Property Management

5C Assured Shorthold Tenancy – Legal Information

5. PROPERTY MANAGEMENT

5.1 Acquisition and Disposals

All school land and buildings are vested in the Diocesan trust. The trustees make the ultimate decision whether to buy or sell land. In all instances, the Diocesan Finance Office must be involved from the earliest stages.

The disposal of land requires a surveyor's report to the trustees as set out in the Charities Act 1993 Section 36 and its Qualified Surveyors Report Regulations 1992. Briefly, these require that trustees before entering into an agreement for the disposal shall:

- obtain a written report on the proposed disposition from a Qualified Surveyor (as defined in the Act) acting exclusively for the Charity;

- advertise the proposed disposition unless in the report the qualified surveyor has advised it would not be in the best interests of the charity to advertise; and

- decide that they are satisfied that the terms on which the disposition is proposed are the best that can be reasonably obtained for the charity.

Sales cannot be made to a person connected to the Diocese which includes a trustee, a person who is a donor of any land, a relative of a trustee or donor, an officer, agent or employee of the Diocese of the spouse of any such people. The list is however not exclusive and the Diocese's solicitor should be consulted if there is any doubt in this respect.

Generally, redundant school land is disposed of with the benefit of a planning consent for development. This gives the purchaser a degree of comfort in what the land may be used for. Land is sold to the highest bidder to obtain the best consideration in monetary terms. In a sale, the planning application for development will usually require the services of an architect and a valuation surveyor or a planning consultant to secure the maximum potential from the site. The fees of these and other professionals such as solicitors must be allowed for, regardless of whether the sale goes ahead. Occasionally, if the planning application is rejected, an appeal is made and this entails further professional costs.

Acquiring property and land is again the Diocesan trustees' decision. The trustees may require a valuation surveyor's report if deemed appropriate. A building surveyor's report on the physical condition of any buildings is usually required.

All professionals, in particular the valuation surveyor, solicitors, and architects, if appropriate, will be Diocesan appointments. This ensures a consistency in provision of advice. Instructions to these professionals is always through the Diocesan Finance Office. Obviously, the school governors will have a considerable involvement in buying or selling land.

5.2 Business Leases, Telcomm Leases, Licences, Easements, Wayleaves etc.

A lease is a disposition of property giving exclusive usage to a tenant. A licence allows a licensee to use property on a regular basis but without exclusive rights to any part. There are other forms of legal rights or control over Diocesan property, such as, easements, wayleaves, rights of way, drainage rights, listed building orders, conservation area allocation/ status, preservation orders, restrictive covenants, planning agreements, etc. These matters affect the use of church property and in all instances the Diocesan trustees have the ultimate decision whether to grant or accept them.

5.2 Business Leases, Licences, Easements, Wayleaves etc. - continued

Long Leases/Licences Leases/licences longer than seven years require a report by a qualified surveyor in the same way as for land sales above. The rent must be the best obtainable and the property should be advertised as recommended by the surveyor. The tenant must not be connected to the Diocese, in the same way as for land sales above.

Telcomm Leases Leases to telecoms companies for mobile phone aerials have proved contentious with neighbours. When approached by a telecom company, the school governors should first contact the Diocesan Finance Office for advice.

Short leases/licences Short leases/licences for less than seven years do not necessarily require a report by qualified surveyors but from a "competent" person, that is someone with knowledge of the rental market, such as estate or lettings agents, or bank managers. The rent must be the best obtainable and the tenant must not be a connected person.

In all instances, it is a Diocesan requirement that the Diocesan solicitor draws up the requisite legal document. Leases and licences are specialist documents and the essential data required by the solicitor is set out in Appendix 5A. Leases are always excluded from the Landlord and Tenant Act 1954 thus removing a tenant’s statutory right to renew and allowing the Diocese to regain control at the end of the lease. The school governors should first contact the Diocesan Finance Office before embarking on buying or selling, or agreeing leases or licences of Diocesan property. The Diocese will ensure that the school governors are fully involved in decisions. Only the Diocesan trustees can sign the legal documents.

5.3 Letting of Land or Fields

Great care must be taken in allowing animals in particular to use school grounds or fields. An agricultural tenancy may be inadvertently created with severe limitation placed on the Diocese as landlord. The Diocesan Finance Office should always be consulted first.

5.4 Assured Shorthold Tenancy for Residential Tenancies

As assured shorthold tenancy can only be used for the residential occupation of Diocesan properties. It is a disposition of land and the trustees have to comply with the requirements of the Charities Act 1993. When a tenant is found, the trustees have to receive a report from a "competent" person or a chartered valuation surveyor on the proposed tenancy. See Appendix 5B. A "competent" person is someone with knowledge of the rental market such as an estate agent, letting agent or bank manager. The rent must be the best obtainable. Then the Diocesan solicitor will draw up the legal documents. The tenancy agreement must be signed by the tenant(s) before occupying the property. Tenants must not be allowed into the property before signing the documents.

The Diocesan solicitor will draw up a tenancy agreement based on the information supplied by the school governors in the pro forma in Appendix 5C. We recommend using the minimum tenancy period of six months, and then to allow the tenancy to run on beyond that on a month by month basis as a "periodic" tenancy. This has the advantage that the tenancy can be drawn to an end by the landlord giving two months' notice of termination. The earliest that notice may be given is at four months' in order to give the minimum six month period. The tenant can give one month's notice.

Although a tenancy is allowed to run on, rent should be reviewed annually on the anniversary date. If an increase is required, the Diocesan Finance Office can issue a standard letter to the tenant(s) giving the new details.

5.4 Assured Shorthold Tenancy for Residential Tenancies – continued

Where the tenant refuses to agree an increase in rent, then the Diocesan Finance Office can bring the tenancy to an end with the appropriate notice period.

The school governors should contact the Diocesan Finance Office at least four weeks before tenants are due to move in to allow time to complete all the necessary documents and distribute them to the appropriate parties.

The Diocese usually recommends the use of a letting agent for residential lettings. The agent acts as intermediary between the school governors and tenant and this helps reduce any personal involvement or difficulties with the tenant. However, the agents must use the tenancy agreement drawn up by the Diocesan solicitors. Also the letting agent should not terminate the agreement at the end of six months. Some agents regrettably do this automatically. They must not.

It is a legal requirement that where houses or flats are let all electrical and gas appliances belonging to the landlord are subject to annual safety checks by qualified contractors.

5.5 Service Occupancy Agreements for Employees

Some employment positions eg caretakers require an employee to live in Diocesan accommodation for the better performance of his/her duties. This could apply to caretakers or pastoral assistants for example. The Employment Contract must be accompanied by a Service Occupancy Agreement (SOA) regulating the use of the accommodation. The employee must sign the SOA before moving in. The employee will occupy the accommodation free of charge. The SOA is linked to the employment, so if the employee leaves or is dismissed, s/he has to quit the accommodation at the same time. The proposal to provide accommodation should be discussed with the Diocesan Finance Office before any action is taken. The Diocesan Finance Office can arrange drawing up the SOA.

5.6 School Premises Hirings

Regular lets, say one day a week for an aerobic class, should be regulated by a licence. The school premises Hiring Agreement is designed for one-off lets, for example, for parties or for a one month language school. Surveyors reports under the Charities Act 1993 are not required. The Chairman of Governors may sign the agreement with the hirer.

Hiring out the school premises can generate some income as a contribution towards its upkeep. The management of lettings needs careful consideration. In particular, the cleaning of the floors, toilet facilities and kitchen needs planning between lets. It is better to have one person responsible for the hall management.

The hirer must hold public indemnity insurance and proof should be given to the school governors. Hirers may hold private parties but must not hold public entertainments.

Hirers for children’s groups must have their own child protection procedures and be expected to follow these. A copy should be attached to the hiring agreement.

A standard school premises Hiring Agreement is given in Appendix 5D. A separate information sheet should be drawn up giving the hire rates for the different parts of the building. The best way to assess rates is by comparing them with other facilities in the vicinity

5.7 Legal Requirements for Renting or Letting Out Properties

There is a duty of care for the safety of all occupants or users. The building must be fit for the use intended and safe in the event of fire and other hazards. Gas, electricity and water and their relevant appliances are covered by health and safety regulations. The letting agent can arrange these checks for AST’s. There may be statutory licences required for hall use.

5.8 Boundaries and Encroachments

As property owners we must be vigilant against all forms of encroachment on to our land or buildings to prevent losing ownership through adverse possession. Neighbours might move boundary structures or construct an access to use our property for, inter alia, cultivation, animal husbandry, leisure amenity, development etc. Vehicles could be parked without permission in car parks or school grounds; but if appropriate a licence could be agreed to regulate car parking for a rent. Travellers in illegal occupation have to be evicted with the inevitable litigation costs. In a similar way we must take care not to permit any form of pedestrian or vehicular traffic route to be created across our property.

Boundary structures must be kept in good repair but the owner with responsibility is not always obvious. It is good practice to periodically “beat the bounds” of all school properties noting any incursions on to our land or damage to the boundaries. The Diocesan Finance Office can provide advice on all these issues.

5.9 Property Deeds

The legal deeds of all school properties are held by the Diocesan solicitors. Any queries about ownership, boundaries, or any other legal matters should be directed to the Diocesan Financial Secretary in the first instance.