Charities warned to seek legal advice before purchasing land following failed £20,000 planning application

23 April 2025

6 min read

Charities, Not-For-Profits & Social Enterprises, Real Estate, Property, Construction & Regeneration

Acquiring property is a major commitment for any charity. This came to the fore in a recent case where a charity spent £20,000 on a planning application only for it to be deduced that the land was subject to third-party rights. This resulted in the charity having to abandon its plans following a substantial investment.

Such a case serves as a stark warning to other charities on the importance of seeking appropriate legal advice as early as possible when looking to purchase land. Here, Sophie Crompton and Josh Wing explains what happened before setting out the key charity law requirements and property law considerations that charities should be aware of.

Charity’s costly premises move cancelled by third-party rights

Change of Scene — a charity based in Surrey that offers animal-assisted learning for children with complex needs — has been facing challenges in finding a new home for over four years.

Recently, the charity believed that it had found an ideal location in West Sussex. However — after spending £20,000 on a planning application — it discovered that there were third-party shooting rights on the land. This discovery unfortunately meant that Change of Scene couldn’t proceed with its plans due to the potential risks involved.

This situation underscores the necessity for charities to seek specialised legal advice early in the property acquisition process.

Regulatory requirements — what charities need to know

This article addresses the responsibilities on charities, whether they are ‘exempt’ or ‘non-exempt’ charities, although there are some key differences between the two which need to be considered.

The differences between exempt and non-exempt charities

A non-exempt charity will be required to register with the Charity Commission and comply with its regulatory framework, including submitting annual returns, financial statements and other reports to the Charity Commission. This includes adhering to the Charities Act 2011 and other relevant legislation as the Charity Commission is their principal regulator.

Whilst exempt charities are not required to register with the Charity Commission, they are still subject to its oversight. They are regulated by other principal regulators, for example, the Regulator for Social Housing and the Financial Conduct Authority. While they do not submit annual returns to the Charity Commission they are still subject to the same legislation as non-exempt charities with the key difference being that exempt charities must comply with the reporting requirements of their principal regulator. Such requirements go beyond the scope of this report.

Therefore, both exempt and non-exempt charities must comply with the provisions of the Charities Act 2011 and its specific legal obligations when acquiring property.

The requirements are set out in the Charity Commission’s Guidance: Acquiring Land (CC33).

Key legal and governance issues include:

Trustee duties & legal responsibilities:

Trustees must carry out their duties in accordance with statute and — where incorporated — their constitution (specifically, memorandum and articles).

Trustees also have a general duty to act reasonably and in the interests of their charity with such care and skill as is reasonable in the circumstances. It can’t be expected that trustees have specialist knowledge — hence why it’s extremely important that trustees engage with legal and other advisors where required. Further guidance as to what constitutes as ‘reasonable’ is set out at Paragraph 4 of CC33.

When a charity acquires property, the trustees are responsible for ensuring that the best interests of the charity are at the forefront of any decision making. CC33 states that trustees must:

Carefully consider the need for the relevant acquisition.
Ensure that it aligns with the charity’s purposes.
Carry out appropriate due diligence to assess legal risks before proceeding.
Ensure that the transaction is financially viable and doesn’t place the charity’s assets or sustainability at risk.

Unfortunately, the Change of Scene case is an example of where such considerations weren’t adequately addressed.

This is important not only from a charitable legacy perspective but also a personal liability perspective for the trustees of a charity. Where trustees have deviated from these duties and responsibilities, they can run the risk of personal liability and sanctions from the Charity Commission.

Investing in land & mortgages

There are specific obligations that trustees must adhere to in relation to investment land — i.e., land used as an income-producing asset that doesn’t directly correlate to a charity’s purpose — and where the trustees finance the property by way of mortgage.

You can refer to CC33 Paragraphs 5 and 8 for further information.

Obtaining professional advice

Charities must obtain professional advice when acquiring land.

Sections 117 to 121 of the Charities Act 2011 are fundamental provisions for understanding the statutory requirements imposed on charities in relation to disposals of land. In particular, this legislation prescribes that a charity obtains a designated advisor report. Under CC33, similar principles apply to the acquisition of land whereby professional advice in the form of a designated advisor report should be obtained from a suitably qualified specialist surveyor.

Obtaining a designated advisor report ensures that a charity is:

Making informed decisions on acquisition.
Securing fair terms.
Complying with legal requirements for an assessment of the property's suitability, market value and any potential legal or planning issue.

In recognising the administrative and financial burden of the Designated Advisor Report, the Charities Act 2022 slightly relaxed the regulations in respect of leases for a term of seven years or less. A charity taking a lease of this nature can instead obtain and consider the advice of a person who’s reasonably believed (by the trustees) to have the requisite ability and practical experience to provide competent advice.

Risk management

CC33 emphasises the need for charities to assess risks before entering into property transactions. This includes reviewing any third-party rights or restrictions on the land to ensure that the property is suitable for the charity’s activities.

Property law — what charities need to know

Prior to acquiring property, charities should conduct thorough due diligence to uncover any restrictions, third-party rights or other legal encumbrances that may affect its use.

Key considerations include:

Title deeds & third-party rights

As seen in the Change of Scene case, the title may be subject to existing rights that impact how the land can be used. These can include rights of way, restrictive covenants or — as in this case — shooting rights.

Carrying out title due diligence will reveal any potential risks and a property solicitor can provide advice on said risks before a charity commits to an investment.

Planning permissions & use classifications

A solicitor can also assess whether the intended use of the land aligns with local planning laws and whether applications are likely to be successful. Although there’s a small cost for undertaking these investigations, this could prevent wasted expenditure on unsuitable sites.