licences do not run with the land. It is important that a licence does confer exclusive possession as this may constitute a lease.
- Appropriation is the transfer from one statutory purpose to another. There cannot be any implied or informal appropriation of land.
- The Local Government Act 1972 provides:
126 Appropriation of land by parish … councils
(1) Any land belonging to a parish …. council which is not required for the purposes for which it was acquired or has since been appropriated may, subject to the following provisions of this section, be appropriated by the council for any other purpose for which the council are authorised by this or any other public general Act to acquire land by agreement.
- Appropriation of open space land is treated as if it were a disposal of the land in question and the statutory advertisement procedure is engaged: s127 of the Local Government Act 1972. Appropriation of a common, village green or public open space to land for statutory allotments cannot proceed without an order by the Secretary of State: s 28 of the Land Settlement (Facilities) Act 1919.
- A dedication to a charity or the execution of a charitable trust deed will count as a disposal. NB King George V fields, dedications to Field in Trust.
- Proposed disposals of land which is an open space must follow the statutory advertisement procedure.
- The grant of a lease where the protections given by the Landlord and Tenant Act 1954 Part 2 must be accompanied by the statutory notices.
- Land may not be disposed of in breach of any trust, covenant or agreement binding upon the local authority: s131(1) of the Local Government Act 1972.
- Disposals of statutory allotment land must be dealt with under the Allotments Acts 1908-1950. Capital receipts are to be used first for reinvesting in allotments: s32 of the 1908 Act; s131(2) of the Local Government Act 1972.
- The disposal of land held for charitable purposes must follow the procedure on disposals set down in ss117-124 of the Charities Act 2011: s131(3) of the Local Government Act 1972.
- Disposals of interests in village greens and common land (including easements) can be effected but such disposals do not affect the status of the land and the statutory restrictions on works continue to apply.
- Appropriate valuation advice should be taken when disposing of land. Consideration received is a capital receipt and must be treated as capital money.
Practical points to note - general
When approaching property transactions, you should bear in mind the following general points:
a) Carry out a full appraisal of the proposal and the terms offered or wanted.
b) What are the terms?
c) The authority should be looking for best price when buying or selling.
d) Are the necessary statutory powers available?
e) Take professional valuation and legal advice.
f) Ensure that decision-making is appropriate and documented and that appropriate authorities are in place. NB importance of delegated authority.
g) There is a project plan including a timetable in place and that a person has been appointed to lead.
h) That the Clerk is properly equipped and authorised to act as the single point of contact with solicitors etc.
i) Adequate budget is approved to cover consideration, professional fees, fees for searches and the Land Registry, VAT.
j) Ensure proper reporting mechanisms.
k) Do not underestimate costs or timescales especially where there are pushy solicitors, prospective tenants playing games, unrepresented landlords or tenants.
l) Do not underestimate the significant work in dealing with CPSE.
m) Managing the process – note the difference between agreeing terms and handling the legal process.
Practical points to note – disposals
For disposals you must consider the following:
a) Is the statutory power to dispose clear?
b) What are the terms?
c) Remember that disposal includes easements and leases but not licences.
d) Be alive to the nature and capacity of a transferee or lessee - is it or they a corporate body or an unincorporated association, a charity?
e) An unincorporated body does not have a legal personality.
f) There are special rules for disposal by local authorities acting as charities: ss117 et seq of the Charities Act 2011.
g) There are special rules for disposals to charities.
h) Are any statutory consents or advertisements needed?
i) Title must be deduced.
j) Plans.
k) Agreements for the sale of land must be in writing and signed.
l) Local authority disposals need not be preceded by a contract.
m) Replies to property enquiries need to be given.
n) Transfer/lease must be executed as a deed under the council’s common seal or with two signatures of councillors.
- o) Is there a home for any capital receipt?
p) Who is paying what fees?
q) Insurance and changes to insurance schedule, asset and risk registers.
Practical points to note – leases
For leases you must consider the following in addition to the above:
a) Parties – to whom
b) Capacities – NB charities
c) Term and break clauses
d) Rent and rent reviews
e) Permitted user
f) Repairing obligations – common parts and unlet parts
g) Insuring obligations
h) Alienation – subletting
i) Landlord and Tenant Act 1954 Part 2 exclusion
j) Forfeiture – bankruptcy and non-use
k) Plans
l) Schedule of condition
m) CPSE 1, 3, 7 – planning permissions, guarantees, insurances, asbestos report, fire risk assessment, EPC
n) Superior landlord’s consent
- o) Costs
p) Registration
Ian Davison has worked in and for local government for over 40 years. He is a partner in Surrey Hills Solicitors LLP. Before joining private practice, he was a chief officer providing and managing a wide range of services including legal, democratic, scrutiny, Member support, licensing, and project management and has acted as Monitoring Officer and Electoral Returning Officer. He was also a clerk to a parish council. Ian is legal advisor to the Kent, West Sussex and Hampshire Associations of Local Councils and SERCAF. He is also a contributor to the local government, open spaces, recreational leases and highways titles of the leading professional practitioner work The Encyclopedia of Forms and Precedents. www.surreyhillssolicitors.co.uk