Church Commissioners’ housing loans for the retired clergy

by
02 November 2006

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From the Secretary to the Church Commissioners
Sir, — Ray and Anne Lane (Letters, 8 April) are unhappy that the Church Commissioners’ loans, which finance a large part of the loans to retired clergy for their homes in retirement, made such a high investment return in 2004. On the back of the housing boom, the return was 16.5 per cent, and over the past five years it has been 21.2 per cent.

It was not always thus. Not so long ago, the loans were the Cinderella of the Commissioners’ portfolio, with lower returns than their other investments. The terms of the loans are set at a level that enables affordable loans to be provided to retired clergy while, at the same time, providing the Commissioners’ fund with a long-term return in line with their other investments.

Inevitably, there will be periods when, like housing, the loans earn high returns; but there are also periods when the return is very low: 2005 could be one such period.

The Lanes quite fairly characterise the loan repayments (or interest) as no more in real terms than rent. Where else could anyone rent a property for an annual rent of as little as four per cent of the property’s purchase price? And that comes with a guarantee that the “rental” will increase only in line with the combined clergy and state pensions.

Any relaxation of the terms of the loans would directly reduce the amount of money the Commissioners can make available for the support of the Church’s ministry. We think we have the balance right.
ANDREW BROWN
1 Millbank
London SW1P 3JZ

From the Revd Nicholas Pedley
Sir, — I am most grateful to Ray and Anne Lane for commenting on the pitfalls of the Clergy Retirement Home Loans Scheme. My situation may be unusual, but highlights the anxieties caused by this form of never ending mortgage.

I retired from stipendiary ministry through ill health in 1999, aged 51, and my wife and I entered into what, I think, was then termed an “Equity Sharing Mortgage”. The repayments were based on our joint income, of pension and incapacity benefit and my wife’s disability allowance. It seemed our only option, other than renting, and it enabled us to have something to leave our children on our demise.

Nine months later, my wife became very ill, and died within a week. She was 42. Still ill myself, I was left to care for my two children, then aged nine and 14. My wife’s benefits died with her; so life became quite a struggle. However, my mortgage payments remained the same, and the payments have risen each year at the same rate as the pension increase. Consequently, I slowly become worse off.

Added to this, I am financially responsible for all maintenance and repairs. I have had to pay for the property to be rewired and flat roofs refelted. To date I have spent approximately £4500 on the home, money I will never see again, as I am merely keeping the property in good order for the future.

After my wife’s sudden death, I considered moving to be closer to friends, and asked if I could transfer the current equity (house prices having risen considerably) to another property. I was told this was not possible: I would have to repay the mortgage and apply again. However, the loan amount had not increased. I was priced out of the market; so any thoughts of a move were abandoned.

I am now content to remain where I am, as I cannot afford to move. However, I remain greatly indebted to the Corporation of the Sons of the Clergy and other charities and my local MP, who have seen us through some very difficult times. There are positives: although my mortgage will never be repaid, we have a home, and I thank God for it. But the problems that I have experienced do seem to highlight some of the anomalies of the Church Housing Scheme.
NICHOLAS PEDLEY
33 Comber Grove, Kinver
West Midlands DY7 6EN

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From Canon Maurice Harper
Sir, — I retired in 1985 and took advantage of what then seemed a generous scheme to obtain a retirement home. I provided £6250 (plus £1000 to meet the vendor’s lowest price of £33,250), and the Pensions Board gave £26,000 to purchase a house at the surveyed price of £32,500.

In 1995, my wife had a triple artery by-pass operation, and it seemed prudent to move into a smaller, single-storey property. Such a property would have cost as much as, or more than, the one we had, which had at that time risen in value to around £78,000.

I asked if the property could be sold and the proceeds used to purchase another; but, in spite of offering to pay all expenses involved, I was told that under the scheme the Commissioners must have their money back. They would, of course, consider giving me a new loan! If this was agreed, my monthly payments would have increased by £64 or £74. I could not afford this. The result was that I was obliged to stay where I was and accept the difficulties.

Had I been able to move, the Commissioners would have lost nothing. They would have continued to receive the same payments while their share of the profits appreciated. The final straw was when I realised that with the repayments going up in line with clergy pensions, I was actually paying 7.7 per cent on the original £26,000 loan, when the bank rate and most mortgages had come down.

Eventually, in 2003, by which time the value of the property had reached £175,000, my family decided that enough was enough, and came to my rescue with funds to purchase a much smaller home.

In one letter from the Pensions Board, the Housing Manager mentioned that there were a lot of clergy in the same position as I was. Perhaps it is time something was done about it.
MAURICE HARPER
30 Cookham Dene
Buckhurst Road
Bexhill-on-Sea
East Sussex TN40 1RU

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