You need to carefully assess all the risks involved before entering into any form of lease, tenancy or ownership of a building. Taking on a building is a big responsibility and a big commitment and you may need to recruit additional skills if this is a new area of work for your organisation. Managing a building is a seven day a week commitment as someone has to be responsible for it whether it is being used or not. Any funder or lender will need a detailed report on these issues before agreeing to release funds.
Does your constitution need changing?
For unincorporated (non-company) charities and voluntary groups the risks here are considerable. By law the individual trustees who ‘hold’ the property are personally liable for any charges due on the premises if the organisation cannot pay them. Incorporating (registering as a company) provides some protection here as it is the company which ‘holds’ the property – individuals are only personally liable in the case of fraud, negligence or wrongful trading (trading at a loss). You also need to check that your constitution allows your organisation to hold property. Seek expert advice on the legalities here before entering into a lease, tenancy or purchase of a building.
Physical condition
Does the building comply with current health and safety regulations? Is there an up to date fire certificate? Does it meet the requirements of the Disability Discrimination Act 1995? Does it need significant repairs or renovation – or will it need them in the foreseeable future? If so how will these be funded? It is always advisable to get a full structural survey carried out to warn you of any major defects and the likely cost of putting these right.
Purchase / lease costs
What will the full cost of acquiring the building be? As well as the purchase or lease price there will be legal and other fees like surveys and planning consents to cover.
Running Costs
How much will the building cost to run? Find out about the costs of the business rates, building and contents insurance, heat, light, water, cleaning and security as well as any service charges and rent. Would you need to provide reception services for visitors and users of the building?
Planning permission
Does the building have planning permission for the activities you intend to run in the building — and for any major repairs or renovations you are planning? Is it a listed building? If so there will be restrictions on what you can do with it and extra costs involved with repairs or renovations.
Does it meet your needs?
Think about the activities you intend to run in the building. Is there enough space and adequate public transport or parking to enable this use? Will people be safe in and around the building at night if you intend evening use? If you are taking on a long term lease or ownership, will the building allow you to grow and develop in future?
These issues are generally explored within a detailed feasibility study to guide a decision on whether to take on the building and to provide the information needed to get the right level of finance in place. It is worth taking care if you are appointing someone to carry out this study on your behalf as it is crucial that the study provides accurate and detailed information on these issues.
