Schools bill: transfer of land by local authorities

7th July 2022

Academies, most often those faith schools linked to Church of England or Roman Catholic Dioceses, may operate on land which is held on separate charitable school trusts. In some cases, the land will have been gifted to be held on a special trust.

This usually means that the land is limited to use for a church school and may be held as a permanent endowment. It is important for the site trustees to have control over the land as the freehold owner to ensure that the land is always used for its original chartable purpose.

With the government’s drive for all children to be taught in a school which is in, or is joining, a multi-academy trust by 2030, charitable school trustees may not yet have confidence that the nature and purposes of their trust will be preserved.

Therefore, to preserve trustees’ existing land interest where a relevant school converts to academy status, the government is proposing to introduce a measure to preserve these once schools whose sites are held on charitable trusts become academies.

Transfer of land from local authority

The schools bill sets out the intention that, moving forwards, if a local authority uses its discretionary power to provide a new site for an academy, it will have to consider whether the existing land is held on a separate charitable school trust.

If so, the local authority’s interest in the land which it is providing will be transferred to the trustees, and the trustees will transfer proceeds from the sale of the old site to the local authority or transfer the land to the local authority.

Alternatively, the trustees may choose to retain their land – for instance where the charitable purposes of the land are broader than simply the school. In these instances, the local authority will not be required to transfer the new site and may instead offer a 125-year lease.

In practice, the local authority, academy trusts and charitable trustees will need to agree that the school will be moved to the new site, and whether to dispose of the current site, with the parties to agree the amount of sale proceeds to be passed to the local authority.

The proceeds of sale

While the local authority and the trustees will usually be able to agree the sum to be transferred to the local authority, the Schools Adjudicator may become involved if the parties cannot reach an agreement.

The sum to be transferred should take into account the value of the interest which the local authority is transferring. This should mean in practice that the transfer from the trustees to the local authority should not exceed the value of the land interest which they are receiving.

If the proceeds of the sale are less than the value of the land interest which the trustees are receiving, it may be that the full proceeds of sale, rather than an agreed portion, will need to be transferred.

However, except in respect of any interest which may accrue where there is a delay, the trustees will not be expected to transfer to the local authority funds which exceed the proceeds of sale.

Next steps

The new measure will replicate the process which would happen where such schools relocate to a new site as a maintained foundation or voluntary school, when these schools have converted to academy status. It is important to be aware that playing field land will not be subject to the new arrangements and will continue to be occupied by the school by way of a lease. The government’s hope is that this new procedure provides assurance and clarity for Diocesan Boards and Church schools.

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