Transfer – Sale
To maximise the benefits of asset transfer, outright ownership of the title may be the preferred mechanism for community involvement in the management and development of assets. This is particularly true of assets where there will be significant investment in terms of grant and loan funding. Clear title will be important to both public and private funders with the large grant funders who are accessible to community groups insisting on this model.
Long Lease
In some situations a long lease (leases can have a duration of up to 175 years) may be the most appropriate form of tenure. For example, a local authority may wish to retain ownership (and therefore control) of assets which are of strategic or historic significance. It may also be the case that the local authority's title is subject to title conditions, making the grant of a long term lease a more attractive prospect for external funders.
Shorter Lease
From a community’s perspective short term leases can be an effective interim step to full ownership. It can provide a range of benefits through:
- enabling the community group to confirm they have the necessary support of the wider community to develop the building and services – increasing levels of participation from volunteers and other interested parties.
- sustaining patterns of usage within the building while the business plan is being developed and assumptions tested.
- building the confidence within the group.
- demonstrating that the group has the operational capacity to run and manage the facility.
- keeping the building occupied and heated minimising the potential for deterioration.
Occupation Agreement / Licence to Operate
This type of agreement may be appropriate where there is an interconnected lease and service level agreement. For example, in the delivery of care services from a local authority-owned care facility, swimming pool or a facility where the local authority continues to deliver services from part of the facility. This type of arrangement has also been used effectively to provide community groups with time to develop their business plan while keeping a facility open.
Types of Tenure - Advantages & Disadvantages
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Types of Tenure |
Advantages |
Disadvantages |
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TITLE Buying the property as owner |
Security of ownership Creates sellable asset Independence Can use the asset to help raise funding Not subject to service charges Freedom to improve or redevelop the asset, and to attract grants to do so (subject to planning, etc constraints, certain title conditions and the conditions of any security) |
Expense of purchase Cost of repairs and insurance May not be sellable if in poor condition Land and Buildings Transaction Tax (LBTT) if charitable relief not given |
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LEASE Taking a lease for a fixed period of years at an annual rent (In Scotland leases of over 20 years can be called “long” but terms depend upon what the parties have negotiated) |
In some cases where agreed with the landlord, rent may be low or peppercorn Longer leases may have few obligations placed upon the tenant, almost akin to ownership |
All leases: Expense of rent (which may increase at regular intervals) and service charge Restrictions on use, alterations and alienation (i.e. assignation, sub-letting, sharing occupation, charging) |
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Longer leases: If a premium is paid, expense, cost of repairs and insurance may not be assignable if the property is in poor condition Cost of dilapidations at the end of the lease
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LBTT if charitable relief not given (depending upon rent and term) |
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LICENCE TO OCCUPY Formal written permission to occupy for a short period (In Scotland, if an arrangement has parties, a rent, a duration and premises, there is a lease; however, licences to occupy are often used for a short term arrangement or where the premises are not “fixed”) |
Opportunity to keep a building open Maintain usage levels Gives opportunity to build the business case Establishes level of community support Can ensure a conservation gap doesn’t open up Costs can be minimal |
Restrictive in terms of use, alterations, etc. Disposal usually prohibited No security of tenure Difficult to get funding if licence too short |