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A recent Court of Appeal case, Banner Homes Limited v St Albans City and District Council, has confirmed that an open space can be listed as an asset of community value, even where its present use - in this case the carrying out of recreational activities by the local community - had constituted a trespass.
An open area of undeveloped land at St Albans ("the Field") had been owned by Banner Homes since 1996 and was bisected by two public footpaths which cut across the Field.
The Field had been used by the public for more than 40 years for various recreational activities, including children's play, walking, kite flying and exercising dogs. Whilst it did not expressly permit the use made by the local community of the Field, the Court heard that Banner Homes were well aware of the use.
In March 2014 St Albans and City District Council listed the Field as an asset of community value ("ACV") following a nomination by a local residents' association.
It was common ground that the use of the Field beyond the public footpaths for the recreational activities constituted a trespass.
The ACV scheme is contained in Part 5 of the Localism Act 2011 ("2011 Act") and is supplemented by the Asset of Community Value (England) Regulations 2012.
The 2011 Act requires local authorities to keep a list of assets (meaning building or other land) that are of community value. Once an asset is placed on the list, the effect of the listing is that an owner intending to sell or grant a long lease of the asset must give notice to the local authority.
Community groups then have six weeks in which to ask to be treated as a potential bidder. If they do, the sale or grant (including exchange of contracts) cannot take place for six months except to a community interest group.
The theory is that this period, known as a moratorium, will allow the community group to come up with an alternative proposal. After the end of the moratorium, the owner is then free to dispose of the asset to whomever they choose.
Under section 88 of the 2011 Act an asset may be listed where:
- it has a main "actual use" that is current and furthers social wellbeing or social interest for the local community and it is realistic to think that this use can continue; or
- where the main use is from "a time in the recent past", it could resume within the next five years.
Local authorities are required to notify owners of the inclusion of their property on the list of ACVs and owners are entitled to ask local authorities to review their own decisions.
The decision on appeal
Banner Homes asked the Council for an internal review of its decision to list (the first step of the appeal process). Shortly before the review hearing, in early September 2014, Banner Homes fenced off the Field so that only the public footpaths could be accessed by members of the public.
In October 2014 the Council's listing decision was confirmed after a review and subsequent appeals by Banner Homes to the First-tier Tribunal and Upper Tribunal against that listing decision were unsuccessful.
On appeal from the Upper Tribunal, the issue for the Court of Appeal to decide in this case was whether, as Banner Homes argued, actual use for the purposes of section 88 of the 2011 Act must mean lawful use. Since the actual use of the Field by the local community outside of the public footpaths was a trespass, and therefore unlawful, it could not form the basis for listing an asset as being of community value.
The regime, Banner Homes argued, should not reward the unlawful actions of the community interest group with a right or benefit, as would occur if the listing decision were maintained.
Dismissing the appeal, the Court of Appeal refused to hold that the "actual use", for the purposes of section 88 of the 2011 Act, needed to be a lawful one. It was not willing to impose an inflexible "bright line" that any unlawfulness, no matter how slight, would prevent a use from qualifying as "actual use" for the purposes of the 2011 Act.
The Court also noted that, by reason of the nomination, Banner Homes felt constrained in order to protect its commercial interests, to fence off the Field from the public footpaths. This result, an unfortunate one for the community group, was clearly an unintended consequence of the 2011 Act.
The case will be noteworthy to developers and landowners as it demonstrates how an ACV listing can act as hindrance to future development.
However, Banner Homes were perfectly entitled to fence off the Field from the public footpaths, preventing the further use of the Field by the local community despite the ACV listing. So whilst an ACV designation may not obstruct development in the way that a town or village green registration would, there are still notable consequences, including:
- ACV listings can be treated as a material planning consideration: local planning authorities are likely to be mindful of the weight of community interest that a nomination can reflect when determining planning applications relating to an asset.
- Due to the potential moratorium period of six months on disposals, it may well slow down the release of development value, potentially deterring market interest and reducing the overall site value.
There may be ways of minimising the impact of an ACV listing. There is an appeal process that can be pursued: you can ask the Council to review its decision and then appeal to the First-Tier Tribunal in the event the Council confirm its decision on review.
An owner can also think about the timing of notifying the Council of an intended disposal. After the six week (or six month if the community group has asked to be treated as a potential bidder) moratorium period, there is a protected period of 18 months where there can be no restrictions on disposal of the asset: this is designed to stop a community group from repeatedly attempting to block any sale. Serving notice at the appropriate time on the local authority of the intended disposal may well minimise the disruption caused by an ACV listing, maximising the 18 month protected period in which an owner can sell free.
The full Court of Appeal judgment can be read here