Changing the use of a church hall

4 January, 2018

Church halls are increasingly being used for a diverse variety of functions, from spaces for community gatherings to centres for children’s activities. Using church halls for a wide range of purposes can benefit the local community and help with fundraising, helping to bring in much needed revenue to maintain the hall and other church property.

 

Church halls, along with other church property, are usually held in a charitable trust. The aims and purposes of that charitable trust will be set out in their governing document. It is common for governing documents to restrict the use of property held in the trust to use for church purposes only. Charity trustees are bound by the charity’s governing document and must not simply allow use of a church hall for other purposes unless permitted to do so.

 

When considering a change of use to allow a church hall to be used for other purposes, trustees must first consider the legal title to the property, and then refer to the charity’s governing document. If use for other purposes is not permitted under the governing document, the trustees will need to consider taking steps to vary the governing document before any change of use can be permitted.

 

Freehold interest

Trustees might not have a right to permit changes of use even where the freehold interest in the church hall is held in the trust. It is important to check whether the hall is subject to any covenants restricting the use of the property. If a restrictive covenant is found to affect the hall and prevent the use required, the trustees may need to approach whoever holds the benefit of that covenant and seek to vary that covenant before the change of use can be permitted. A restrictive covenant is likely to have been imposed for a reason and release may require negotiation, making it potentially time consuming and costly to the trustees.

 

Leasehold interest

Where trustees hold a leasehold interest in a church hall, the first step they will need to take upon considering a change of use is to check the lease for terms detailing the permitted use. The lease may restrict use of the hall but allow changes and amendments to the use clause with the landlord’s consent, in which case the trustees will need to seek that consent before allowing any change.

 

If the lease expressly prohibits any change of use, the trustees may need to negotiate with the landlord to agree a variation to the lease. Alternatively, the trustees could negotiate with the landlord to agree a surrender of the existing lease and grant of a new lease which includes the desired use terms.

 

Governing Documents

Once the trustees have considered the freehold title or lease for consent, they will need to refer to the governing document of the charitable trust to find out whether it contain restrictions on the use of properties held within the trust. If the governing document does not permit the intended change of use, the trustees will need to check if they have power to amend the governing document. If the trustees do not have such a power, they will need to apply to the Charity Commission to amend the governing document to permit the change of use. The Charity Commission can sanction a change to a charity’s governing document by making a ‘Scheme’. A Scheme is an authorised document produced by the Charity Commission which can amend all or any party of a charity’s governing document. Even in cases where trustees do have power to amend the governing document, care must be taken to ensure that the scope of that power includes changing the permitted use of trust properties.

 

If the trustees wish to grant a lease of a church hall, the trustees will be under a duty to comply with any relevant restrictions contained in the Charities Act 2011 on disposing of land. Again, it will also be necessary to check the provisions of the governing document and, if relevant, the trustee’s lease to check that the trustees are able to grant a lease to a third party.

 

If you are a charity trustee and require advice on the use of a church hall, please contact Simon Schipper, a managing associate in the commercial real estate team, on 01892 506033 or simon.schipper@crippspg.co.uk.