24th June 2021

Community Ownership Fund

As part of the Budget on 3rd March the Chancellor announced the Community Ownership Fund. A £150m fund is to be established with the aim of helping local communities take ownership of pubs and other community venues facing the risk of closure.

The Community Ownership Fund will cover at risk sports clubs, theatres, music venues and post office buildings that have been hit hard by the pandemic and has been welcomed by industry bodies. The scheme is to last for 4 years beginning summer 2021 and will offer communities the chance to bid for up to £250,000 from the fund to match funding they have already raised elsewhere. This will rise to up to £1million for sports grounds at risk of closure.

Under the fund, which will open in the summer and last for four years, community groups will be able to bid for up to £250,000 matched-funding to help them to buy local assets to run as community-owned businesses.

But what important factors should local communities consider before setting the wheels in process to take over local assets such as pubs and post office buildings?

How is the community asset to be owned?

  • Government guidance states that in most circumstances, bids for community assets should be made from community and voluntary organisations with formal governance in place, such as a Community Trust. This will require the preparation of a formal trust deed clearly setting out how the trust is to operate.
  • Bids may be considered from groups without formal governance, if there is a clear plan to set up community level governance to take over a facility – a suitable method might be to set up a Community Interest Company. This is a limited liability company for social enterprises which are intended to provide benefit to a community and uses its income, assets and profits for the community it is created to serve. This could be used for the acquisition and/or financing of a project and as a long term ownership structure because it would be free from any pre-existing obligations and debts, subject to the articles by which it is established and be separate to the parties that set it up for accountancy, tax and insolvency purposes. A Community Interest Company is subject to specific governance requirements in addition to the usual ones that impact a standard form of company and we would be happy to provide further advice on this should you require it.

How is the asset to be run? In many ways it should be looked at as a business venture with the intention of creating a self-sustaining entity, so serious thought must be given to business planning, including:

  • Likely outgoings – it is not only about the cost of purchasing the asset but also the overheads associated with running it once acquired.
  • Employment issues – how many staff will be required to run the pub, post office or whatever it may be and on what terms will they be employed.
  • Licencing issues – many community assets such as pubs will have specific regulations and licencing obligations which must be complied with in order for them to trade.

Clearly there is much to be considered in putting together a formal bit for a share of the Community Ownership Fund but it is time worth spending to protect assets which are important to your local community, which build connections between people and foster a sense of pride in the local area.

If you are considering making an application to the Community Ownership Fund and would like further commercial legal advice in relation to this, please get in touch with Buss Murton Law.