Grounds for Disposal: Building the Case Before Public Land Changes Hands

Public land is rarely just an asset on a balance sheet. It is a recreational ground, a depot, a site earmarked in a local plan, a corner of a town centre that residents have opinions about. When a council or other public body decides to sell, lease or transfer it, the decision carries weight well beyond the transaction itself — and the legal controls that apply reflect that.

In practice, the most common failures are not errors of valuation. They are errors of sequence: heads of terms are agreed, a developer's expectations harden, a press release is drafted, and only then does anyone ask whether the authority had the power to dispose on those terms. The discipline this article describes is about asking the harder questions earlier.

Start with the power, not the plot

For principal councils in England and Wales, the statutory anchor is section 123 of the Local Government Act 1972. Land held for a function must generally not be disposed of for less than the best consideration that can reasonably be obtained, except with the consent of the Secretary of State (in England) or the Welsh Ministers. Similar — though not identical — regimes govern other public bodies, from NHS trusts to central government departments and arm's length delivery companies.

Two points are regularly misread. First, the general power of competence does not displace these controls; it sits alongside them. Second, the duty is not a duty to achieve the highest headline price. "Best consideration reasonably obtainable" is a valuation question set against the circumstances of the particular disposal — the encumbrances, the planning status, the covenant position, the delivery obligations attached. A site with a restrictive covenant and a requirement to build a community facility may legitimately realise less than the figure quoted in a speculative land agent's circular.

What a defensible valuation looks like

The evidence that matters is a valuation prepared on a recognised basis by a suitably qualified valuer, addressed to the authority, dated close to the decision, and explicit about its assumptions. Instructions should be recorded, and any departure from standard practice explained in the report rather than buried.

Where the authority intends to accept less than the assessed market value, the valuation is only half the argument. The other half is the public interest justification: what the authority is buying with the discount, and how that connects to its corporate priorities, its best value duty and any relevant statutory framework. That justification belongs in a decision report, not in a covering email.

The consent routes for a below-value deal

The current general disposal consent for England allows disposals at an undervalue of up to £2 million where the disposal is likely to contribute to the economic, social or environmental wellbeing of the area. It carries conditions, does not remove the separate safeguards attaching to public open space, and must be applied deliberately rather than assumed. Disposals outside its terms require a specific application and a specific consent, which takes time that the transaction timetable must accommodate.

Councils should also test whether the disposal falls within a different statutory route altogether — for example, where land is held on charitable trusts, where school playing fields are in scope, or where the asset forms part of a housing revenue account. The answer determines who must approve what.

Public open space: the advertisement duty

Section 123(2A) imposes a distinct procedural requirement where public open space is to be disposed of: advertisement in a newspaper circulating in the area, on two consecutive weeks, and proper consideration of any objections received. This is a genuine decision point, not a formality. Objections must be summarised accurately, addressed on their merits and the outcome recorded. Authorities that treat the exercise as a tick-box routinely find it relied on in judicial review.

Community asset transfer and the right to bid

Where land or buildings have been listed as Assets of Community Value, the community right to bid creates a moratorium period during which a qualifying community interest group may bid. Listing is not a veto, and the right to bid does not compel a sale to the community. But it does impose a discipline: the authority needs a clear, published approach to community asset transfer, an honest assessment of whether a community group can sustain the asset over the term, and a decision record that shows both the offer and the alternatives were weighed.

Long leases to community organisations raise their own questions — repairing obligations, break rights, the basis on which any undervalue is justified, and what happens if the group's capacity changes.

Overage, clawback and the shape of the consideration

Consideration is not confined to the headline figure. Where the authority accepts a lower capital receipt in exchange for a share of future uplift, the drafting of the overage provision becomes the substance of the deal. Trigger events, the valuation mechanism, the identity of the expert, the timetable, and the security behind the obligation all need to be settled while there is still leverage. A well-drafted overage clause can bridge the gap between market value and a policy-driven price; a poorly drafted one delivers neither.

The same applies to covenants. Where the authority intends to retain control over future use, the covenant — and the terms on which it might later be released — should be understood as part of the value being given away.

Subsidy control and procurement interfaces

A disposal at less than market value to an enterprise may constitute a subsidy for the purposes of the Subsidy Control Act 2022, engaging the statutory principles and, in some cases, transparency or referral obligations. A robust market valuation is the cleanest way of demonstrating that no subsidy arises, but it must genuinely reflect the market rather than be constructed to reach a desired conclusion. Separately, where the transfer obliges the recipient to deliver works, services or infrastructure, the arrangement may stray into procurement territory and should be assessed on its own terms.

The file that should exist before signatures

By the time heads of terms are executed, the authority should be able to point to:

• a current valuation with instructions and assumptions recorded;
• a business case setting out the policy rationale and the counterfactual;
• a section 123 assessment identifying the consent route relied on;
• confirmation of the decision-maker under the scheme of delegation, including any urgency provisions used;
• conflict of interest declarations covering members and officers involved;
• for open space, evidence of advertisement and a reasoned response to objections;
• a community right to bid position where relevant;
• a subsidy control assessment and any transparency entry made;
• title, covenant and planning review commensurate with the deal.

Conclusion

Land disposals attract scrutiny because they are, in the fullest sense, irreversible. The authority's protection is not a longer contract or a cleverer clause; it is the quality of the reasoning that precedes the transaction. Building that reasoning early costs time. Reconstructing it after a challenge costs considerably more.

This article is general information and does not constitute legal advice. Authorities considering a disposal should take advice on the specific statutory regime, consent route and approval arrangements that apply.