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Your Guide to Building Projects (as a Church Growth Trust tenant or occupier)

CONTACT DETAILS Church Growth Trust 1 Manor Farm Barns, Baines Lane, Seaton, Oakham, Rutland, LE15 9HP 01536 201339 enquiries@churchgrowth.org.uk www.churchgrowth.org.uk Church Growth Trust is the operating name of Church Growth Trust Limited, a registered charity no. 1138119, and a company limited by guarantee no. 07352319, registered in England

CONTENTS

Introduction

1 So, you want to do some building work?

2 Church Growth Trust

3 Pre-contract considerations

4 The funding

5 Who leads the project and who is on the team?

6 Resolving problems

7 Where do we go from here?

Introduction If you have been given this booklet, it is highly likely that you are wanting to do some building work at the property you occupy. The work can be as little as reordering some of the spaces in the building, through building an extension, to even contemplating a new building entirely. We are delighted to work with churches such as you on building projects and to help you get your building fit for its God-given purpose and more suitable for modern church use. There will no doubt be trying times in the months (and maybe years) ahead, but we hope that, as we partner in the Gospel with you on your project, we will see a bit more of God’s Kingdom come in your locality. We have a great team to work with you and trust you will make good use of them. In the first instance, you will need to speak with John Duffield our Property Manager on 01536 647162 or john.duffield@churchgrowth.org.uk. May the Lord bless you in your continued work for Him.

Giles Arnold Chief Executive

Neil Walker Chairman

So, you want to do some building work? This booklet has been produced to try and answer some of the frequently asked questions that come up in the early stages of a building project, so that you are better informed before you begin, rather than finding out part way through. If you have a question which is not covered by the booklet, ask us as soon as you can. It is important that you know what you are embarking on before you begin. Property matters can become quite technical, but this booklet is intended to try and explain simply the things that you need to consider as you prepare for a building project, including how it might be funded, using so far as we can non-technical language to make it accessible to as wide an audience as possible. There is a second booklet, which complements this one. This explains the different stages of a building project.

Church Growth Trust 1. Who are we and what do we do? Church Growth Trust’s vision is to safeguard independent church properties for future Gospel use. We are also passionate about making sure the buildings are as good as they can be for modern church use. The best way to do this is by both supporting and guiding occupiers of our buildings in their use of the buildings and by working closely with them when they want to improve a building to make it better fitted for its Gospel use. There is no “one size fits all” approach. Each project is unique in content. However, we have an approach which has been tried and tested over a number of years. This helps both parties to keep on track from start to finish and to know what is happening through the day to day life of the project. What follows is hopefully a helpful explanation of a building project when working with us. 2. Ownership – “Explain how the building ownership works” Church Growth Trust owns its buildings, either as a freeholder or as a sole trustee. Essentially this means that the Trust is in control of the property and that when looking at a project the tenant/occupier needs to understand that at no point can the Trust grant any interest in its property other than a tenancy. There can be no sharing of equity where a church owns a share in the property. 3. Funding and gifts for the project – “How are we going to pay for this?” Church Growth Trust understands the issue of ownership and equity can be a difficult message to share with a fellowship AND then to expect generous financial support for a project. Church members often expect to see something tangible

and of value as a result of giving money to a project. It is something they can see and show others. This aspect can be harder still when the owner appears, to the outsider, to be having its building enhanced at someone else’s expense and that rent may also be paid by the church on top. Paying a rent seems to be almost adding insult to injury. This arrangement does not have a modern equivalent in the “normal” property arena and can be a hard concept to grasp even for experienced property professionals. However, Church Growth Trust does not treat property in the way that other property organisations do. All its properties have been gifted to it because the previous owners saw Church Growth Trust as trustworthy and reliable long-term stewards in the care of their independent church properties. This is the perspective that each tenant/ occupier needs to take when planning a building project. Both parties want the same thing: for the Gospel to be proclaimed now and in the future from a building in its best possible shape to do so. This is achieved by combining those gifts that God has given each party, including people to pray, church leaders and the body of believers to reach the local community, a building, finance, and technical skills. Both the church and Church Growth Trust are standing on the shoulders of generations of generous faithful servants of God as we come together to build upon their legacy. We pray that this can be grasped early on in a project, as it will strengthen the co-operation and focus of the parties as the project moves forward. Church Growth Trust recognises financial contributions that you make to improve the property. We normally do this by giving a proportionate rent reduction in order to buy back the value of the improvement. It is important to remember three things at this point: • Not all works to a building are “improvements”. For example, changing a carpet due to wear and tear is not an improvement. Equally, changing a stainless steel sink for an enamel sink is not an

improvement or a wear and tear replacement. It is simply a choice based on taste and this does not create additional value. • The value of an “improvement” is the increase in value of the property, not the cost of the works. For example, if new UPVC double glazed windows were fitted to replace single glazed metal windows, the cost may have been £8,000, but the increased value to the property may only be £2,000. • You will not be paying a full market rent, as Church Growth Trust always lets its buildings to churches at a discount. At most you will be paying 50% of market value, so some of the value (of the improvements) to be bought back will be reflected by the discount that we are already giving. For example, if you are already receiving a rent concession of £6,000 per year below the market rent, the value of the new windows mentioned above could be purchased as part of the one year’s rent concession. 4. How long can we have on our lease? Church Growth Trust’s normal policy is to grant five-year tenancies, which allow us and you to review the letting arrangements regularly. The five-year tenancies are normally renewed. Where you have invested substantially in the property and want a longer-term commitment (and where the value of the improvements need to be purchased over a longer period), we would be willing to grant a longer lease. Sometimes where grant funding has been obtained, the grant funder may require a longer lease to be in place (e.g. funders will often ask for a minimum of 10 years). Our policy is to grant a maximum of 20 years on a lease. Normally a 10-year lease or longer would only be granted if a minimum of £50,000 had been spent by the church.

Leases for seven years or longer need to be registered with the Land Registry. For this and other reasons longer leases are drawn up by our solicitors (shorter leases are produced in-house at no cost). The cost of drawing up the lease will normally be charged to the church.

Pre-contract considerations 1. A sure foundation “Our Father…” Whilst every building needs a foundation, the sure foundation for a project will be ongoing fervent prayerful support. Prayer is essential for every work that we commit to in God’s name and under God’s hand.

2. Communication or Stakeholder engagement - “Tell me, what are we doing again?” It is possible that two or three people in a fellowship will have known about the need for the works in a building project for some time and they can describe its benefits in countless ways. Indeed, they may be becoming slightly frustrated at the slow speed of the project. However, for those who are not so aware or well informed, but who are as important to a project as those with leading roles, it can be difficult to grasp the overall concept, benefits and the need for the expense. For this reason, time needs to be taken at an early stage to engage with everyone within a fellowship and explain what is happening and why. It is important as well to encourage feedback and to work out a way of capturing this, so that leaders can reflect on what people have said, as a project is brought into firm focus, and they can show that they have heard people’s ideas and suggestions. Perhaps most important of all is to appoint someone within the fellowship as the one person who will communicate between the project team and the fellowship. This should be consistent throughout the life of the project and should be an arrangement that is insisted upon and respected by all. We say this because in our experience many projects are undermined by inaccurate explanations and wrong information and this can lead to bad feelings, delays and in Continues on page 11

“We have been talking for many years about improving the building. As time went on, we outgrew the worship area and we wanted our church building to be more welcoming for our community. CGT have been amazing, restructuring our lease, helping with funding and always being on hand to support and advise us. Building projects can be stressful, but CGT have bent over backwards to help and accommodate us. They bought into our vision, they are excited by it and wanted to see it happen. Praise God!” Mike Pavlou, Oakleigh Community Church

Before

After 10

the end increased costs. However, these issues can be avoided in very large part by an agreed method of consistent communication. 3. Working together with CGT – “Let us do this, but the fewer the merrier…” In most building projects, everyone has an opinion and most think their view is the only one worth having! The problem is that if projects are run, essentially, by a committee or a committee style decision-making process, because everyone is “entitled” to say what they think, then the project is destined to be slow and increasingly costly. In addition, those who are aggrieved about the direction of a project can use this process to attempt to divert the project away from its agreed parameters or undermine it, again with serious timing and financial implications. We can help you, as we have expertise in property projects and a vested interest in making sure your project works. Our Architect and/or our Property Manager should be involved from the start, to help keep you focussed. Experts, which include us, should be involved. Experts are used in a project because they are “expert”. A project team in the context of an agreed project needs to be made up of people who are competent and able to represent the interests of the various parties to the project. In this way they can ensure that decisions are taken responsibly, promptly and proportionately with all available information to hand. An ideal project team will be one comprising the builder, quantity surveyor, project manager, architect, church representative, treasurer and CGT representative (usually our Property Manager). 4. Timings – “When will the building be ready?” Timings are governed by two distinct areas – the finance needed to deliver the project and the project itself.

The funding 1. Where does the money come from? We will need to work with you to establish how much finance is already available, so that any “gap” in funding can be clearly seen. The gap may be bridged by grants (from outside funders) and a decision may be needed to decide who will apply for these.

2. Smaller projects Funding for a small project may be readily to hand or can be underwritten by gifts that are promised (i.e. pledges) from your church members. This would apply to projects up to £50,000, but would be dependent on the size of the fellowship. Sources of funding can include: a)

The fellowship itself through: i. A building fund established over a few years; ii. Additional funds the church may have (e.g. from legacies or in general funds) and iii. One or more gift days for sacrificial giving.

These means of raising funds are suitable for gift aiding.

Loan from us. With funding up to £50,000 we are able to secure money through a loan arrangement with have in place, but this has to be repaid over five years. Even though this is at a low interest rate, it may be too much for you to repay (usually through an increased rent) in such a short period.

c) Grant funding from us. This is limited, as we do not have a lot of surplus funds. However, sometimes funds are available. d)

Gap funding from grant providers if possible. You may wish to fundraise. Only minor amounts tend to be raised from church fundraising activities, and it is better to consider using a fundraising consultant to apply for funds from local and national grant funding bodies. One typical source of grant funding can be from local landfill operators through the Landfill Communities Fund. These can be found through the Entrust website: www.entrust.org.uk. You may already be aware that Church Growth Trust does not allow Lottery Funding to be used on our buildings.

3. Larger projects In a project costing more than £50,000, it is likely that there will need to be an element of raising funds through substantial grants and a mortgage. Grant funding can take up to 12 months (or longer) to secure. This is because many charities that provide grants normally have only two or three meetings a year to decide which projects will get grant funding. Therefore, if a meeting is missed by a project, then the wait until the next grant meeting could be between four and six months. Using a fundraising consultant can be very helpful and we can suggest one to help. There is also a briefing paper on our website on “Fundraising for major church building projects”, which is helpful reading. A mortgage application will need to be made by us, as we own the property. A further scenario to address may be how the project goes forward in the event that no grants are forthcoming to fill the gap in funding. This may mean CGT making funds available as an investment in the property with an agreed payback rate which will need to be met by the church through an increased rent.

We may also be able to provide funds for major projects (£50,000 or more), but this would normally be through a mortgage. A mortgage

can either be on the property with the building project or sometimes on another of our properties. The mortgage would need to be repaid within 15 years and the interest rate is likely to be variable. This would be added to the existing rent for the property and would be changed (up or down) depending on the variable rate of interest. 4. VAT Many churches think that VAT can be reclaimed or is not payable when charities carry out building projects. This is generally not true. There are however some exceptions, including work on the fabric to a listed place of worship where VAT can be reclaimed. There are also cases where work to a building is zero-rated for VAT. These include providing access for people with disabilities (e.g. new ramp or accessible WC) and where a new building or “independent annex” is built and used for a relevant charitable use. VAT rules are complex and it is worth getting advice on VAT at an early stage, as it may influence how you design the building and will certainly influence the overall costs.

Who leads the project and who is on the team? 1. Project Stages A project has a number of stages which need to be followed. These are covered by the complementary booklet to this one on “Your Guide to Church Growth Trust’s Architectural Services and the RIBA workstages”. Copies can be obtained from our office. 2. Momentum Progress has to be consistently forward to maintain momentum and with stages being closed out and recorded. Any attempt to reverse and review elements of the process does more than slow down the project. It increases costs through delay. This normally means an increased professional input and generally demoralises both those working on the project and those raising funds. Experience shows that delaying a project in this way is often due to an unwillingness to accept the direction of the project from its inception and is therefore counterproductive, unnecessary and brings no benefits. It is a bit like snakes and ladders! The snakes are avoidable events which drag the project down and backwards. Putting this right will nearly always incur more cost. Those involved in leading on building projects need to be disciplined and move forward on the agreed basis. 3. Church Growth Trust’s involvement The stages start with looking at the feasibility of the project. Church Growth Trust would expect to be involved

in the process for at least three reasons: firstly, because we own the building; secondly, because we have a lot of first-hand experience in managing projects and finally, because we want to see the Gospel go forward from buildings that are as fit as they can be for this purpose. We are normally prepared to provide the feasibility study free of charge to help get the project going. 4. Church Growth Trust’s involvement It is important to decide who is leading the project; whether this is you or us. It is likely that whoever has the majority financial commitment is more likely to want to lead and that is reasonable and practical. Cases where it would be better for you to lead the project may include situations where improvements to the property are for your specific needs, rather than for the property generally and/or where you already have substantial funds available and/or are likely to be able to raise grant funding. We are flexible and whether we or you are leading, we can help with our expertise and we would want to be involved and kept fully informed. If you are leading, then it will be important for whoever is identified as the person heading up the project to have a reasonable level of property competence or awareness, so as to be able to manage and challenge in a way that helps, not hinders, the project. You also need to understand that if you lead on the project, you will be the client and therefore responsible for signing contracts with builders and paying for the work.

Resolving problems It is important for Church Growth Trust and the church to have open and frank discussions from an early stage and at each point in the project. If problems occur or unforeseen circumstances arise, they should be raised as early as possible and a meeting called to discuss them. Often, they can be dealt with by email or telephone, but sometimes a face-to-face meeting is preferred. We will provide a main point of contact for any building project and this will normally be our Property Manager. Our Architect will be involved with the plans and our Operations Directors will normally be involved with the funding, but the main contact will remain our Property Manager. If at any point the church has concerns that are not being dealt with by our team, they may raise the matter with the Chief Executive (Giles Arnold on 01536 647164 or giles.arnold@churchgrowth.org.uk). In the same way, we would expect the church to have a main point of contact. It is important for a successful building project to have someone responsible for running the building project, communicating with us, ensuring that decisions can be taken quickly by the church and that the church members are kept up to date. We at Church Growth Trust are committed to working with you to ensure that your building project is run in the best possible way and that the church building is made suitable for modern church use, for the glory of God.

Where Do We Go from Here? If you have any queries on this booklet and/or wish to pursue a building project, please contact Church Growth Trust’s Property Manager John Duffield. We look forward to working with you on this Kingdom-based building project to help you reach your community more effectively.

Church Growth Trust’s Property Manager: John Duffield 1 Manor Farm Barns Baines Lane Seaton OAKHAM LE15 9HP Tel: 01536 647162 Mob: 07970 143871 Email: john.duffield@churchgrowth.org.uk

December 2021