Part 5: Asset Transfer

Part 5: Asset Transfer of the Community Empowerment (Scotland) Act 2015 sets out the key rights and duties and provides a framework for the asset transfer process. Some of the detail, including the manner and procedure for the submission of and dealing with asset transfer requests, is provided via secondary legislation.  

This is a summary of the key points, but please also read the Guidance Notes to the Act added below.  

The CEA introduces new key community rights for communities of place (geographic) or interest (united by a common interest), and places requirements on public agencies. This includes the right fro communities  to:

  • Request information on any public asset that interests them.
  • Request the transfer of a public asset (and it doesn’t have to be surplus).
  • Acquire that asset if the public body cannot offer a good reason not to (i.e. there is a presumption in favour of transfer).
  • To decide on the price it wishes to offer, based on the economic, social, health or environmental benefits the proposal will add.
  • To appeal any adverse decision, first with a public body (if it is a local authority) and then/or with the Scottish MInisters.

The requirement on public bodies to:

  • To produce and  maintain a register of land which, to the best of its knowledge and belief, is owned or leased by the authority. The register is to be made public and be available via website or other electronic means. It should be noted that omission of land from the register will not prevent an asset transfer request.  
  • Produce an annual report on asset transfer, explaining how many requests have been received and the results of those applications, together with what means they have used to promote asset transfer and how they have helped community bodies that want to make asset transfer requests. 

Community Organisation Eligibility

To become eligible for any form of asset transfer a group needs to be considered to be a "community transfer body". Distinction is made between which type of body can request an asset transfer by way of:

  • Ownership; and
  • Lease or e.g. management.

 

For all asset transfer requests , the community group has to be a:

  • Community Controlled Body designated under section 19 of the act (see below)  which means a body (whether corporate or unincorporated) which has a written constitution that includes the following—

(a) a definition of the community to which the body relates;

(b) provision that the majority of the members of the body consists of members of that community;

(c) provision that the members of the body, who consist of members of that community, have control of the body;

(d) provision that membership of the body is open to any member of that community;

(e) a statement of the body's aims and purposes, including the promotion of a benefit for that community; and

(f) provision that any surplus funds or assets of the body are to be applied for the benefit of that  community.

In addition for ownership, as well as being a  "community controlled body" it has also should be: 

  • A Scottish Charitable Incorporated Organisation (SCIO), the constitution of which includes provision that the organisation must have not fewer than 20 members; or
  • A Community Benefit Society (BenCom), the registered rules of which include provision that the society must have not fewer than 20 members; or
  • a company, the articles of association of which include provision that:

(a) the company must have not fewer than 20 members; and

(b) on the winding up of the company and after satisfaction of its liabilities, its property (including any land, and any rights in relation to land, acquired by it as a result of an asset transfer request under this Part) passes—

(i) to another community transfer body, 

(ii) to a charity,

(iii) to such community body (within the meaning of section 34 of the Land Reform (Scotland) Act 2003) as may be approved by the Scottish Ministers,

(iv) to such crofting community body (within the meaning of section 71 of that Act) as may be so approved, or

(v) in no such community body or crofting community body is so approved, to the Scottish Ministers or to such charity as the Scottish Ministers may direct.

Making a Request

A community transfer body making an asset transfer request must specify in the request—

  • The land to which the request relates;
  • The reasons for making the request,
  • The benefits which the community transfer body considers will arise if the authority were to agree to the request; and
  • If the request is for ownership, the price; or if the request is for a lease or other, the rent, duration and if applicable, the nature and extent of the rights sought.

A community transfer body can also appeal to the Scottish Ministers if a request is agreed, but no contract is concluded within the required time limit.

In all cases the final decision lies with the Scottish Ministers. There is no further route of appeal beyond them (except by judicial review).

Types of Tenure

The transfer of assets to the community may be on the basis of transfer of title e.g. at below market value, or by way of lease or management. There are links here to the eligibility criteria set out in the Community Empowerment (Scotland) Act 2015.

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 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.
  • Demonstrate 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 well 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 enable community groups time to develop their business plan while keeping a facility open.

Related Resources

Asset Transfer Guidance for Relevant Authorities

This guidance has been developed for relevant authorities.  Relevant authorities are required to have regard to guidance issued by the Scottish Ministers in carrying out their functions in relation to asset transfer.

PDF icon Asset Transfer RA Guidance Notes.pdf