6 things to consider when your church needs to buy a property

The following article was written by one of our Agency members, Kingdom Bank. You can find out more about Kingdom Bank here.

When you’re thinking about purchasing property for your church, it can be difficult to know where to begin and what to prioritise. Kingdom Bank’s Lending team have put together six key considerations for those looking to invest in church property, which help to provide a starting point for your plans.

Future-proofing:

It’s important when planning a building project to have a long-term view. Rather than investing in property which only suits the needs of the church now, it is useful to consider how the building can be future-proofed and be a blessing to generations to come. For instance, how can the building enable your current ministry, whilst also allowing for church growth and new ministries?

The Community:

It’s also useful to think about community impact. Many churches want to reach out into their local area with the hope of Jesus. Investing in property which benefits the community helps to build and foster relationships. If you’re purchasing a commercial property, like a church building or community centre, could you create a space which draws people in for midweek ministries like small groups or playgroups? This space can also be a useful source of income if rented to external groups when the building is vacant. You can read more about Mission-Shaped Buildings on the Kingdom Bank blog.

Separate Entities:

If you’re planning on purchasing a residential property, it’s worth considering whether the building is being purchased in the church’s name or by a separate property-related charity. Some churches favour the latter, as it enables them to own property outside of centralised structures, giving an element of flexibility. If you’d like to find out more about this, you can look at our mortgages for Independent Property Trusts. Either of these options can work for churches, but a lease would need to be created if you decided to purchase via a property-related charity, and it may need to be for a larger amount than the loan repayments. The Kingdom Bank mortgage team would be happy to discuss how this might work for your church.

Ground-Up Developments:

Some churches decide that the nature of their work means they need a custom space that can be used to facilitate a variety of different ministries. Building a brand-new facility may be the best solution, but this also requires considerable planning. For instance, is there land available to purchase where planning permission is likely to be granted? You also need to consider whether you have the necessary expertise on hand to assist you with any development, including an architect, construction firm, planning consultant, solicitor and surveyor. Though building projects are time-consuming, they can often give more flexibility and are bespoke for the needs of your church.

Good Governance:

If you are looking to find a mortgage for your building, it is of great importance that you can demonstrate good governance to any potential lenders. If you are a registered charity, this will mean having up-to-date accounts with the Charity Commission that were received on time. It’s also good to be able to show that you have proper policies and protections in place, for instance a safeguarding policy, and you will need to be able to evidence a stable or rising income.

Affordability:

Affordability is key! If you are considering a mortgage for the property, you need to be able to demonstrate that this is an affordable option. Lenders will run various tests, which will include analysis of what a mortgage would cost if interest rates were to rise. An assessment of whether the mortgage would still be affordable if income were to fall and/or expenses were to increase will also be carried out to make sure any lending is appropriate.

If you’re looking to purchase property for your church or Christian organisation, Kingdom Bank would be delighted to speak with you to see if we can help. Call our lending team on 0115 921 7280 or visit www.kingdom.bank to find out more.

Mortgages subject to application. Your property may be repossessed if you do not keep up repayments on your mortgage.