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Commissioners to market financial interest in housing loans

4 October 2006

The Church Commissioners have begun detailed discussions to sell their financial interest in housing loans granted to the Church of England Pensions Board.

This is a sale of the Commissioners' income stream from these loans and not a sale of the ‘bricks and mortar.’

Currently, around 1,300 retired clergy have mortgages provided by the Pension Board to assist them to purchase retirement housing. The residents will continue to own the properties concerned and their loan conditions with the Pensions Board remain unchanged.

The announcement comes as the Church is exploring ways in which clergy might be helped to acquire an interest in the property market earlier in their ministries. These include providing clergy with information about buy-to-let mortgage products available from lenders at preferential rates. Other options, such as a form of ‘property bond’, in which clergy could invest ahead of their retirement, are also being considered.

Andrew Brown, Secretary to the Church Commissioners, said: “This proposed transaction is in line with the Commissioners’ aim of reducing its exposure to UK residential property which has been as high as 22 per cent of total assets. It forms part of our overall strategy of regularly reviewing our investments. Following the sale, 13 per cent of the Commissioners assets will still be linked to the residential property market.

“The transaction will also help the Commissioners to continue making further housing loans.”

The transaction covers situations where retired clergy have taken advantage of finance provided by the Pensions Board, funded by the Commissioners, to part-finance the purchase of their homes. Properties rented from the Pensions Board do not form part of the transaction

The Pensions Board is writing to retired clergy who have mortgages under The Church's Housing Assistance for the Retired Ministry (CHARM) scheme to advise them of the transaction, and reassure them that their loan conditions with the Pensions Board remain unchanged.

 

Notes

 

The Church's Housing Assistance for the Retired Ministry (CHARM) came into operation in 1983.  The Board, with funding from the Church Commissioners, is able to assist beneficiaries with value linked mortgage loans, with properties for occupation under licence (rented accommodation).

The objective of the scheme is to enable all clergy, deaconesses and licensed lay workers, who retire from the stipendiary ministry having been in occupation of a ‘tied house’, to obtain a suitable retirement property, of modest proportions, if they do not have the financial resources to provide such accommodation for themselves.

The widow/er of a pensioner can continue to participate in the scheme. Assistance is also available to those who have to vacate a tied property as a consequence of their spouse’s death while serving in the ministry.

Beneficiaries may apply to the Board for a mortgage loan from age 62 (unless early retirement is being considered for any reason) and for ‘rented’ accommodation from six months prior to retirement.

The mortgage is an interest only, value-linked mortgage, which includes a sharing of any appreciation in the value of the property. A value-linked mortgage is one where the amount required to repay the loan is linked to the value of the property on which it is secured. It will represent the same proportion of that value as it did when the loan was granted, subject to any adjustments that have been made due to part repayments or further advances during the period of the loan.

Those applicants who are unable to purchase their own property with the aid of a value-linked mortgage may be eligible to occupy, under licence, accommodation provided by the Board. Properties owned by the Board are occupied by its beneficiaries under a Licence Agreement. The occupants are not tenants and the Board is not a landlord. Payments made to the Board by occupants are a contribution towards maintenance costs and other outgoings met by the Board.

General information about the CHARM scheme

The Pensions Board letter to all mortgage holders