The Charities Act 2022: land, constitutions, mergers and trustees – new provisions in force from 7 March 2024

The aim of the Charities Act 2022 (the 2022 Act) is to simplify the regulation of charities in England and Wales, enabling trustees to focus on the day to day running of their charities and maximise the benefits their charity delivers. These changes have been implemented in stages and the latest tranche (which came into force on 7 March 2024) is particularly relevant to the real estate sector.

Charity Land

Charity trustees must always act in the best interests of their charity, and that includes making sound financial decisions when dealing with charitable property. The Charity Commission therefore oversees transactions involving charitable land and their seal of approval is required when disposing of and mortgaging land, except where certain exemptions apply. The most common exemption is set out in S119 of the Charities Act 2011, which allows charity trustees to make disposals if, having first obtained valuation advice from a designated advisor, they are satisfied that the disposal terms are the best that can be reasonably obtained for the charity. 

The 2022 Act makes some practical changes to the pool of advisors charities can turn to (which can now include the charity’s trustees and employees) and sets out more straightforward rules on the form that the valuation advice should take. This is designed to streamline the process for charities, saving both time and money. 

To demonstrate compliance with the statutory requirements, the 2022 Act makes some changes to the form of certification required. Previously, trustees were required to confirm compliance with the statutory provisions in their personal capacity in the sale contract, transfer and/or mortgage deed. Now, the documents must contain a statement confirming that the charity has the power to effect the disposition under its constitutional documents and that the relevant statutory provisions have been observed. This change may seem minor but, as the trustees no longer need to give the statement in their personal capacity, they will not be required to execute the transactional documents. Therefore, for incorporated charities, transactional documents need only be executed by the corporate entity, which will speed up the process. 

As ever, there are transitional provisions where contracts have already been entered into before these provisions came into force and so the old form of certification will be valid for the time being.

The 2022 Act contains a new exemption (in force from 7 March 2024) so that charitable land dispositions by liquidators, provisional liquidators, receivers, mortgagees or administrators are not caught by the restrictions and again, there is a simplified statement that should be included in the transactional documents to this effect. 

Other Changes 

The 2022 Act contains other more general provisions that came into force on 7 March 2024. These will enable charities to operate more efficiently and include:

• A new statutory power for the Charity Commission to make orders ratifying the appointment of a trustee if a charity mistakenly fails to carry out the appointment correctly. This new power also allows the Charity Commission to vest charitable property in the trustees, which could prove helpful when effecting disposals of charitable land. Inevitably, charities do not routinely update the proprietorship register of their Land Registry entries and so, often, trustees who have long since retired remain the legal owners of charitable property. Unfortunately, the paperwork required by the Land Registry to make the changes cannot always be located, which causes delays.
• Provisions making it easier for charities to amend their governing documents to allow charities to update their structures and better achieve their charitable purposes. The Charity Commission’s approval will be required though for fundamental changes such as amending the charitable objects of the charity or trustee benefits clauses.
• New rules for gifts made to charities that have merged with another charity and registered the merger on the Register of Mergers. This is a welcome tidy-up of the previous regime where there were gaps in the Register of Mergers and some legacies were lost due to wording restricting the gift to a specific named charity that had ceased to exist. 

All these amendments are expected to reduce the administrative burden placed on charities, whilst still promoting good governance and an effective operating framework. Ultimately, charity trustees are volunteers providing substantial benefit to their local and wider communities and so any legislation that frees up their time and enables them to concentrate on their charitable aims can only be a good thing.