Our church hall is surplus to our needs and very run down. We are
working on a deal with a developer to create housing on the site, and this
would make a good contribution to the cost of repairing the church itself. What
AT moments like these, many churches are so relieved that someone will come
up with a golden egg to sort their financial problems that they forget that
they own the goose, albeit one that seldom lays any kind of egg.
The hall and its site have a considerable capital value. Most developers
will want to demolish the hall and simply use the land for commercial or
residential property. They usually start by tut-tutting over the cost of
demolition. It is most important that you ensure that you are being paid a good
price for your golden egg, the one-off payment that your hall might produce.
The best way to do this is to get the advice of both national and local
commercial property surveyors. In today’s property markets, the values are
volatile, and any individual or company may get it wrong. I have more than once
found excellent pro bono advice from professional surveyors through Business in
the Community, which is one of the Prince’s trusts.
Also, as you have been approached by a developer, you can be pretty sure it
will be trying not to offer you the top value. It is worth putting the sale on
the open market. My own church received bids that varied from £0.8 to £1.6
million on the open market.
But before taking action, consider whether in taking up an offer to purchase
the hall and site, you are in fact disposing of an asset that would earn you
more if you continued to own it. Have you got a goose, not just an egg?
Can the value of the hall be turned, in some way, into a means of endowing
the church with income in the future? You could sell the hall and invest the
money, to produce annual interest or income. Over 20 years, would this produce
enough income to cover repairs and alterations to the church? At the end of the
time, you would still have an appreciating asset.
This compares favourably with the action of selling the hall and disposing
of the capital in one big spend, leaving you with no asset and no income.
Alternatively, if you are located in an area where there is high demand for
a community hall, the highest return on your asset could be to repair the hall
to modern standards and set up an active letting programme.
A projected schedule of use, realistic letting rates, and a good cash-flow
projection will tell you whether this is a worthy target. A simple business
plan would address the issues of maintaining the hall at its optimum level in
order to sustain the income level.
So, it’s a question of assessing several potential ways forward. Whichever
you choose, it is better to have done considerable investigation beforehand