Church Commissioners: faith in good investments

imageThe Church Commissioners won’t let their £1.6bn worth of property to just anyone, says Christopher Middleton.

Most landlords aren’t bothered about how their tenants raise their rent money, so long as they pay it on time.

The developers of the sleek Brassworks project, near Marble Arch in London’s West End, are rather different. Not only are they asking £3,250 per week to live in one of the apartments, but they want to know how that money has been earned.

If it’s in the wrong way: through the arms trade, alcohol or tobacco, for instance, they won’t let you live there. No matter how rich you are.

“We have an ethical guidelines policy, and in the course of our precontract checks, the nature of your business would show up,” says Rosemarie Jones, spokeswoman for the developers. “And your tenancy would not be approved.”

Simple as that. In a field known for its reverence towards “high net-worth individuals”, it’s an unusual approach.

It’s also the kind of attitude you imagine would put a firm out of business pretty quickly. Except that this particular company has been in operation for more than 300 years. Back in 1704 it was run by a group known collectively as the Queen Anne’s Bounty. Today, they are called the Church Commissioners.

Business in the modern world is harder than it used to be, but rental demand has never been stronger. A report by Savills and Rightmove estimates that the number of privately rented homes in Britain has nearly doubled in the past decade, up to 4.8m. In 2011 Britons paid around £48bn in rent, a sum expected to rise to £70bn within five years. So many owners are rubbing their hands with glee.

The Commission doesn’t own many of the great estates, works of art or palaces that belong to the Church of England. But they’re far from empty-handed. The current roll call of Church Commissioners’ property includes a patch of Central London bordered by Bayswater Road, Edgware Road and Sussex Gardens; 2,000 properties on Hyde Park Estate and the land on which the Gateshead Metrocentre and Cheshire Oaks (in Ellesmere Port) are built. There are also a few places in Peterborough and Sutton Coldfield.

The estimated value of all this is £1.6 billion, which makes up 31 per cent of the Commissioners’ overall £5.3 billion worth of assets.

That’s the good news. The bad news is that the income from all this has to help fund the Church of England, which currently costs £1.1 billion per year to run. Income from the rent only provides 17 per cent of this figure. The rest comes from collection plates.

The Commissioners constantly try to increase this sum, encouraged by the First Church Estates Commissioner, Andreas Whittam Smith.

“I am always urging us to be more hard-nosed,” he says. “Each year, we aim to achieve a return of at least five per cent above the Retail Price Index, and we usually do. Last year, our return was 15.2 per cent.

“Of course, owning so many premium properties on the Hyde Park Estate is a great help. Our jewel in the crown, so to speak.”

The Commissioners try to maximise the value of that jewel by buying new properties. In Connaught Square, Central London, they are buying up a group of smart shops which they are calling Connaught Village. They are also looking for other projects similar to The Brassworks, where they have converted an old Victorian musical instrument factory into nine flats.

But don’t look to them for some merciful, below-the-market-rate rent. A year in the biggest Brassworks flat, with four bedrooms and roof terrace, will set you back about £169,000.

That said, they can still be benevolent. “If you were one of our rural tenants, for example, and found yourself no longer able to run your farm, we would make every effort to help you,” says Whittam Smith. “We would arrange for you to move out, and buy you a place where you could live for the rest of your life.

“We would gain vacant possession of the farm, thereby generating sustained income,” he explains.

The Commissioners are a great reminder that the Church can still put its land to good use, providing rental opportunities in a market where demand is higher than ever. If they can weed out some of those would-be renters who have made their money in nefarious ways, then they are providing a service as necessary today as it was 300 years ago.

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