This post was first published by The Croydon Citizen on 13/03/2018.
What is an Asset of Community Value and does it even matter?
There has been plenty of talk about Assets of Community Value (ACV) in Croydon in recent months and with it, lots of confusion. As someone who was instrumental in pulling together the ACV nomination for the building at 5–9 Surrey Street and who supported the subsequent nomination of the premises occupied by Matthews Yard and the nomination of the Glamorgan pub on Cherry Orchard Road, I thought it would be useful for others considering going down this route to look at ACV and the Community Right to Bid in more detail.
An Asset of Community Value is land or buildings that are important to the local community and which benefit from protection under the Localism Act 2011. The act is a piece of legislation which was passed by parliament with the intention of devolving power from central government to local communities. It introduced a broad range of mechanisms enabling local groups to take control of assets and fight back against the widespread erosion of vital services and the loss of land and buildings. These mechanisms include the Community Right to Bid and the Community Right to Reclaim Land.
The regulations vary in Scotland and no protection has yet been introduced in Wales, so this article focuses on ACVs in England. These must be nominated by a community group, parish council, unincorporated body (made up of 21 or more local people) or, a non-profit entity. All of these must have a demonstrable local connection. ACVs cannot be nominated by individuals or businesses and the nomination must always be approved by the local authority.
A nursery, a post office, or even a pound shop could be nominated and successfully listed
In Croydon there have been eleven ACV nominations in total since legislation came into force. Of those, only four have been granted. The Ship pub, Love Lane Green in South Norwood, and most recently, the Glamorgan pub on Cherry Orchard Road, followed by 1 Matthews Yard. The listing of Love Lane Green is important in so far as it dispels the myth that ACV status is the preserve of public houses. The Localism Act cites community centres, green spaces, village halls and public houses as examples of potential candidates, but does not restrict the definition on the basis of the type of use, rather on its importance to the community. In theory, anything which 21 local people come together to protect, could be considered an ACV. A nursery, a post office, or even a pound shop could be nominated and successfully listed, but only if the council agrees to list it.
This brings me to the first of several flaws in the Localism Act which render ACV status all but pointless in many cases. The decision-making process is entirely controlled by the local authority, and there is no right to appeal for those nominating an asset, although there is nothing preventing them applying for the same asset repeatedly with modified nominations. If a group is successful in securing ACV status, this still provides little tangible protection.
If a local authority agrees to list an asset it must be published in a public register and a notice placed on the land registry files for five years. This ‘protection’ triggers a community right to bid and also creates a material planning consideration, for example if, as in the case of Matthews Yard, the asset comes under threat of demolition. It also gives local authorities reason to exercise compulsory purchase powers, should they choose to do so.
Owners are not compelled to sell to the community group who secured the listing
The right to bid is not a right to buy and the ACV listing does not compel the owner of the building to sell the asset. It just gives community groups six weeks to bid for the asset if the owner chooses to sell. If the bid is accepted, a further four and a half months is given to raise the capital to complete the purchase.
In the case of the Glamorgan, the pub is already owned by a developer who has acquired a portfolio of more than one hundred and fifty pubs across the UK. There is nothing in the Localism Act which prevents them from land-banking the asset and focusing on developing the other 149 pubs in their portfolio first, by which time, one can safely assume, the five year protection period would have lapsed. Even if the owners decided to sell the building, they are not compelled to sell to the community group who secured the listing and they are not compelled to sell at market value and can demand whatever sum they choose. In the case of the Glamorgan, they have requested the sum of £2.5m, almost five times what they recently paid for the property.
The community group which has come together to secure the ACV nomination is not the only community group entitled to submit a bid, so there is nothing stopping the people behind the Save the Matthews Yard campaign from entering the bidding for the Glamorgan or vice versa.
In the case of Matthews Yard, plans to demolish the building are still speculative and the developer does not yet own the asset
At this point, you could be forgiven for questioning the point of trying to protect an asset in the first place. The answer to that lies in the specifics of the situation and the timing of the nomination. Matthews Yard’s ACV nomination offers a strong example of a perfect storm scenario, where nearly all the weaknesses in the Localism Act can be countered. In the case of Matthews Yard, plans to demolish the building are still speculative and the developer does not yet own the asset. This is crucial as with an ACV listing, Save Matthews Yard (or another community group) would get the right to bid for the asset.
As the building is still owned by Folly’s End Fellowship Trust, a registered charity and evangelical church, it would be hard for them to deploy blocking mechanisms such as the highly inflated pricing utilised by the owners of the Glamorgan to prevent the community from acquiring the asset. So long as the people behind the campaign are able to secure the ACV nomination, issue a bid which exceeds the amount offered by the developers, and subsequently raise the capital to purchase the building within the six month moratorium, then in this case, the asset should be able to be saved. If it is not, there are likely to be more than a few raised eyebrows at organisations like the Charity Commission.
Even in Matthews Yard’s situation, there are still complications. For Matthews Yard to raise enough money to outbid the developers, it would need to raise more capital than what the developers have offered and therefore more than the ‘red book’ value of the asset. This would make it hard to finance the deal entirely on the basis of a conventional commercial mortgage and means other fundraising and financing strategies would need to be deployed.
Whatever the circumstances, the process of nominating an asset for protection is complex and you would be strongly advised to liaise with the local authority sooner rather than later to find out more about the process and your chances of success. But don’t rely entirely on council officers, and ensure you do your own homework too. My best piece of advice would be to protect the assets which may be at risk at the earliest opportunity and before property developers get their hands on them.