When you’re thinking about purchasing property for your church, it can be overwhelming knowing 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.
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 the future generation of the church. It’s good to assess whether there are ways that the building can enable your current ministry, whilst also being able to accommodate church growth, and future needs which may become apparent.
It's also useful to think about community impact. For many churches, they want to reach out into their local area with the hope of Jesus, and one way to build and foster these relationships is through investing in property which benefits the community. If you’re considering purchasing a commercial property, like a church building or community centre, could you create a space which draws people in, and provides space for midweek ministries like small groups or playgroups? This can also be a useful source of income, as you could also consider whether the property could generate income by allowing other groups to use the building when it’s vacant. You can read more about Mission-Shaped Buildings on our blog.
If you are planning on purchasing a residential property, it’s worth considering whether the building is being purchased in the church’s name, or 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 in a property-related charity, and it may need to be for a larger amount than the loan repayments.
If you are planning on purchasing property for your church, you need to consider whether the layout of the building meets your existing requirements. There are lots of churches who decide that the nature of their work means they need a custom space, which can be used to facilitate a variety of different ministries. It is useful to think about whether a new building would be more suitable overall, but this also requires lots of 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. Although building projects are time-consuming, they can often give more flexibility and are bespoke for the needs of your church.
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 looks like having up to date accounts on the Charity Commission, which 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. Being able to show that your income is stable or rising is also key.
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, and will need to demonstrate that the mortgage will still be affordable if income was to fall, and/or expenses were to rise in the future.
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.
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