Community Asset Transfers: What You Don't Think About - A Town Council Clerk's Guide to Making Informed Decisions

What I Walked Into: A 73-Page Wake-Up Call

Let me be brutally honest about what I inherited when I became clerk. The Council had accumulated quite a few assets over the years - we were in three long-term leases, had a large public park, a children's playground, and a four-storey Grade 2 listed community centre. But what we really hadn't grasped was the risk profile that came with these assets.

We were tied into a few seven-year leases, locking up a huge portion of our precept, but we had no reserves to cover costs if tenants pulled out. We had all these facilities, but no one had properly considered the compliance and safety requirements that came with them.

We had no condition surveys, no asbestos management, no Legionella risk assessments, no regular hazard checks, and no recorded playground inspections. When I brought in an external auditor to assess our health and safety compliance position, I ended up with a 73-page report containing 113 urgent recommendations.

This wasn't just untidy paperwork - it represented genuine risks to public safety, council finances, and potentially my position as the responsible person under health and safety legislation.

Understanding Community Asset Transfer: The Official Definition

According to My Community (2020), "Community Asset Transfer is an established mechanism used to enable the community ownership and management of publicly owned land and buildings." In practice, this means the transfer of local authority "assets" to local councils - and I've put "assets" in quotation marks for a very important reason.

Here's the fundamental question that every council needs to ask before taking on any transfer: If something costs you money every single year, drains your resources, and absorbs your time and capacity, is it really an asset or is it actually a liability?

Let me clarify these terms:

• An asset is something you own that has value, can generate income, or appreciates in value and can be sold for cash
• A liability is something that takes money out of your pocket regularly - loans, leases, ongoing service contracts, or any obligation requiring payment

The critical distinction in asset transfers is understanding exactly what you're being offered. Are you being transferred ownership (freehold), or are you being offered a 99-year full repairing lease? Because in financial terms, a 99-year full repairing lease isn't a gift - it's a massive responsibility.

Why We Do It (And Why We Should Be Careful)

Don't get me wrong - community asset transfers can be transformational for communities. The benefits are real:

• Democratic control: Often more democratic and closer to service users
• Local empowerment: Gives communities direct control over their spaces
• Service protection: Saves community services that might otherwise be lost
• Grant opportunities: Can open doors to funding streams not available to principal authorities

But we need to be honest about the challenges:

• Financial liabilities: Especially if you're tied to long-term leases
• Skills gaps: Most local councils don't have estates teams or in-house legal advice
• Ongoing maintenance: Buildings don't maintain themselves
• Community expectations: Taking on beloved assets means taking on hopes and complaints
• Limited capacity: Most clerks are already stretched thin

Assets are rarely transferred during times of plenty. They're handed down in times of crisis when budgets are tight and someone higher up is looking to cut costs.

The Insurance Reality Check: More Than Just FLEEA Cover

Let's talk about something that often gets overlooked: insurance. It's not a one-off payment - it's an ongoing cost that can be significantly higher than what principal authorities were paying.

Your insurer will likely insist on a reinstatement valuation, and you'll need a full condition report for planning and budgeting. One thing that's easily missed is that most buildings are transferred after their original use has ended, often sitting empty for months or years.

Insuring an empty building isn't easy. In some cases, all you can get is FLEEA cover (Fire, Lightning, Earthquake, Explosion, and Aircraft impact) - and even that comes with conditions. Your insurer might insist you board the property to secure it, but Natural Resources Wales might refuse permission unless you've done a bat survey first.

Early insurer engagement is absolutely essential - build it into your timeline and budget. This needs to happen before you sign a lease or agree to a handover date. You'll also face ongoing costs and restrictions that don't apply to principal authorities, who may self-insure or carry larger excesses that aren't practical for local councils.

The Business Plan That Could Save You

In 2010, Connah’s Quay Town Council took on a lease for a building and opened the Quay Cafe. It sounded like a good idea - community cafe, providing space and helping with food costs. They had a business plan, but it was vague, optimistic, and thin.

By 2018, the cafe had drawn a cumulative loss of over £234,000, paid for through increased precepts. The Auditor General produced a report in the public interest - the strongest possible censure of a community council - stating that the Council had acted unlawfully because they didn't have proper power and lacked a sound basis for decision-making.

The Essential 7-Point Checklist

Based on my experience and the lessons learned from others' mistakes, here's what every council needs to consider:

1. Terms of Transfer - Drive a Hard Bargain

• Is it leasehold (liability) or freehold (potentially an asset)?
• If freehold, is there a sunset clause limiting your ability to sell?

2. Prepare a Robust Business Plan

• Would your business plan survive audit scrutiny?
• Have you identified clear statutory powers?
• Is there a realistic exit strategy if income doesn't materialise?

3. Identified and Planned for Health & Safety Responsibilities

• Are you resourced and trained for the duties the asset brings?
• Do you understand your role as the responsible person?

4. Sufficient Reserves to Mitigate Risk

• Have you made sufficient provision in reserves?
• Can you cover ongoing costs if income streams fail?

5. Speak to Your Insurer Early in the Process

• Have you spoken to your insurer before committing?
• Do you understand the full cost implications?

6. Get a Full Condition Survey

• Have you secured comprehensive condition reports?
• Do you understand what maintenance will be required?

7. Budget for Transfer Costs

• Have you budgeted for legal fees, surveys, and professional advice?
• Are you prepared for ongoing periodic assessments?

Don't be afraid to say no. If you're going to drive a hard bargain, you have to be prepared to walk away.

Practical Strategies for Council Officers

Before You Sign Anything:

1. Negotiate hard: Push for freehold over leasehold. If it's a service that loses money annually, negotiate a cash transfer to go with it.
2. Demand surveys: Get a full condition report, electrical installation condition report (EICR) - you'll need a new one in your name anyway - and asbestos survey completed before transfer
3. Calculate true costs: Remember that principal authorities often use internal services that won't be available to you. Their accounts might show no repair costs because "the property department just fixes it."
4. Plan for periodics: Budget for reinstatement cost surveys every five years, along with all other periodic checks and certifications.
5. Consider governance: Sometimes running assets through a different structure (like a registered charity) can save significant costs - we save thousands on business rates this way.