Charities will lose millions after Gove reforms, Church of England warns

The Church Commissioners manage a £10bn endowment fund, much of which is in its 105,000 acres of real estate in England and Wales. This is used, alongside donations, to fund the Church of England’s ministry.

Church Commissioners hold the freeholds to these buildings, including the Hyde Park Estate, which has been in continuous Church ownership and care since around the 11th century, when it belonged to the monks of Westminster Abbey.

The proposed abolition of marriage value would result in a one-off cut in income from the Church Commissioners Hyde Park Estate of £35m.

This would reduce the annual amount given in support of the Church of England’s charitable work by £1m a year.

The Bishop also pointed to the John Lyon’s Charity which is the largest independent funder of children and young people’s services in Greater London.

In 2022-23, it reached the milestone of having awarded over £200m in grants since 1991. That is over 4,500 grants to over 1,700 organisations.

The loss of marriage value could cost it around £3m per year, money which would go to owners of apartments valued in the millions.

Medical research charity The Wellcome Trust, which owns a freehold estate of 1,800 properties in South Kensington, London is also among those set to be hit.

“John Lyon’s is not the kind of rogue landlord that leaseholders need protecting from,” the Bishop added.

“It’s a widely accepted principle of charity law, accepted even when right-to-buy legislation was extended from council housing to many housing association tenants, that charity assets should not be transferred to individuals or bodies that would not qualify as their beneficiaries.

“This Bill seems to fly in the face of that principle. Is it possible to exempt charities?

“The National Trust already has such an exemption and one not restricted to those parts of its estate that are inalienable under Act of Parliament.

“Should that prove impossible, will they put forward a full compensation scheme for when a charity loses marriage value?”

Eleanor Bateman, of the National Residential Landlords Association, said: “This is just one of the many ‘known unknowns’ surrounding the legislation and, in the case of the marriage value clause, underlines why the Government must as a matter of urgency follow through on its vow to examine the lease premium calculation in detail.”

Critics want to see a ‘grandfathering’ amendment added to the Bill for existing leases under 80 years.

This would offer freehold investors a transition period, achieve the Government’s goal of abolishing marriage value and protect British property businesses.

A Whitehall source said: “This would be an elegant compromise. A straightforward amendment would tweak the legislation by ‘grandfathering’ the current situation for those leases which have fewer than 80 years to run.

“Effectively any lease with more than 80 years remaining at the time of the act passing will not have marriage value included within the calculation of premium for a lease extension or enfranchisement now or in the future.

“The Government will still have achieved the objective of abolishing marriage value.”