What is a community asset transfer (CAT)?
The transfer of management and/or ownership of public land and buildings from a public sector body (usually a local authority) to a community based organisation at less than market value to achieve a local social, economic or environmental benefit. This is a voluntary process entered into proactively by public bodies.
How does the CAT process work?
In most cases community organisations will be required to submit an expression of interest and, if we accept it, a more detailed business plan will be required to show that the organisation is ready and able to successfully manage the land or building in the long term.
Who can apply?
- Voluntary and community sector organisations (VCSOs) or organisations that aren't for private profit
- Unincorporated charitable organisation
- Company limited by guarantee with charitable status
- Community interest company (CIC) limited by guarantee or by shares
- Community benefit industrial and provident society with an asset lock
- Charitable incorporated organisation
- Community Amateur Sports Club (CASC)
- Other charitable bodies may be considered at our discretion
Community asset transfers are usually only made to organisations which have an ‘asset lock’ – that's a clause in their governance which restricts asset disposal. Generally this would apply to registered charities, community interest companies and charitable community benefit societies (a type of industrial and provident society). Restrictions may also be written into the lease.
What do I need to do before applying?
You need to consider whether your organisation has the skills, enthusiasm and person power to own and manage the building, and whether there's strong community support. You'll need to look at the finances – what's the likely income, what are the running costs, how will you repair and refurbish the building in the long term. There's extensive written information to help you to think through these issues.
Any voluntary or community group interested in asset transfer will need to:
- Gather evidence to show how the community and local people will benefit from the transfer
- Gather evidence of community support for the transfer
- Read the Community Asset Transfer Policy
- See if there have been other transfers nearby from which you can learn – check our stories for inspirational examples of good practice
- Check that the land and buildings in question really are assets and not liabilities – they're liabilities if they can't generate enough income to cover repairs, maintenance and ongoing operational costs
- Develop an initial outline business plan: the organisation would need to demonstrate that it's capable of running the asset and has a sustainable business plan to do so. A detailed business plan will be required if your application proceeds past the initial expression of interest
Are there any financial risks in me applying?
There's no financial risk involved in expressing an interest in a CAT, but should the application be successful and proceed to an actual transfer your organisation would then be expected to meet the full running and repair costs of that building.
What would we be responsible for if the asset was to be transferred?
Terms would be agreed for the organisation to take a full repairing and insuring lease of the property, usually at a reduced or peppercorn rent, but each application is considered on its merits. This means that once the building has transferred, the organisation will be responsible for complying with all relevant legislation and for meeting all operating costs. It should be noted that additional support is often required, particularly in relation to technical expertise around asbestos, health and safety, compliance with the Equality Act 2010, fire risks, legionella and related risks. The organisation should consider in advance how such issues will be addressed.
How long would the transfer be for?
There are several legal options for community asset transfer, but most tend to be long-term leasehold arrangements (25+ years at a ‘peppercorn’ rent) to enable external funding to be secured, although a shorter term might be more appropriate as a ‘stepping stone’ to a more substantial agreement in the future.
What's the difference between long leasehold and freehold?
Most local authorities choose to transfer on a leasehold rather than a freehold basis, so that the property remains in public ownership whilst the long-term management of the asset transfers to a community organisation. A long leasehold (over 25 years) will be acceptable to most funders, though some loan funders expect a longer lease.
Will having the property on a leasehold basis mean the council will be able to take the property back?
Your lease will set out the circumstances in which we'll be able to take back the property during the term of the lease. These will be negotiated as part of agreeing the lease, so it's important to take legal advice on this issue and to fully understand your obligations.
What information will be available on the asset?
Where available, information on running costs and building condition will be provided. It should be noted that the council's costs are indicative only and may not be an accurate reflection of the likely cost to your organisation. In all cases it's recommended that organisations appoint suitably qualified professionals to undertake their own investigations in relation to their project. The council won't fund a condition survey as part of the transfer.
How can a community organisation run a building profitably?
There are no guarantees, but developing a good business plan should give you enough certainty to proceed. If you already manage the building but are taking on responsibility for the property through a community asset transfer, then you already have a lot of the information you need. If you're starting from scratch, look at the kinds of facilities and services you'll offer, what you'll charge and who will pay. The My Community webpages provide guidance on business planning.
Try to visit similar projects – this is one of the best ways to get practical information.
The council is placing conditions on the transfer - do we have to accept them?
Any conditions should be part of negotiating the terms of the transfer. Common conditions are to set out minimum opening hours or to restrict the types of activity which can take place in the building. You need to consider whether you can fulfil the conditions – for example consider the practicalities of opening the building for the hours suggested, is it viable?
If the conditions don’t fit with your resources or business model, then you need to renegotiate.
Where can I find capital funding to refurbish the building?
There are a range of options including grant funding, loans and community shares. Which sources are most appropriate will depend on your business plan and the services you intend to provide. Grant funders will be most interested in the outcomes of your service delivery.
Will the council provide any legal assistance or property advice?
No, for us to provide legal assistance or property advice would be a conflict of interest. Any organisation interested in applying for an asset transfer will need to seek (and fund) independent legal advice on the process and any transfer which is approved.
Why is the council doing this?
We're facing large reductions in public spending over the coming years, and recognise the important and valuable role that local communities play in their local area. We're therefore looking for new ways for valued services to be provided. Transferring the management of local assets is an opportunity for community groups and businesses to have control over valued local land, facilities or services. Asset transfer also allows local communities more opportunities to access funding that wouldn't be available to us, which helps sustain existing facilities and supports community development.
Why should public assets be disposed of at less than market value?
Local authorities are usually required to dispose of land and building on the basis of the best ‘consideration’ reasonably obtainable. However, best consideration means achieving maximum ‘value’ from the disposal, not just maximum price. The government’s best value guidance recognises the importance of social as well as economic and environmental value in the achievement of best value. Disposal at less than market value must contribute to the ‘promotion or improvement of the economic, social or environmental wellbeing of the area’.
How do I apply?
The first step is the completion of an initial expression of interest form, which you can find on our website. You can also request a copy by email (CommunityRight@shropshire.gov.uk) if you'd prefer a Word or paper version.
If the strategic asset manager is satisfied that the initial submission meets the council criteria, the organisation would then be invited to proceed to the formal stage, and further details of the building would be provided.