A Property Partnership

A big challenge churches face as they seek to serve and grow their ministries is ensuring their staff can find appropriate housing. It’s an area we at Edward Connor Solicitors are increasingly being asked for advice on.

Although property is never cheap, it’s particularly expensive relative to typical ministry salaries and church income. Church workers at the start of their careers might not be able to get a high-street mortgage in order to buy a house or flat near the church. Equally many churches do not have an existing manse or the capital to purchase one.

Renting is an alternative option and may be the only realistic solution in many parts of the country. But this is also not cheap and may be undesirable, particularly for workers who want to get a foot on the housing ladder. Some churches may also feel that paying off a mortgage rather than paying rent is a better use of church funds.

Shared ownership

One solution to this problem could be shared ownership. The phrase “shared ownership” is used in various contexts (and other jargon is often used to describe the same thing) but here we mean arrangements where both the church and the worker contribute towards the cost of purchasing a property and each takes a proportionate share in it.

The legal arrangements can be structured in various ways, each with its own pros and cons. Where necessary, remaining funding may also come from outside sources, such as a traditional mortgage.

The advantages

The most obvious advantage to shared ownership is that it could make affordable a property that neither the church nor the worker could have purchased by themselves. Whilst traditional mortgages may still be required, the size of the loan and the loan-to-value ratio is likely to be lower where more than one party is contributing to the cost. This could also unlock affordable mortgage offers that wouldn’t otherwise have been available.

Shared ownership also serves as a tangible expression of gospel partnership between the church and its worker, on the one hand demonstrating a commitment on the part of the church to the wellbeing of the church worker, and on the other hand a commitment by the worker to the local ministry of the church.

It allows both parties to benefit from any return on their investment and, depending on how the arrangement is set up, can also make for a sharing of the responsibilities and risks of property ownership.

The disadvantages

Shared ownership is intrinsically more legally complex.

Churches need to be aware of a number of risks, including charity and trust law considerations that church trustees may not always pick up during initial discussions. There are also more terms that will need to be discussed and agreed between the church, the worker, and any other lenders.

All of this can mean that a shared ownership purchase may take much longer than a more typical purchase, particularly if the consent of the Charity Commission is needed for the transaction (as is often the case).

In all scenarios, it will mean a greater financial investment in professional costs and a greater time investment for church leaders than a normal purchase. Churches should factor all of this into their decision-making.

Next steps

If shared ownership is something that your church is considering, then FIEC may be able to put you in touch with other churches who have been down this path already who are willing to share their experience of the initial process and how the shared ownership relationship has worked for them.

Get in touch using their contact form to talk more.

Taking proper legal advice at an early stage is recommended before going too far down the path, and will save time and cost in the long run.

At Edward Connor Solicitors (ECS), we’ve produced a free guide expanding on this topic.

We would also be happy to have an initial chat with you to discuss options for your church (please note that we can only act for the church, and not individuals).

Every FIEC church gets 30 minutes of free legal advice from ECS every year on any new topic. Just call 01858 411 569, email [email protected], or use the FIEC Contact Form and select ‘Legal Support (Edward Connor Solicitors)’.