Well...here it is...the most growing notorious issue to confront community associations, village halls and anybody else unlucky enough to be caught up in this whole issue of confusions, misdirection and potential lethal liabilities.Commercial Market Rent If we want to be absolutely clear (and it seems we certainly need to be) a Commercial Market Rent is what would be charged to a "private sector" organisation.Market Rent Again, if we want to be absolutely clear, it would seem that when a local authority talk to the voluntary and community sector about a "Market Rent" they (purportedly) are talking about a commercial market rent base that has been discounted (on the basis of community /charitable use) for the purposes of arriving at a figure to assess the charge for a fair rent to a community/voluntary/charitable sector organisation. It would be great if we could ascertain from each local authority:

• that basis they use for making such a calculation,
• And indeed, what impact this has for "Rateable Value" of the property - Note: go to the rates page for further information on this issue.

Why Charge a Market Rent? - Actually, they don't have too!

Here we have the biggest conundrum of the all:
1. Often we are told by local authorities that they are required by law to charge a "Commercial/market rent." They say they need to do this because they are required in Public Accounting to show full "Public Transparency."
2. RUBBISH - there is no such requirement that offsets their ability to provide Discretionary Rent Relief to Community Associations/Village Halls/Women's Institutes [Under the Local Government (Miscellaneous Provisions) Act 1976], nor for the wider community/voluntary sector under the Local Government Act 2000.
3. If local authorities wish to conform with "Public Accounting Transparency Issues" it would simply require a statement (in words) in the Annual Financial Accounts stating the use of the Discretionary Powers and the cost (in subsequent reduced income on rent account) to the local authority - with perhaps a principled statement about "Community Service/Community Development/Neighbourhood Renewal/ Partnership with community and voluntary sector organisations in the delivery of community services.

2. Pass the Parcel!2.1 A dominant method being promulgated by local authorities, is to charge a "Market Rent" but then make an equivalent "Rent Grant."2.2 Wonderful - this is "Pass the Parcel Transparency in Public Accounting" at its absolute magnificence! Hey - has anybody worked out the admin cost to LA's yet?2.3 BIG PROBLEM - that agreement has to be annually based. So where does that leave the Community Association/Sector Tenant:2.3.1 In Deep **** Problems.2.3.2 Firstly, how can any business (and indeed that is what a charity is) develop a "Business Plan" across a five year period if, for example, in year 1 it has a Precept Rent of £20k that will be grant aided, but does not know the position for the following 4 years. What does it do - put down an £80k estimated deficit at the end of the financial plan!! - great grant application support document to charity trusts!!2.3.3 But now look at new realities coming to the fore.some local authorities are saying that they cannot give full rent grant aid.some are saying they need to use a concept of "Tapered Rent Grant Aid" (Stealth Tax Rent) per annum so that it ends up with the charity picking up the full rent after a period of say 5 years. Who the hell can afford this!? 2.3.4 SO WHO IS GOING TO GRANT AID RENT APPEALS FOR THE NEXT MILLENNIUM OF APPLICATIONS - TRUSTS!!!? Somebody has not got their thinking cap on.2.3.5 So - Community Associations have suddenly become lucrative businesses with major PROFITS to pay RENTS!!! Point them in our direction please!2.3.6 But here is the biggest "rub" of all (and the one not at all understood by local authorities) - a LEASE is a contract with specific terms across a set period - grant for rent is annually based - the two do not fit - the result may well be personal liabilities on charity trustees of unincorporated charities and indeed LIABILITIES ON DIRECTOR TRUSTEES OF A COMPANY/CHARITY for breach of charity trust - this is one of the little legal bits not often taken into account when talking about incorporation merits or lease agreements.Partnership Leases

1. A move to Lease and security of tenure is the most positive thing that can happen, BUT:
2. The Lease Terms need to be based on a new concept of "Partnership Relations" between the local authority and the community/voluntary sector organisation - a commercial sector lease will be entirely inappropriate - that really needs new lateral thinking in community development.
3. Peppercorn/Nominal Rents must be the basis for the Lease - anything else will be a negative investment in the potential "Dissolution" of that charity because it will not be able to afford a market rent.