RFU discuss Security of Tenure and explore the key things to be aware of

Dave Stubley, The RFU’s National Club Development Manager tells us, from his experience, some of the key things organisations should be aware of and what funding partners will look for when deciding to fund an organisation’s facilities project.  

The majority of grassroots sports clubs and groups require access to facilities in order to run their activities. These organisations will have different types of agreements for these facilities, some of which will provide security of tenure whilst others do not.

Security of tenure is the legal right to use a particular property or piece of land, which can have pros and cons. Having security of tenure through a freehold or leasehold will help to ensure that an organisation will always have access to the facilities they require without having to rely on third party organisations. This security does however mean that organisations take on additional responsibilities like maintenance, adhering to relevant legislation and tax. The alternative of not having security of tenure can mean that organisations may struggle to plan effectively for the future because they do have to rely on a third party in terms of when and where they can play and the standard of facilities. By not having responsibility for their facilities, organisations might be able to be more agile and concentrate on the sport and activities they deliver.

However, when a club or group is considering improving or investing in the facilities they use, security of tenure becomes a key factor - especially if they are looking for funding to help. Funders are likely to require a minimum level of security of tenure before they consider making an award, which often means the applicant organisation should have a freehold, making them the owner of the property or land, or a long-term lease for the facilities they use. However, clubs and groups sometimes confuse licence, or usage agreements with leases, which do not provide security of tenure.

It is worth noting that organisations might have a range of agreements in place, some of which cover different parts of the facilities they use, that can provide further issues to unpick. For example, the RFU has worked with a number of rugby clubs who either own their clubhouse (freehold), or have a long-term lease, but the pitches they use to play are either rented or there is a licence or usage agreement in place. Unfortunately, this scenario potentially does not provide security of tenure if a club wanted to secure funding for pitch development.

Clubs that have leaseholds need to understand the details, requirements and restrictions of their lease. Different funding bodies will have different requirements for leases, such as how long is left on them, so it is vital for clubs to understand their own particular circumstances regarding their lease and any funding requirements.

Organisations should also be aware that there could be specific provisions, which must be incorporated into a leasehold agreement in order for it to be accepted as security of tenure by funders. Some examples of these provisions have been outlined are below. However, this is not an exhaustive list and individual funding bodies may require further provisions. All organisations are advised to seek independent legal advice before negotiating or varying existing lease agreements to ensure the correct advice is given. Working with our legal advisors from an RFU perspective the following provisions may exist:

1. Term - How long the lease is for can be important. For grant awards, each funder will have different requirements concerning the term of a lease depending on the amount of funding applied for.
2. Break clauses - Funders are less likely to invest if a lease agreement has a break clause included, because this is a way of allowing the landlord to end the lease before it reaches its full term.  
3. Alienation - The organisation must be able to assign (or sell) the lease to another club or group with the consent of the landlord.
4. Charging - The lease must allow the organisation to charge the lease to a funder, if necessary with the Landlord’s consent not to be unreasonably withheld. A legal charge allows a funding organisation to protect the money they have committed through legal documentation against the property registered with the Land Registry.
5. Use - The lease must allow the club’s ground to be used by any rugby or any sports club, not a specific named club.
6. Forfeiture/Rights of re-entry - The lease must not allow the landlord to end the lease if the club becomes insolvent, especially if the club is a registered company. The lease can allow for termination i.e. if the rent is not paid or other agreements are breached.

If your organisation is considering applying for funding you should be aware of what provisions are necessary so that you can either:

• Inform the landlord of these requirements when negotiating a new lease; or
• Approach the landlord with a view to varying an existing lease.

For further information on Security of Tenure view our webpage here.

DISCLAIMER: This article is provided for general information only. Sport England is not your adviser and any reliance you may place on this is at your own risk. Neither Sport England, nor any contributor to the content of this article, shall be responsible for any loss or damage of any kind, which may arise from your use of or reliance on this article. Care has been taken over the accuracy of the content of this article, but Sport England cannot guarantee that the information is up to date or reflects all relevant legal requirements. The information contained in this article is not organisation specific and may therefore not be suitable for your organisation or club. We recommend that you obtain professional specialist technical and legal advice before taking, or refraining from, any action on the basis of information.