Local Authorities intending to dispose of land will now also need to consider whether the disposal will provide a subsidy to the purchaser and whether it is of land designated as public open space.
A “subsidy” is defined as financial assistance, given from public resources by a public authority which confers a specific economic advantage on an enterprise and which could have an effect on competition or investment in the UK or trade or investment between the UK and other countries. It is generally considered that disposing of land owned by Local Authorities on favourable terms is likely to qualify as a subsidy.
When a Local Authority calls on s123(1) LGA 1972 to dispose of public open space, s123(2A) requires them to advertise the intended disposal in a local newspaper for two consecutive weeks and to genuinely consider any objections before proceeding. Under s123(2B), where the Local Authority has complied with the aforementioned requirement, the disposal will be free from being held in trust for enjoyment by the public under s164 of the Public Health Act 1875 or s10 of the Open Spaces Act 1906.
Recently, a parish Council sold land to a developer without complying with these obligations. Therefore, the land remained subject to the trust for enjoyment by the public and the developer experienced difficulty in obtaining planning permission. The Supreme Court found that the failure to comply with s123(2A) meant the statutory trust of open space continued to apply once the land was vested in the developer and the decision of the local planning authority to grant planning permission was quashed.
The powers afforded to Local Authorities in respect of disposing of land can be extremely useful when managing their resources. However, it is paramount that when they exercise these powers, they ensure they have complied with any legal obligations, act reasonably in the decision making process and keep clear records to allow them to dispute any challenges which may arise.
For more information on Local Authority Land Disposal you can read our article on s123 of the Local Government Act 1972.
If you have any further inquiries regarding Local Authority Land Disposal and Subsidy Control, please contact our Public Sector team, we would be happy to help.