Having successfully listed your asset of community value, undertaken the important preparatory work outlined in Step 4, and submitted a non-binding expression of interest to trigger the full moratorium upon receiving notification of the owner’s intention to sell, you will need to make ready to bid in earnest.
First and foremost, you should ensure that your organisation has the legal powers to both fund and acquire a leasehold or freehold of the kind you are interested in by checking your governing documents (for example, your rules, Memorandum and Articles of Association, Trust Deed, Constitution). If you are a registered charity, you will also need to comply with the provisions outlined in the Charities Act (2011) in relation to taking advice from professionally qualified people where acquiring land and buildings is concerned.
Thereafter, you should ensure that the business case you developed is comprehensive and robust. Remember, it may be some time before an owner opts to dispose of an asset of community value that you nominate, so you should either update your business case at regular intervals or make plans in advance to undertake this work during the moratorium period at relatively short order.
The business case will set out the basis upon which you can make an offer to the owner – whether they are from the public or private sector – and serve as a benchmark against which to adjudge the maximum bid you are able to make given your income generation projections.
During Step 4, you should have made contact with the owner to see if they have an interest in bringing your project forward in partnership with you as this will make the bidding process less uncertain and risky. It might also lead to more favourable or manageable payment terms. You should also establish who will be take responsibility for submitting or otherwise representing your organisation in the course of any subsequent bidding procedure.
There are a number of routes to sale that you should be aware of, and most will require someone from your organisation to engage with the stages which take place during the moratorium period, since the main prohibition concerns the formal exchange of contracts:
- Via a local or other statutory authority advertising their intention to dispose of it, and inviting expressions of interest or offers for it. This may be done in-house within a local authority, but might otherwise be undertaken by Property/Estate Agents that they have employed to oversee the process.
- Via a private owner (an individual or company) advertising a property via a Property/Estate Agent, inviting offers or offering it for a specific price.
- Via an Auction, where an agent runs an auction of properties on a specific date on behalf of owners. These can only take place after the moratorium period has run its full term. Ordinarily, a guide price will be advertised in an auction catalogue, and it may be possible to forge an agreement with an owner before an auction if the catalogue says so. If you contact an owner in advance, you should ask whether this is the case.
Crucially, you should expect discussions between owners, yourselves and other potential bidders to take place throughout the moratorium period.
Depending on how the asset you are interested in comes to market, you may have to consider the following:
- Availability of finance: At auction, you or your agent will be required to provide evidence that you have the finance in place to cover the purchase price, and you must be able to pay at least 10% of the price agreed at auction on the day. The remaining amount must normally be settled within 28 days of the auction sale.
- Professional advice: depending on the type of finance you are using to buy the property, you may have to obtain a valuation before any sale takes place, in keeping with relevant terms and conditions.
- Due diligence: you should ensure that a due diligence process has been completed by your legal adviser and other property professionals as required by the nature of the asset (for example, surveyors, engineers, etc.) before moving to submit a formal and binding bid.
Bidding for an asset simply means making an offer to the seller or its agent within or at the end of the moratorium period. The seller is not obligated to accept your offer, and will generally weight it against any other offer that may have been received during the moratorium period; the fact that you are given a period to present your offer does not guarantee it will be accepted. It will therefore be important to make the offer attractive both in terms of its value and its security. However, you also have obligations to the Board to which you belong, relevant regulatory bodies and, of course, those beneficiaries whom you intend to serve. This further highlights the importance of having solicited as much information about an asset of community value as you possibly can, preparing a robust business case, and securing investment in principle prior to the asset coming to market (Step 4).