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Community Asset Transfer FAQ

 

What is Community Asset Transfer?    Community Asset Transfer (CAT) relates to the transfer of responsibility for assets from public authorities to community organisations (COs).  This can be through a lease, ownership or other management responsibility, the terms of which are contained in Part 5 of the Community Empowerment Act 2015.

Who can make a CAT request?  A request can only be made by a community transfer body, defined as a community controlled body with a minimum membership of 20 people, which must be constituted in the form of a Scottish charitable incorporated organisation (SCIO), a community benefit company or a company limited by guarantee.  Further information is available at www.fifedirect.org.uk/CAT

How do I apply for a CAT?  The Council has a two stage process for making a CAT application.  Stage 1 is a pre-application enquiry, where the organisation provides some basic information about itself and how it is intending to use the asset.  Stage 2 is the full application stage, where more information is required from the group, including a detailed business plan and community consultation.  See above link to the CAT page on Fifedirect.

Can I apply for a CAT of a property that has not been formally declared surplus to Council requirements?  Yes, legislation allows applications to be made, irrespective of whether a property is vacant or still being used by the Council.  Upon receipt of a Pre-Application Enquiry Form, a local assessment team will carry out an initial assessment to determine whether the service being proposed is viable and/or can an alternative solution be found for the community organisation.

What happens if more than one Community Organisation is interested in the same property?  If there is interest from more than one group in acquiring an asset, then the COs may be encouraged to develop a joint bid.  When there are competing proposals, then a decision will be made on the basis of which applicant demonstrates the widest community support and sustainability.

What support and guidance is available to Community Organisations?  You will receive support from a member of the Local Assessment Team who will, wherever possible, support the CO to access guidance and funding.  The contact will co-ordinate the provision of advice and information from relevant Council departments, as necessary.  Guidance on CAT is also available from the Development Trusts Association Scotland website www.dtascommunityownership.org.uk

Can our organisation have a 25 year lease?   Yes.  However, organisations should first consider their constitution (see Q9.), as individual office bearers would be personally liable. It is more secure for this length of lease to be entered into by a company limited by guarantee or SCIO. Organisations should also be aware of some of the consequences of entering into a lease of this length, particularly in terms of repairs, maintenance and insurance, especially for buildings with significant condition issues at the start of the lease.  

What does 'wind and watertight' mean?  This means that the landlord will undertake external repairs to the building to ensure that wind and water do not enter it.  However, the landlord will not accept responsibility for any broken windows or for wind and water entering the building through broken windows or glass doors. The tenant will be responsible for all internal repairs and for the repair of windows and glass in doors. 

What does 'fully repairing and insuring' mean?   The tenant will be responsible for arranging contents and public liability insurance, and will be responsible for all repairs to the building, both external and internal, unless the landlord has agreed to keep the building wind and watertight.  This includes all grounds and car parking within the lease site.  It is often the case, however, that the Council will insure the leased building against standard risks, including loss of rent, which might occur due to extensive damage requiring the tenant to vacate the building for a period while repairs are carried out. The premium for the insurance policy will be recharged to the tenant.

How long will it take to negotiate a lease from the point of application?  Approximately 6-8 weeks, but this depends on a number of factors, including how much negotiation occurs after notification from an organisation that they wish to proceed, along with the volume of applications received at any given time.  Prior to the Estates Service instructing Legal Services, it is hoped and anticipated that most issues will have been raised and resolved.

How long will it take to conclude a lease once Legal Services are instructed?  Once Legal Services are instructed they will issue an offer of lease with a draft lease attached as soon as possible. The lease can be concluded within two weeks from that point, if the tenant accepts the offer without qualifying it and raising questions about it.  The more qualifications made and questions asked the longer matters will take. A solicitor will advise you that a 25 year lease should be registered in the Land Register. There will be additional work associated with this involving a full investigation into the Council’s titles.

Who pays the fees associated with entering into the lease?  Where the Council is pro-actively engaging with and encouraging organisations, the Council would proceed on the basis of "each party bears their own costs". You would only pay your own legal fees incurred in relation to negotiating and signing the lease. There would be no recharge by the Council for Legal Services time.  However, all registration dues for the registration of the lease etc, would be paid by the tenant. If you want to enter into a lease for a property that the Council is notactively trying to dispose of, then the organisation would have to pay both their own legal costs and those incurred by Fife Council Legal Services.

There will also be outlays associated with the registration of a lease. Registration in the Books of Council and Session for preservation and execution will be £22 payable by the tenant. A 25 year lease requiring registration in the Land Register will involve registration dues payable to the Keeper by the tenant, and this is a sliding scale depending on the value of the property. There may also be Land and Buildings Transaction Tax payable and a solicitor can advise you in relation to this.

Who is responsible for insuring the building and contents? The tenant is responsible for insuring their own contents.  Fife Council will arrange and invoice annually for building insurance cover for all leased buildings (see document in the publications section on this page relating to Management Committees' Insurance Options). 

Fife Council have stated that there are significant amounts of backlog maintenance and future maintenance liability.  Will Fife Council bring the property up to standard before the lease is signed?   No. The condition survey reports and the amount of outstanding maintenance refer to elements which "might" need to be replaced 10 years from now rather than immediately. The survey and report is undertaken to a framework and standard required for the Council internally and not for external purposes – this is highlighted in the report. The condition of the building will be reflected in the rent which is charged, with buildings in a better condition generating a higher rent.

What constitutional arrangements need to be in place for a lease to be signed?  An unincorporated body with a constitution which allows office bearers/trustees appointed at a quorate AGM to lease property and operate bank accounts, etc. Office bearers who sign the lease become personally liable for complying with its terms. Alternatively, and particularly in the case of a longer lease, the tenant can be a company limited by guarantee or SCIO.  Fife Voluntary Action can help groups to ensure that their governance arrangements are appropriate both for leases and more generally.

What are the annual lease charges that tenants have to pay?  Tenants are responsible for meeting all the costs in relation to the building.  If there is income being generated from the building that is kept by the tenant.

Who is responsible for health and safety once the lease is signed?  The tenant is responsible, but Fife Council can provide advice and training.

Will the tenant be required to use Fife Council Property Services to carry out repairs and maintenance in the facility? No, but any work should be undertaken by a reputable company and may require a Building Inspector to check and sign the work off. 

What mechanism is in place to ensure Property Services are satisfied with any repairs or maintenance undertaken by the tenant?  At the end of the lease, if there are outstanding maintenance, repairs or renewals which the tenant is responsible for and has failed to carry out, or if the maintenance, repairs or renewals which the tenant has undertaken are inadequate or unsatisfactory to the Council, then the tenant will be required to make these good to the Council’s satisfaction.  If the tenant is unable or unwilling to do this, the Council will maintain, repair or renew to its satisfaction and recharge the tenant the cost incurred in doing this. If the tenant fails to pay, legal action through the Court is available to the Council to recover the sum due.  An agreed schedule of condition of the leased property at the start of the lease would assist any group to fulfil its obligations. 

What happens at the end of the lease period? Generally, the Council would hope to continue with the lease arrangement and offer a renewal to the tenant on terms to both parties satisfaction.   If the lease is not to be renewed, the tenant will need to restore the leased property to the condition which the lease requires it to be in at the end of the lease, remove all contents and return the keys for the buildings to the landlord.

What funding will be made available to organisations to upgrade or improve the facility?  This depends on funding sources available and whether the group qualifies at the time of making an application.  Support can be provided through Fife Voluntary Action and the Council’s Community Investment Team.

If a group is in receipt of a recurring grant, will that be affected?  The grant position will need to be discussed with the funding Service when the grant comes up for renewal and will depend on funding availability at the time.  NB – The nature of recurring grants is that they do not change from year to year (unless the Council applies % increase or decrease across all funded organisations) and therefore is not dependent on funding availability from year to year). 

Will there be break clauses?  Possibly.This will depend on what has been negotiated with the Estates Service by the group before Estates instruct Legal Services.

Who will be responsible for energy performance? Legislation sets out who is responsible for carrying out energy performance improvements and the need to provide energy performance certificates.  Independent advice can be provided by Fife Voluntary Action or COSS/ DTAS. 

 Where can a group get independent advice/support?  From Fife Voluntary Action or a solicitor.  The Council’s Legal Services can only provide legal advice to the Council and will always recommend that groups obtain independent legal advice from their own solicitor on the terms of an offer of lease and the lease before accepting the offer and signing the lease. 

What if the lease is entered into but the service being provided becomes non-viable - what are the group's options?  Some potential options will need to be discussed, including discussion with the Council on whether an alternative option can be found for the group to carry on providing the service or to wind up the service completely. 

Why is the group having to pay for buildings insurance when they are only being asked to undertake internal repairs?  If the Council is not operating from a building or only partly occupying a building, the insurance terms are different compared to if the Council was sole occupier of that building.  The Council, as landlord, will insure the building against any significant damage to it, as the risk to the Council increases when it is not in direct control or occupation of the asset.   If the Council is not operating from a building or only partly occupying a building, the insurance terms are different compared to if the Council was sole occupier of that building.  The Council, as landlord, will insure the building against any significant damage to it, as the risk to the Council increases when it is not in direct control or occupation of the asset. 

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