Guidance

Selling, leasing or otherwise disposing of charity land in England and Wales

Updated 7 March 2024

Applies to England and Wales

• Publication for Northern Ireland
• Publication for Scotland

In most cases you can sell, lease or otherwise dispose of your charity’s land in England or Wales without asking for authority from the Charity Commission.

You must properly manage these important transactions in the best interests of your charity.

Unless the disposal falls into a very limited number of exemptions, you must also get the best terms you reasonably can. You must follow the relevant legal requirements of the Charities Act 2011 (as amended), which are explained in this guidance, if the land is held solely by your charity

Requirements vary depending on:

• whether you have the power to dispose
• how you plan to dispose of your charity’s land
• whether you will dispose to a ‘connected person’
• whether you are looking to dispose of land that must be used for a particular purpose (designated land)
• whether the disposal falls within one of the exemptions listed in this guidance

Use this guidance to help you identify:

• which requirements you must follow for the disposal you are planning
• if you need Commission authority

You may also find this overview chart helpful.

You will usually need to get professional advice on any disposal.

What we mean by ‘land’ and ‘disposal’

In this guidance ‘land’ means any:

• land owned by, or held in trust for, your charity
• buildings on the land
• rights over land such as easements or restrictive covenants

When we use the term ‘disposal’ we mean:

• selling or transferring land
• granting, transferring or surrendering a lease of your charity’s land
• granting or releasing rights such as fishing rights
• granting or releasing an easement, or a right of way over land
• granting or releasing a wayleave to allow access to facilities on the land

Use our separate guidance on mortgages or charges for information about these.

Key actions for all types of disposal

You must take these four actions whenever you plan to dispose of any of your charity’s land.

1. Be certain that your charity owns the land

You can usually check this with the Land Registry.

2. Be satisfied that the disposal is in your charity’s best interests

As trustees you must always make sure your decisions are in the best interests of your charity.

You have a duty to your charity as trustees to ensure that you use reasonable care and skill when disposing of land.

Disposing of land may help you to:

• raise money
• relocate
• reduce some administration

But you should also think about how:

• your charity will operate without the land
• disposing the land may affect your beneficiaries or affect public support for your charity

3. Know if you have the power to dispose of the land

In most cases charities have the power to dispose of charity land. This is usually allowed by a power in law (often under the Trusts of Land and Appointment of Trustees Act 1996) or in your charity’s governing document.

Always take advice if you are unsure about whether your charity has the power to dispose of its land.

Take extra care to check:

• that your governing document, or the documents that explain how the relevant property must be used, does not prevent you from disposing of the land or sets out conditions you must follow
• before disposing of ‘designated land’. This is because the Commission’s authority may be needed to do this. Designated land is land that must be used only for a particular purpose. For example, a recreation ground, or a building which must be used for a school. Read the section in this guidance on designated land

4. Know when you need Charity Commission authority

In most circumstances you do not need Commission authority to dispose of your charity’s land. Use this guidance to check whether you need Commission authority.

If you need to apply for authority, do so in good time.

Legal requirements for sales, longer leases and other forms of land disposal

This first section sets out the legal requirements for the following types of disposal:

• selling land
• granting a lease of your charity’s land for more than 7 years
• granting a lease of your charity’s land for 7 years or less where a fine or premium is paid to your charity. A fine or premium is a lump sum or other benefit, not including rent, paid to a charity on the granting of the lease
• granting a lease of your charity’s land for 7 years or less with an option to renew or extend the lease beyond 7 years
• granting or releasing a right, easement or restrictive covenant. These can include a right of way or access to equipment on the land, or a right, such as fishing rights in a lake or river on the land
• granting or releasing a wayleave, which is a formal written agreement giving a right to another party to access your charity’s land for specified activities
• granting an option to buy or lease the land. An option agreement gives someone the right to demand the disposal of your charity’s land to them at a point in the future on the terms of the option agreement
• any other type of disposal that is not a short lease with no fine or premium, and not a mortgage or charge against the land, for example surrendering a lease. Surrendering a lease means agreeing that it will end

First, take the key actions for all disposals that were set out above.

Then, comply with the following 2 legal requirements that are set out in the Charities Act unless an exemption applies.

You must:

1. Get and consider a report from a designated adviser

Before you agree to this type of disposal, you must get a report from a designated adviser acting exclusively for your charity. A designated adviser must be:

• a fellow or professional associate of the Royal Institution of Chartered Surveyors or
• a fellow of the Central Association for Agricultural Valuers (CAAV) or
• a fellow of the NAEA Propertymark (National Association of Estate Agents)

You must also be satisfied that your adviser has the ability in and experience of valuing similar land to yours within the same area.

The designated adviser can be a trustee, officer or employee of the charity if they meet the required level of one of these professional bodies. If they do provide advice, then you must manage any conflicts of interest.

If you want to pay a trustee for acting as the designated adviser, then you must:

• make sure your governing document does not prevent you from paying trustees for services they provide to the charity
• follow the legal requirements for paying trustees

Read our guidance about trustee expenses and payments.

You should also check your charity’s insurance cover. Not all insurance will cover negligent advice given by an adviser who is also a trustee, officer or employee of your charity.

The report must comply with the Charities (Dispositions of Land: Designated Advisers and Reports) Regulations 2023. Your designated adviser should be familiar with this.

2. Be satisfied that the proposed terms are the best you can reasonably obtain for your charity

You must:

• consider the report’s recommendations, including how to advertise the disposal
• be satisfied, that the proposed terms are the best that you can reasonably obtain for your charity
• include certain statements and certificates in the disposal documents

You should keep a clear record of your decision-making. You may choose not to follow all of the report’s recommendations, but you should clearly record your reasons for this.

When you must get Charity Commission authority

You must apply for Commission authority before you dispose of land:

• if you do not follow these 2 legal requirements. For example, because the cost of a designated adviser’s report would be out of proportion to the value of the land
• if you are proposing to dispose to a ‘connected person’
• if you are disposing of designated land in most circumstances

More about these situations and how to apply is covered next.

If you do not follow these 2 legal requirements

When you apply for Commission authority you will need to explain how you have:

• valued the land with supporting evidence
• advertised the proposed disposal
• managed any conflicts of interest
• decided the proposed disposal is in your charity’s best interests

Apply for Commission authority if you do not follow the 2 legal requirements.

If the proposed transaction is with a ‘connected person’

A ‘connected person’ is defined in section 118 of the Charities Act. It is certain people or organisations closely connected to or associated with the charity and includes:

• the trustees and their close relatives
• a donor of any land to the charity and their close relatives
• employees, agents or officers of the charity
• the spouse or civil partner of either a trustee, donor of land, employee, or close relative of a trustee or donor
• organisations in which any of the above have a controlling or substantial interest. This includes a wholly owned subsidiary of your charity

Check the list in section 118 of the Charities Act or get professional advice if you are unsure whether someone is a connected person.

Remember that if you are selling, leasing or otherwise disposing of land to a connected person, the transaction still needs to be in the best interests of your charity and on the best terms that can reasonably be obtained. When you apply for authority, you will need to demonstrate that the terms agreed are the best that can reasonably be obtained and provide a summary of the designated advisor’s report.

Apply for Commission authority to dispose of land to a connected person.

If you are disposing of designated land in most circumstances

You must get Commission authority to dispose of designated land in most circumstances if you do not intend to replace the land.

Read the section on disposing of designated land below if you are planning to dispose of this type of land

Selling land at auction

You must follow the 2 legal requirements set out above before the auction and be satisfied that an auction is in the best interests of your charity. You may find it helpful to get professional advice.

You should also:

• set the reserve price at or above your designated adviser’s lowest value for the land. The reserve price is the minimum price the land is allowed to sell for at auction
• write into the conditions of the sale that if the purchaser is a connected person, the transaction will be subject to a Charity Commission order being made

Legal requirements for ‘short leases’

This section is about granting a lease of your charity’s land for 7 years or less where no fine or premium is required to be paid to your charity.

If you grant a lease that includes an option to renew or extend for a further period of time, and the sum of two periods exceeds 7 years, you need to follow the legal requirements for sales, longer leases and other forms of land disposal.

To grant a ‘short lease’, take the key actions for all types of disposal. Then, comply with these 2 legal requirements that are set out in the Charities Act, unless an exemption applies.

You must:

1. Get and consider a report from a person competent to give advice on the disposal

You must get a report from a person who you believe to have the ability and experience to give competent advice on the lease. You must do this before you agree the lease.

There is no requirement for your adviser to have a professional qualification, but we recommend that they are a member of a relevant professional body such as:

• National Association of Estate Agents Propertymark (NAEA Propertymark)
• Central Association for Agricultural Valuers (CAAV)
• Institute of Revenues Rating and Valuation (IRRV)
• Royal Institution of Chartered Surveyors

The report can be provided by a trustee, officer or employee of the charity if you consider that they have the right ability and practical experience. You must manage any conflicts of interest.

If you want to pay a trustee for providing a report, you must:

• make sure your governing document does not prevent you from paying trustees for services they provide to the charity
• follow the legal requirements for paying trustees

Read our guidance about trustee expenses and payments.

You should also check your charity’s insurance cover. Not all insurance will cover negligent advice given by an adviser who is also a trustee, officer or employee of your charity.

2. Be satisfied that the proposed terms are the best you can reasonably obtain for your charity

You must:

• consider the report’s recommendations
• be satisfied that the proposed terms are the best that you can reasonably get for the charity
• include certain statements and certificates in the lease documents

You should keep a clear record of your decision-making. You may choose not to follow all the report’s recommendations, but you should clearly record your reasons for this.

When you must get Charity Commission authority

You must apply for Commission authority before you grant a short lease of your land if:

• you do not follow the 2 legal requirements set out above
• the lease is to a ‘connected person’
• you are leasing designated land in most cases

More about these situations and how to apply is covered next.

You do not need Commission authority if the lease is to a charity employee with the right to live in the property as their home, and either the lease is for a:

• fixed term of one year or less, or
• periodic tenancy of one year or less

If you do not follow the 2 legal requirements

When you apply for Commission authority, you will need to explain how you have:

• valued the land with supporting evidence
• advertised the proposed disposal
• managed any conflicts of interest
• decided the proposed disposal is in your charity’s best interests

Apply for Commission authority if you haven’t followed the 2 legal requirements.

If the proposed transaction is with a ‘connected person’

A ‘connected person’ is defined in section 118 of the Charities Act. It is certain people or organisations closely connected to or associated with the charity and includes:

• the trustees and their close relatives
• a donor of any land to the charity and their close relatives
• employees, agents or officers of the charity
• the spouse or civil partner of either a trustee, donor of land, employee, or close relative of a trustee or donor
• organisations in which any of the above have a controlling or substantial interest. This includes a wholly owned subsidiary of your charity

Check the list in section 118 of the Charities Act or get professional advice if you are unsure whether someone is a connected person.

Remember that if you are leasing land to a connected person, the transaction still needs to be in the best interests of your charity and on the best terms that can reasonably be obtained. When you apply for authority, you will need to demonstrate that the terms agreed are the best that can reasonably be obtained. You will need to provide a summary of the report you obtained from a person you believed to have the ability and experience to give competent advice on the lease.

Apply for Commission authority to dispose of land to a connected person.

If you are disposing of designated land in most circumstances

You must get Commission authority to dispose of designated land in most circumstances if you do not intend to replace the land.

Read the section on disposing of designated land below if you are planning to dispose of this type of land.

Exemptions to following the legal requirements

There are exemptions that mean some disposal types can be completed without complying with the legal requirements for sales, longer leases and other forms of land disposal or short leases.

Leasing land to a beneficiary

You can do this for less than the best rent you could have reasonably expected to receive in the circumstances, if it is a reasonable way of achieving your charity’s purpose. You are not required to follow the legal requirements set out above.

For example:

A charity whose purpose is to relieve poverty by providing housing can lease property to one of its beneficiaries for less than the market value. This is a way of achieving its purpose. The charity does not have to comply with the legal requirements set out above before leasing the property to the beneficiary.

Selling, leasing or otherwise disposing of land for nominal value to a charity with the same or similar purpose as your charity

You can do this without meeting the legal requirements if the only aim of the disposal is to further your charity’s purposes. The disposal would be for nil or nominal value because it is not about raising funds for your charity.

You should check the purposes of your charity and ask to check the other charity’s purposes in their governing document.

The other charity’s purpose must be the same as your charity’s purpose, or must include your charity’s purpose if its purposes are wider than your charity’s purpose.

Where the other charity’s purposes are wider than your charity’s purpose, there must be a restriction in the trusts so that the land being disposed of is used – after its transfer to the other charity – to further your charity’s purpose. This includes if the land is subsequently disposed of by the other charity. If it is, the proceeds of the disposal must be used by the other charity for the purposes of your charity; they must not be used for the wider purposes of the other charity.

Always take professional advice if you are unsure.

For example:

Charity A has the purpose of relieving poverty in Aberystwyth. The trustees want to transfer land to charity B which has the same purpose, but for no or nominal value. This is because charity B is in a better position to use the land and making a financial return for their charity is not the reason for charity A selling the land to charity B.

Charity C’s purpose is to promote good health within England, whereas charity D’s purpose is narrower: it is to promote good health within Norfolk. Charity D can transfer its land to charity C, but charity C can only use the land, or any money it gets from disposing of the land, to promote good health within Norfolk.

Disposing of land to a charity with different purposes does not fall into this exemption. You must follow the legal requirements for sales, longer leases and other forms of land disposal or short leases.

Disposing of land  where your intention is both to achieve a financial return and to achieve your charity’s purpose (a social investment) does not fall into this exemption. You must follow the legal requirements for sales, longer leases and other forms of land disposal or short leases and consider that the terms agreed are the best that can reasonably be obtained. This is different than achieving the best price in the context of a social investment.

For example:

Charities E and F have the same purpose, to provide housing to homeless people. Charity E chooses to sell land worth £100,000 to charity F for a reduced price of £80,000. It is doing this both to raise some money for itself, but also to ensure the land is still used to achieve charity E’s purpose. This is classed as a social investment as making a financial return is part of charity E’s decision to sell the land to charity F. Therefore, charity E must follow the legal requirements for sales, which includes being satisfied that the terms are the best that can reasonably be obtained.

Read guidance about social investment.

Disposals by liquidators, provisional liquidators, receivers, mortgagees or administrators

These types of disposal are not required to follow the legal requirements set out above.

Disposing of land using a power in an Act of Parliament, other statutory provision or scheme

Some charities are set up by an Act of Parliament or are governed by some other statutory provision or court or Commission scheme. These may give you express authorisation to dispose of:

• a specific piece of land or
• land in specific circumstances

You must check the wording very carefully, follow the requirements, and take legal advice if you are unsure. The power must be expressly given for a particular disposal or class of disposal. You will not be exempt if you just have a general power of disposal.

If you have express authorisation for these disposals, you are not required to follow the legal requirements set out above.

Your charity is an exempt charity

Your charity is not required to follow the legal requirements set out above. However, you may have to follow different requirements set out by your principal regulator and you will need to check this.

Releasing a rentcharge

A rentcharge is an annual payment to a person who does not own the land or have any other legal interest in it. If your charity owns a rentcharge of £10 or more, we encourage you to negotiate for its release as they can be difficult to collect and the amount of a rentcharge often bears no relation to the value of the land.

You do not need to follow the legal requirements for sales, longer leases and other forms of land disposal if you release a rentcharge for a payment of ten or more times its annual amount.

Disposing of an advowson

You can dispose of an advowson without following the extra requirements for sales, longer leases and other forms of land disposal.

A charity that owns an advowson has the right to nominate a suitably qualified candidate as a vicar or parson of a parish to the Bishop of the diocese.

Disposing of designated land

This section covers:

• what designated land is
• when you need Charity Commission authority to dispose of designated land, and when you do not
• if you need authority, how to apply
• giving public notice
• using the proceeds of disposal

What is ‘designated land’

Designated land is land that must be used for a particular purpose or purposes of your charity according to the document that explains how the land must be used. This will be the ‘governing document’.

For example:

• property which must be used as a recreation ground, or
• a building which must be used as a school

Designated land may be ‘specie’ land; it may also be permanent endowment.

To find out if your charity has designated land look at the terms of the documents that explain how the land must be used, for example wills, conveyances or trust deeds.

These will set out important instructions on how to use and manage the land. They may also include instructions about:

• disposing of the land
• how any proceeds may be used

You should take professional advice if you are unsure whether your charity has designated land, what powers you have to dispose of the land and how you may use the proceeds.

Before you make a final decision to dispose of designated land you should, in most cases, consult:

• your charity’s beneficiaries, and
• anyone else who may be affected by the disposal

You should consider their views when making your decision.

The decision to dispose must be in your charity’s best interests. Use our decision-making guidance to help you.

When disposing of designated land:

• you must obtain Commission authority unless you can go ahead without it, as explained below
• you must comply with the legal requirements that apply to the disposal of any charity land unless an exemption applies, as explained in the rest of this guidance above
• you may need to comply with the rules on giving public notice, as explained below

When you do not need Commission authority

You do not need Commission authority to dispose if:

(1) you will use the proceeds of the sale or lease to replace the designated land with equivalent land which will be used for the same charitable purposes

(2) disposing of the land will not impact on the purpose for which the land is required to be used or how the charity furthers its purpose. For example, where only a small portion of the land is to be disposed of, or you are granting an easement or public right of way

In either of these circumstances, you can start the process to sell or lease or in some other way dispose of the land.

You must comply with the usual requirements that apply to the disposal of any charity land. (These vary depending on how you plan to dispose, for example a short or a long lease, or a sale. There are also requirements covering disposing to a connected person). 

Read the relevant sections of this guidance above to understand what these requirements are.

And, if circumstance (2) applies to you, read the section below about giving public notice.  

When you must get Commission authority

You must get Commission authority if:

• neither circumstance (1) nor (2) above apply to your disposal
• your governing document does not include a power to dispose of the land

You must have received Commission authority before you start the process of disposing.

The authority you need is about changing the purposes of the designated land.

This is because you can no longer carry out the charity’s purpose without the land.

For example:

A charity with a purpose that requires its designated land to be used as a recreation ground could no longer carry out that purpose if all of the recreation ground land was sold and not replaced.

There are rules about changing charity purposes. Read guidance about changing governing documents to help you comply with these rules. It also explains how to apply for Commission authority.

Disposing of the land after receiving Commission authority

Once you have received Commission authority to your new purposes, you can start the process of selling, leasing or in some other way disposing of the land.  

You must comply with the usual requirements that apply to the disposal of any charity land. (These vary depending on how you plan to dispose, for example a short or a long lease, or a sale. There are also requirements covering disposing to a connected person). 

Read the relevant sections of this guidance above to understand what these requirements are.

Giving public notice of your plans before you dispose of designated land

You must give public notice of your plans before disposing of designated land, or agreeing to dispose, unless:

• the land is being replaced
• you are granting a lease for a term of 2 years or less with no premium or fine
• you have received Commission authority to change the purposes of the designated land, and the land is now no longer designated (see preceding section above)

Your notice must:

• provide details of the land
• explain how you want to dispose of the land
• invite people to contact you with any objections or comments
• give people a minimum of one month to contact you

You should try to reach as many of your charity’s beneficiaries as is reasonably possible.

You can match your approach to your charity’s circumstances. For example:

• a small, community-based charity advertising in a local newspaper or by a notice fixed to the property
• a larger charity choosing a national newspaper, its website and social media
• a charity specialising in a specific activity advertising in a specialised publication, its website and social media

You can apply for Commission authority not to give public notice of the disposal where it is clearly in the charity’s best interests. For example:

• the governing document says that you need to do something more than give public notice, such as holding a public meeting
• you have already consulted widely about the proposal, for example if you consulted before you made your decision to dispose and you do not consider that views have changed

You should consider all feedback you receive, with other relevant information, before you proceed to dispose of the land.

Proceeds of disposal

If you changed the purposes of the designated land and received Commission authority, the new purposes govern and explain how you must use the proceeds.

If you have disposed of designated land as described in (1) and (2) above, and you have proceeds, the governing document may set out how to use them, for example on the repair and upkeep of the replacement, or existing, property.

If the governing document does not set out how to use the proceeds, you will need Commission authority to change the purposes of the proceeds to suitable new purposes. For example, the repair and upkeep of the replacement, or existing, property.

Read guidance about changing governing documents.

Seek professional advice if you are not sure.

Statements and certificates you must make

For all disposals (except advowsons and certain rent charges) you must make certain statements and certificates in your disposal documents, which state:

• how the land is held and by what sort of charity
• how the disposal is allowed by law

Your solicitor or other professional adviser will usually draft all the documents for the disposal. They must make sure the statements and certificates use the correct wording. The Land Registry Practice Guide gives further detail.

If you are disposing of land which is vested in the Official Custodian for Charities then they must be named on any conveyance, lease or other disposal document. Read what needs to be done when land vested in the Official Custodian is disposed of.

Legal note

The main laws relevant to this guidance are:

Charities Act 2011 (as amended)

Trusts of Land and Appointment of Trustees Act 1996

Trustee Act 2000