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Charities Act Valuations

4 August 2021

Charities Act Valuations

Any registered charity planning to sell or lease a property for longer than 7 years needs a qualified Chartered Surveyor to provide a Charities Act Report.

According to the 2011 Charities Act, section 119, prior to disposing of the land the trustees must:

  •       obtain and consider a written report on the proposed disposition from a qualified Surveyor instructed by the trustees and acting exclusively for the charity,
  •      advertise the proposed disposition for such period and in such manner as is advised in the Surveyor's report (unless it advises that it would not be in the best interests of the charity to advertise the proposed disposition), and
  •     decide that they are satisfied, having considered the Surveyor's report, that the terms on which the disposition is proposed to be made are the best that can reasonably be obtained for the charity.

In simpler words, an independent Chartered Surveyor must provide a report that advises on the most appropriate method of disposal, whether to carry out works prior to a sale, the current value and how to best advertise the property. The trustees must then act on the advice to ensure the best possible outcome for the charity. 

Obtaining a Charities Act Valuation is a requirement of the law designed to ensure that the value of charity assets is maximised, and trustees do not make unwise decisions, as they may be personally liable for any losses the charity suffers due to failure to comply with the requirements of the Charities Act.

It is advised to obtain the report as early as possible as the Surveyor can provide valuable advice prior to marketing the property for sale, but it must legally be done before the charity is contractually obliged to enter the sale. Some more complex transactions may require more than one report at various points of the process.

If the property is in a poor condition selling via auction may be the best method of disposal. In this case the report should provide advice in relation to a reserve price.

Complications can arise with the disposal of a property subject to an overage clause. The valuer needs to consider the value of the clause, but this is not straightforward; essentially, they must provide an opinion at the date of disposal of the planning potential and the chance of the overage clause being triggered.

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