Local Authorities have a duty to ensure that Best Value is achieved from public resources and that they are not misappropriated. Therefore, where an asset is being disposed of at less than best consideration, authorities will seek to identify (and reduce) the potential risks involved, while balancing these against the potential benefits to the public.
Section 14 of the Guidance Notes on Asset Transfer Requests outlines the use of conditions to protect the discount. In the case of asset transfer to community bodies, disposal at less than market value, or with other support or concessions, may be justified by reference to the expected benefits to be delivered by the project. In that situation, relevant authorities sometimes seek to protect themselves against the risk that the benefits may not be delivered by including clauses in the contract requiring some form of restitution if the project fails.
- where a reduced price was agreed in recognition of the benefits to be delivered, the community body may be required to repay the difference in price if the benefits are not delivered.
- where the price was based on a lower valuation for a particular use, conditions may be imposed to return any increase in value to the authority, if the use of the property is changed or the expected benefits are not delivered.
- If the property itself is important to the community, for example due to its heritage or location, arrangements may be made to enable the authority to recover the property if it is no longer used by the community body for the agreed purpose (or the community body is wound up).