01 February 2007
The Church Commissioners have today sold their financial interest in a portfolio of housing loans granted to the Church of England Pensions Board to Grainger Trust. The sale follows a competitive tender that attracted bids from a range of commercial companies.
The transaction is a sale of the Commissioners' rights to receive income and capital receipts on the loans and is not a sale of the ‘bricks and mortar’. The purchasers will have no legal interest in the loans which will continue to be administered by the Church of England Pensions Board. It follows the announcement on October 4th 2006 that the Commissioners had begun detailed discussions to sell the financial interest.
Currently, around 1,300 retired clergy have mortgages provided by the Pension Board (largely funded by the Church Commissioners) to assist them to purchase retirement housing under the Church Housing Assistance for the Retired Ministry Scheme (CHARM). The Pensions Board has written to all the retired clergy concerned to advise them of the transaction, and reassure them that 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 agreement represents the completion of a major strategic shift by the Commissioners away from our previous over-investment in the UK residential property market. At one point, this had been as high as 22 per cent of our total assets. Now it stands at around 13 per cent.
"We are pleased to have protected the position of the borrowers, whose loans will remain unaffected by this transaction while also securing an excellent financial deal for the Church Commissioners."
Rupert Dickinson, Grainger’s Chief Executive, said: “This acquisition is an excellent fit with the rest of Grainger’s equity release and retirement solutions business and demonstrates Grainger’s ability to source and deliver innovative transactions. We are delighted to be able to work with the Church Commissioners and the Church of England Pensions Board on this transaction.”
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 Church's Housing Assistance for the Retired Ministry (CHARM) came into operation in 1983. The Board, with funding from the Church Commissioners and its own charitable funds, is able to assist beneficiaries with value linked mortgage loans and 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 (or depreciation) 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
Pensions Board letter to all mortgage holders