Negotiating legal agreements

Key features:

• Transfers all responsibilities, liabilities, and costs from the local authority to a community organisation, including repairs, maintenance, and insurance.
• Provides security and independence for a community organisation.
• Allows freedom for a community organisation to use, improve or redevelop the asset as they see fit.
• May become a liability for a community organisation if the condition of the asset deteriorates.
• The ongoing repair and maintenance costs are all part of this ownership type and can be expensive. 

Key features:

• Is usually granted for a period of over 25 years.
• The local authority may retain some responsibility for the ongoing upkeep and maintenance of the asset, but the leaseholder would be expected to pay for ground rent, service charges, repairs, refurbishment, and insurance. It’s important to establish the likely costs of a lease at an early stage, and if any rent or service charge free periods are offered while building works are undertaken, to ensure sufficient time is allowed for the asset to be financially viable.
• Offers reasonable levels of flexibility, security, and independence for an organisation. The longer the lease, the more security this will provide.
• The local authority may retain some control and place some restrictions on the use and sub-letting of the asset.
• The local authority may want a share of any future ‘profits’ generated.
• It’s easier for organisations to hand back the asset if anything goes wrong, particularly if the lease includes break clauses. Break clauses should be fair and equal for both parties but can affect eligibility for funding.

Key features:

• The lease period can vary from anything from one to 24 years and often includes rental fees, although a rent-free period may be offered at the start of the lease.
• A lease under five years wouldn’t usually be considered for a Community Asset Transfer, but if it provides extension clauses it may be considered.
• Conditions in the lease may restrict how the asset can be used and any sub-letting of the asset.
• A shorter lease may be beneficial and enable organisations to gain experience of asset management. 
• Repair, maintenance and insurance of the asset are likely to remain with the local authority.
• A short lease such as under five years is unlikely to attract funders to invest in capital works, but a lease of seven or more years may be suitable to attract funding.
• A shorter lease is easier to exit from if it doesn’t prove financially viable.

Licenses are usually offered where there are complications with the asset which mean a lease can’t be given. 

Key features:

• Are usually for one year or less and can be for as little as a month, but some licences are given over longer periods with extension clauses.
• Offers no security for community organisations but can be easily renewed by the local authority.
• Provides little flexibility regarding the use and development of the asset for community organisations. 
• Organisations will be unlikely to secure any funding. 
• Can be used to give organisations experience and build a track record of managing an asset. 

Key features:

• Doesn’t provide legal tenure for a community organisation but contains clauses relating to the management responsibilities of an asset.
• Provides details of how the site is accessed, used, and maintained.
• Is unlikely to be long term but can contain clauses which trigger renegotiation or renewal.
• Can be used in a situation where a long lease is impossible to offer or alongside a lease or licence.
• Needs to include a small payment from the local authority to ensure it’s a legally binding agreement.

This would be mean your organisation wouldn’t have any control over the asset and would require a full agreement with the partner organisation, but it can provide a suitable option, particularly for large and more complicated assets and facilities.