Charities Act 2022 Receives Royal Assent

The Charities Bill 2021-22 received Royal Assent on 24 February 2022, becoming the Charities Act 2022 (2022 Act). 

The 2022 Act will implement most of the recommendations that were made by the Law Commission in its 2017 report "Technical Issues in Charity Law" and aimed to reduce bureaucracy for charities. The changes are likely to be implemented over the next 12-18 months. We outline below the most significant changes specifically affecting charity property.

Restrictions on dispositions and mortgaging of charity land

Part 7 of the Charities Act 2011 (2011 Act), which imposes restrictions on dispositions and mortgaging charity land, is subject to  a number of amendments. The new section 117(1A) of the 2022 Act confirms that the restrictions will apply where:

The following table summarises  when s.117 previously applied in a legacy context under the 2011 Act as originally enacted and how the 2022 Act will change the landscape:

Charities Act 2011

When s117 applied (Charities Act 2011)When s117 didn't apply
The land is appropriated to a single charity (the charity's trustees must comply)The land is disposed of by the PRs (the charity only has an interest in the proceeds of sale)
The land is appropriated between two or more charities (the PRs must comply) The land has been appropriated to a mix of charity and non-charity beneficiaries
The land is being disposed of following the death of a life tenant where the remainderman is a charity (the charity's trustees must comply) or the remaindermen are all charities (the Will Trust trustees must comply)The land is subject to a life interest trust and is being disposed of whilst life-tenant survives / the interest subsists.
The land has been assented to a charity so that the charity now holds it (i.e. the property was specifically gifted to the charity and the PRs assent the land to the charity)The land is disposed of on the death of a life tenant and the remainderman are a mix of charities and non-charity beneficiaries.

Charities Act 2022

When s117 applies (as amended by Charities Act 2022)When s117 doesn’t apply
The land is appropriated to a single charity (the charity's trustees must comply)The land is disposed of by the PRs (the charity only has an interest in the proceeds of sale)
N/AThe land has been appropriated to a mix of charities or a mix of charities and non-charity beneficiaries
The land is being disposed of following the death of a life tenant where the remainderman is a charityThe land is subject to a life interest trust and is being disposed of during the life-tenant's life-time.
The land has been assented to a charity so that the charity now holds it (i.e. the property was specifically gifted to the charity and the PRs assent the land to the charity)The land is disposed of on the death of a life tenant and the remainderman are a mix of charities and non-charity beneficiaries.

Advertising and reporting requirements for the disposition of charity land

The 2022 Act removes the requirement in section 119(1)(b) of the 2011 Act for charity trustees to advertise a proposed disposition in the manner advised in a surveyor's report or for the reports to contain the information prescribed by regulations made by the Secretary of State (s119(4), 2011 Act).  This removes the current requirement to comply with the Charities (Qualified Surveyors Reports) Regulations 1992.

Advice relating to the disposition of charity land

The 2022 Act amends section 119 of the 2011 Act to substitute references to "qualified surveyor" with "designated adviser", reflecting the fact that advisers from The National Association of Estate Agents and The Central Association of Agricultural Valuers can give advice to charity trustees on disposals of their charity's land.

It also allows for that advice or report to  come from charity trustees, officers and employees where they have the relevant qualifications and experience to advise although it has yet to be seen whether charities will be inclined to adopt this option or prefer to rely on insured professionals against which recourse could be sought in the event of errors.

Residential tenancies granted to employees as connected persons

Residential tenancies granted to employees of a charity where the disposal is a short, fixed-term or periodic tenancy (of one year or less) are no longer a "connected person". Charity trustees will need to obtain advice on the grant of those leases but will no longer be required to obtain consent from the Commission to make the disposal.

The Charity Commission will now take steps to implement the changes introduced by the 2022 Act. Should you require guidance on how the 2022 Act affects you and your charity's property please get in touch with Anna Phillips or Marina Leigh from our specialist Charity Property Team.