Charities Act general valuation procedures
Whether the valuation procedure under section 119 of the Charities Act 2011 applies, the charity trustees must obtain written advice from a Qualified Surveyor (a Fellow or Professional Associate of the Royal Institution of Chartered Surveyors or as may be further specified in regulations) instructed by the charity trustees and acting exclusively for the charity. The charity trustees must reasonably believe that the Qualified Surveyor has the ability in and experience of the valuation of land of the type and in the area concerned.
- The surveyor must advise as to whether and how the proposed disposition is to be advertised, and provide the information and deal with the matters required by the act and set out in the Charities (Qualified Surveyors’ Reports) Regulations 1992 (the QSR).
- The QSR provides that the surveyor must consider a wide range of issues including: whether it would be in the best interests of the charity to repair any buildings on the land; whether it would be appropriate for the charity to alter any buildings prior to disposition (but be wary on this point of triggering a tax charge on the basis that this is development rather than merely obtaining a capital receipt on the sale of land); whether the land should be divided up for sale; whether the charity should advertise the proposed disposition, for how long and the manner in which the property should be advertised; and whether an application for change of use of land under the planning laws would be appropriate.
- The surveyor must address all the issues in the QSR, otherwise it appears that the report will be totally invalid.
- The advice could be given in a number of documents, as long as together they comply with the Act’s requirements. The number of documents varies from transaction to transaction.
- Typically a surveyor may give initial general valuation and marketing advice, but will modify and add to the advice in the course of marketing the property. The charity trustees must consider all the documents comprising the report and decide on the basis of the report whether the terms of the intended transaction are the best that can reasonably be obtained for the charity.
- The decision whether to proceed with the transaction is for the most part the trustees’ decision. There is no actual compulsion to comply with any surveyor’s recommendation apart from that relating to advertising the property.
- However, in making the decision the trustees have a general duty to act prudently and are, therefore, under a duty to consider professional advice in an appropriate manner. If the trustees were dissatisfied with the surveyor’s views on valuation and pricing, it is unlikely that they could justify substantially departing from that advice without seeking advice from another surveyor.
- In assessing the best terms that can reasonably be obtained, it may be that trustees can consider non-valuation issues in deciding whether to proceed. For example, the transaction may assist the charity to carry out its objectives by letting to a tenant who is required under the lease to do things that supplement what the charity does. The law is not clear on that point. Charity Commission guidance also does not deal with this issue in detail.