A charity that sells a building, grants a long lease, or even lets out a spare office rarely treats it as a specialist legal transaction — it looks like an ordinary property deal with an extra layer of trustee sign-off. That assumption is exactly where the Charities Act 2011 regime catches boards out. Dispose of charity land the wrong way and the transaction is not just a compliance breach on paper: in the worst cases, the disposal itself can be set aside as void, years after everyone involved thought it was finished.

The general rule: a report before you decide, not after

Under sections 117 to 121 of the Charities Act 2011, trustees disposing of charity land must generally obtain and consider a written report on the proposed disposal before they decide to go ahead, and must be satisfied the terms are the best that can reasonably be obtained for the charity. Since the Charities Act 2022 reforms came into force, that report comes from a designated adviser — a term that replaced the old "qualified surveyor" and now covers RICS members, fellows of NAEA Propertymark, and members of the Central Association of Agricultural Valuers, among others. Usefully, a trustee, officer or employee of the charity can act as the designated adviser themselves if they genuinely meet the skill and experience test and have no conflict of interest — you are not automatically forced to pay an external surveyor, though many boards still choose to for anything significant.

The two tracks: over seven years, and seven years or less

The length of the lease decides how much process is required, and this is the single most common point charities get wrong. For a freehold sale, or a lease of more than seven years, trustees need the full designated adviser's report: the adviser's qualifications and absence of conflict, the value of the land, any steps that could enhance that value, and advice on how (or whether) to market it. For a lease of seven years or less, the requirement is lighter — trustees need only the advice of someone they reasonably believe has the ability and experience to give competent advice on the proposed terms, not the full prescribed report. The Charities (Dispositions of Land: Designated Advisers and Reports) Regulations 2023, in force since 14 June 2023, set out exactly what the full report must contain, and the lighter seven-year track is where boards most often skip advice altogether, assuming a short lease needs nothing at all.

The trap inside the seven-year test. A lease's stated term is not always its real term. A business lease protected under the Landlord and Tenant Act 1954 can run on beyond its original end date while the tenant has security of tenure, and HMRC and the courts have treated leases that could be extended this way as needing to be assessed against the potential duration, not just the number written on the front page. A charity granting what looks like a clean six-year lease, protected under the 1954 Act, can find itself needing the full report it assumed the short term let it skip.

Connected persons: consent, not just a report, whatever the value

A disposal to a connected person — a trustee, an employee, or someone falling within the statutory list in section 118(2) of the Act, such as a close relative of a trustee or a company they control — sits outside the designated adviser track entirely. These disposals need the Charity Commission's prior written consent (or an order of the court), regardless of the property's value and regardless of how glowing the designated adviser's report is. The Charities Act 2022 carved out one narrow exception: a tenancy of less than one year granted to an employee to use as their home no longer counts as a connected-person disposal requiring consent, though trustees must still take advice on the terms. Outside that specific carve-out, selling or leasing to a trustee's business, or to a trustee's relative, without Commission consent first, is one of the few property mistakes in the charity sector that case law has actually set aside: a lease granted to a connected person below market value, without the Commission's consent or independent advice, was held void by the court, with the charity found to have been disadvantaged by the terms.

Three tracks for a charity land disposal: full designated adviser report for a freehold sale or lease over 7 years, a lighter competent-advice standard for a lease of 7 years or less, and Charity Commission consent regardless of value for any disposal to a connected person Which track applies to your disposal Charities Act 2011 ss.117-121, as reformed by the Charities Act 2022. Freehold sale, or lease over 7 years Full designated adviser's report required before trustees decide. Lease of 7 years or less Lighter standard: advice from someone reasonably believed competent on the terms. Disposal to a connected person Charity Commission consent required first — whatever the value, whichever track above would otherwise apply. A 1954 Act-protected "short" lease can be assessed on its potential, not stated, term.

What goes wrong if trustees get it wrong

The consequences are not a fine or a warning letter. Dispose of land without the right report, or without Commission consent where it was needed, and the transaction can be set aside as void or voidable — potentially years later, once a buyer has already spent money on the property, or a tenant has already moved in. Separately, trustees who ignore the requirement can be held personally liable for breach of trust if the charity loses out as a result. Both consequences land hardest exactly where boards feel most confident skipping the paperwork: a quick, informal letting to someone the trustees already know and trust, agreed on a handshake basis because "it's only a short lease to someone sound." That is precisely the profile of the cases that end up being unwound.

What to do this week

  1. Before agreeing terms on any land disposal, work out which of the three tracks applies: full designated adviser report, lighter competent-advice standard, or Commission consent for a connected person — and check whether a "short" lease is actually protected under the 1954 Act before relying on the lighter track.
  2. If the counterparty is a trustee, an employee, or anyone connected to either, stop before agreeing terms and get Charity Commission consent in writing first, regardless of how fair the deal looks or how good the report would be.
  3. If a trustee, officer or employee is acting as your designated adviser rather than an external surveyor, document their relevant skill, experience and the absence of any conflict of interest before the report is relied on, not afterwards.
  4. For anything already agreed informally, check it against these tracks now rather than waiting for a sale or refinancing to force the question — unwinding a defective disposal is far more disruptive than pausing one before completion.

We work alongside your solicitor and designated adviser to check which track a proposed disposal actually falls into before terms are agreed, and flag connected-person transactions early enough that Commission consent isn't a last-minute scramble. This sits alongside the wider governance duties covered in our trustee personal liability article and our social enterprise structure guide. Fixed fees from £39 + VAT a month. Get started.