How to follow charity law when you buy, sell, lease, mortgage or transfer charity land and property.
How to sell or lease charity property
It’s usually straightforward to sell or lease charity land and property - most charities don’t need Charity Commission approval. You must try to get the best deal for your charity and follow any rules in the law and your governing document.
Before you start, you and the other trustees must be sure that:
- you have permission to sell or lease the property – either in your governing document or in the law
- there is nothing in your governing document that prevents you selling or leasing the property
- your charity actually owns the title to the property
- the sale or lease is in the charity’s best interests
- if the property is designated for a particular purpose, such as a recreation ground, that the sale or lease doesn’t go against this
Charity land sales and leases - legal requirements
The law says you must:
- try to get the best deal for your charity
- take written advice, including a valuation, from a qualified surveyor before you agree a sale or lease (although you don’t need one for a short lease)
- advertise the sale or lease, unless the surveyor says otherwise
To complete the sale or lease without commission involvement, you must comply with the requirements before entering into an agreement. If you do not, you will need to apply to the commission during the process, which will delay you being able to complete the sale or lease.
You also need to provide statements and certificates to assure the purchaser:
- how the land is held and by what sort of charity
- that the land is being disposed of legally
Some transactions don’t need to comply with these requirements, such as when you sell or lease property to another charity with similar aims.
When to get commission approval to sell or lease
You only need the commission’s approval if you:
- want to sell or lease any land that your governing document says must be used for a particular purpose (unless you are replacing it with equally suitable property, and this doesn’t go against the charity’s purposes)
- don’t want to follow the surveyor’s advice, such as the price they suggest or the method of sale or lease
- are specifically prevented from selling or leasing by your charity’s governing document
- intend to sell for less than the market value
- want to sell or lease to someone connected to the charity, such as a trustee, employee or their relative
If you want to sell or lease property to someone connected to your charity, apply using the commission’s online form.
Read guidance on:
- selling or leasing for less than the best price
- getting commission approval to sell or lease charity property
How to buy or rent charity land and property
Most charities can buy or rent property without commission approval - but you must make sure it is in your charity’s best interests. You can buy land or property for your charity to use or to generate income it can use to meet its purposes.
You and the other trustees are responsible for protecting your charity’s money and assets. This means you should make sure:
- the property is suitable for your needs
- the price is fair, or even discounted, compared with similar properties on the market
- you understand any legal obligations relating to the land, such as planning restrictions
- any loan or mortgage terms are reasonable and competitive
When to get commission approval to buy or rent
You need commission approval if you want to:
- buy or rent land from one of the trustees or from someone closely connected to the charity, such as a trustee’s relative
- buy land when your governing document specifically forbids it
- use permanent endowment (money from which only the income can be spent) to buy leasehold land and property
The commission’s detailed guidance on acquiring land explains when you need its approval to buy or rent charity property.
Mortgages and loans secured against your charity’s property
You can take out a mortgage or loan secured against your charity’s land without commission approval as long as you get legal advice in writing and ensure that the loan:
- is needed and used for an activity that fits with your charity’s purposes
- has reasonable and affordable terms and repayments
Charity land: who should hold the title
Charity land must be registered in someone’s name with the Land Registry.
If your charity is a company or charitable incorporated organisation (CIO), you can register the title to the land in the name of your charity.
If your charity isn’t a company or CIO, you could appoint individuals to hold the land on behalf of your charity (usually some or all of the trustees). This may lead to extra work and expense when trustees change, because you need to re-register land in the names of the new trustees.
To avoid this, you could transfer your charity’s land to the Official Custodian – this is a free service that the commission provides that holds your land constantly in the same name regardless of who the trustees are.
Find out more and apply using the commission’s online form.