Social enterprises can often not afford to buy land, or may prefer leases to taking on ownership. In these cases, supportive arrangements with landowners are crucial to developing successful enterprises. This blog looks at some common issues with setting up leases and agreements and considers how the process can be supported.
Well thought out leases and agreements facilitate mutually beneficial land use for social enterprises and landowners. An appropriate lease or management agreement provides social enterprises access to land, enabling them to deliver their social mission whilst removing the hurdle of the cost of land purchase. This is especially useful for social enterprises who work with land, since land ownership can also incur high liabilities. For landowners, a good agreement can help make their relationship with the enterprise stable, sustainable and trouble free.
A good agreement will depend on the specific needs of both parties, with some common considerations such as length, rent and restrictions. The process of establishing this agreement is also important, both to understand the land that is being taken on, and to build a relationship with the landowner. However, social enterprises often struggle with this crucial step in their journey. They can make agreements which do not support the enterprise in the long term or even fail to provide access to land in the first place.
Problems with securing leases and agreements:
Lack of expertise and other resources can be a barrier to setting up strong agreements between landowners and social enterprises. For both sides, long legal documents can be daunting. Both will often be unaware of the appropriate form and content of the agreement. The journey between deciding to access land and setting up an agreement may have unexpected demands, for example the need to become incorporated. Seeking legal expertise to help with all this important, yet few new social enterprises can afford to access it privately.
Another problem is that it can be difficult to organise a lease before accessing funding, and difficult to access funding without a secure lease. Both public and private landowners often require social enterprises to demonstrate they have the backing needed for a sustainable business, yet social enterprises will struggle to access funding without a lease of sufficient duration.
Finally, many landowners do not have the knowledge or procedures in place to bring social enterprises on to their land even if they would like to. This is true even for large, well-resourced landowning organisations, where departments and support functions not directly involved with negotiations may have restrictive interpretations of policies, or established ways of procuring services. This can make it difficult for unusual or novel approaches to developing an agreement to break through
Support for setting up leases and agreements:
Guidance and support needs to be made available to new social enterprises seeking land. Luckily, there is already some guidance for organisations, though it is mostly tailored to community supported agriculture and food growing rather than other types of land use. The Community Land Advisory Service has produced guidance for community organisations and landowners on setting up agreements. In addition to providing useful guidance and templates, they also provide tailored support. The Soil Association and LandShare have also published useful guidance on setting up leases and agreements. We have also offered some top tips on sharing assets.
Landowners that wish to engage community organisations should develop clear policies to support this approach at an early stage. These should encourage staff to take a flexible and entrepreneurial approach to delivering shared public value. Landowners such as central and local government, charities, and large estates should make it easy for social enterprises to access their land. The onus should not be on the enterprises and staff to negotiate individual leases, since they will normally lack the expertise and resources to do so. The Crown Estate has set a brilliant example with its ‘Local Management Agreements’. They not only have and promote a consistent application process, but also provide support and advice to help smaller socially-focused organisations work through it.
Given the potential benefits to society, and to landowners themselves, it is important to make land sharing with social enterprises as easy as possible.
Please get in touch with any thoughts on this issue or any of the other areas we are looking at. Next week’s blog will look at the need for networks to support social enterprise land management. Previous blogs in the series are available here.