Community Asset Transfer

With Local Authority budgets being squeezed, we hear a lot about Community Asset Transfers. Here’s our guide to what Community Asset Transfer means, the benefits, the risks, who can apply, the process – and more!

What is Community Asset Transfer?

Community Asset Transfer (CAT) is the transfer of land or buildings from organisations such as local authorities to community groups such as sports clubs, trusts, libraries and so on.

It is a big decision for any community group and should not be taken lightly. But we are here to guide you through. Find out what it means, what the process involves, the benefits and the risks!

CAT can be initiated by either the community organisation or by the public body. A community organisation may have identified an opportunity to develop an underused asset and might request an asset transfer from the local authority. Alternatively, Local Authorities can get the ball rolling through a Community Asset Transfer scheme. They might see CAT as a good way to maximise the use of a facility or land or as an investment opportunity. In these situations, they may implement a policy to transfer assets to community groups.

Who can apply?

• Community and Town Councils – the grassroots level of local governance in Wales; accountable to local people.
• The Third Sector - comprised of independent, non-government organisations that are motivated by social, cultural or environmental objectives. These include charities, voluntary/community organisations and social enterprises.
• Community Groups - run by and servicing the needs of the local community. Most sports clubs would fall under this category.

Here's more information on who can apply for a CAT.

Tenure types

There are several different types of legal agreements. This is called ‘tenure’ and simply means the conditions under which land or buildings are held or occupied.

The most suitable type of agreement or tenure will depend on the circumstances and factors such as council policies, legal covenants and the asset(s) to be transferred.

You should consult with an appropriately qualified and registered legal adviser when deciding which type of agreement or tenure is most suitable. You can find a solicitor in your local area that specialises in the services you require on The Law Society website.

Let’s take you through the main tenure options:

• Freehold - Purchasing the property as full owner through a legal document which would include the whole site or a part share in the site at full market or discounted price. Covenants can be used to restrict use or future sale conditions – for example, a covenant could be put in place to ensure the site remains for the benefit of the community and for sporting purposes only.
• Long Leasehold - A long lease which may be granted at a small price or for a purchase price usually over a long period of time. It may include a service charge or ground rent and the Lessee usually has the responsibilities of a freehold owner.
• Lease - Taking a lease for a fixed period of years at an annual rent, subject to various conditions. This is a common arrangement for sports clubs and the length of lease typically varies between 1 to 25 years. The lease may contain conditions that restrict how the asset can be used, such as the site can only be used for recreation and sporting purposes.
• Licence to occupy - Permission for a non-exclusive right of occupation over a defined period. These are often called preferential user agreements and are common on Local Authority managed sites that are public open spaces or have multiple users. These agreements are usually granted for a short period of time and provide sports clubs with little or no security.  It’s worth noting that most funders don’t consider this to be sufficient security to obtain finance.
• Management Agreement - An agreement that details the management responsibilities but is not a property contract. It usually provides details of how the site is to be used, conditions about public access and maintenance of the site. It can be used instead of or alongside a lease or licence and might be used in a situation where a long lease is impossible to offer. (For example, a cricket club may have a Management Agreement to maintain the square only because the rest of the site is used by other sports clubs.)

It is worth bearing in mind that most funders providing capital grants will need to know what agreement you have in place and for how long.  Different funding organisations will have different policies but most only consider freeholds, leaseholds and leases as acceptable forms of security of tenure.

Benefits of CAT

CAT can have many benefits for all parties if it is undertaken in a collaborative way. To be successful, the process needs to be well managed with appropriate timescales.

Benefits to the organisation making the transfer:

• Protects community assets from being closed and ensures the long-term future of sport on the site
• Produces and develops a more sustainable business model for the site
• Enhances relationship between the Local Authority and the local community.
• Local people are involved in the running and development of the services and assets that they use.
• Community Groups have more opportunities to secure capital investment to develop the assets
• Reduced maintenance costs for the council.

Benefits to sports clubs and community receiving the transfer:

• Provides sports clubs and community groups with more security and control over their facilities
• Improves the standards of the facility to meet the expectations of members.
• Opportunities to expand the activities of the club and grow participation levels.
• Becomes a catalyst for more community involvement by recruiting more volunteers
• Enables the club to generate additional income and become more financially sustainable with less reliance upon grants
• Improves club management structures and governance arrangements.
• Provides clubs with the ability to work collaboratively and in partnership with other sports
• Previously disused facilities are available to the community
• Supports the local economy through locally owned and managed assets

Risks of CAT

There are of course risks - especially if a transfer is poorly managed.

These include:

• Does the club have the capacity to manage the assets? Does it have the workforce/volunteers and the know-how to operate and maintain a facility?
• Can the club afford to maintain it? Can the club generate enough income to cover the day to day costs as well as a rainy day savings pot to invest in maintenance projects?
• Is the facility fit for purpose? If the facility hasn’t had any investment for a while, it may mean that serious refurbishment is needed. Usually this type of work is not eligible for grant funding. This means that an asset should either be fit for purpose on transfer or a pot of funding should be made available by the Local Authority to cover the work required.
• Does the club have the volunteers and resources to manage the transfer? The actual process of CAT can take a long time, up to several years in some cases. Does the club have the volunteers and resources to commit to the process over an extended period?

Even if a club feels under pressure to take on an asset, it should not do so if the project does not have the potential to be viable.

Local Authority CAT Policies

Most  Local Authorities in Wales have a Community Asset Transfer scheme. The policy should include details about the decision-making process, the criteria that applications are assessed against, the timescales and the documentation that applicants will need to present.

Several local authorities who are actively pursuing CAT have created specific roles to manage the process. These individuals have detailed knowledge of the council’s policy, the application process and can advise clubs throughout the process.

Contact your Local Authority to find out who is responsible for this area of work. Alternatively, your National Governing Body or Sport Wales should be able to help.

The application process will vary across Local Authorities. A typical transfer takes between one and two years to complete but in some cases has taken up to seven years.

Usually, the application process looks like this:

1. CAT opportunity advertised by Local Authority to make potential interested parties aware.
2. Pre-application discussions take place between interested parties and the Local Authority to understand the conditions of any transfer.
3. Initial Expression of Interest (EOI) is submitted by the interested party to the Local Authority. There is often a standard form provided by the local authority.
4. Local Authority reviews the EOI and decides whether or not the application can proceed to the next stage. The review would consider if the applicant is eligible and if its objectives align with the council’s priorities.
5. Submission of full detailed business plan by the interested party detailing how the asset will be managed and how it will provide benefits to the local community.
6. Local Authority reviews the business plan and decides if transfer is to proceed.
7. Legal transfer of the asset proceeds via the preferred agreement route.

Negotiation and communication between the parties is essential throughout the process to ensure everything runs smoothly.