Gospel Standard

A chapel house is an asset of the chapel and trustees/church officers have duties to ensure the asset is effectively used for the benefit of the charity and their responsibilities as landlords are fulfilled. No chapel house should be occupied without the trustees formally agreeing to the terms at a properly convened Trustee’s Meeting.
 
When considering the occupation of a chapel house there may be details relating to the ownership, occupation, maintenance, and repair of a chapel house in the trust deeds. The deeds should be checked to ensure adherence to the stated requirements. It is advisable to complete a checklist annually of compliance with the various requirements.  A checklist can be found here.
 

Tenancy Agreements

In all cases where occupation of a chapel house is agreed, or the terms amended, a formal lease, or amendment to lease should be documented and properly signed, even if the property is occupied by a pastor or other person connected with the chapel on a rent-free basis. The lease, often called a ‘tenancy agreement,’ formally sets out the terms agreed between both parties and provides protection and assurance for both sides. The tenancy should not give long term rights to the occupier which will de-value the chapel house.  The UK government provide a model agreement for a shorthold assured tenancy which can be found here: Model agreement for a shorthold assured tenancy - GOV.UK (www.gov.uk).  Further advice about buying, selling, leasing, mortgaging or transfering charity land and property can be found here:  https://www.gov.uk/guidance/charity-land-and-property
 
A pastor will usually occupy rent free.  A caretaker may also occupy rent free. If rent is to be paid by the caretaker there is a limit to the amount which can be charged. See www.gov.uk/national-minimum-wage-accommodation
        
There are some exceptions to the general rule. Voluntary workers are covered under Section 44 of the National Minimum Wage Act 1999. Such workers employed by charities etc. are not entitled to the National Minimum Wage (NMW) provided certain conditions are met including the provision of no pay or benefits other than reasonable accommodation. We have had advice in one case that the NMW was not payable, but trustees/church officers do need to take care and obtain appropriate advice according to their situation. 
        
Advice should be taken from a person with the requisite ability and practical experience, such as a property letting agent, or a solicitor regarding the terms of the lease. The law requires trustees to obtain the terms which are the best that can reasonably be obtained for the charity.  Note it does not say “best price” but “best terms” which is for the trustees to judge, and for which decision they can be held accountable by the Charity Commission.

The Equality Act 2010 may need to be considered when seeking new tenants.  Schedule 23 of the Act provides an exception for certain kinds of religious organisations so that there is no unlawful discrimination if the conditions set out in the exceptions are satisfied. Here is a link to the exceptions: http://www.legislation.gov.uk/ukpga/2010/15/schedule/23.
 
Where a property is let on a rent-free basis, to comply with English contract law the rent should be set at a minimal amount e.g.  “£1”. A £1 does not have to actually change hands.  In such cases, the rent us usually stated as “£1, if requested”.
 
If a chapel house is not needed by a pastor or caretaker, it can be leased, and the revenue typically goes towards the chapel's benefit. However, in all cases it is important to review the Trust Deed to ensure the requirements of the deed are met.

Your responsibilities as a property owner

Whether rent-free or otherwise, in all cases, as a property owner you must:
 

• Keep your rented properties safe and free from health hazards
• Make sure all gas equipment is safely installed and maintained. You must:
  • Make sure gas equipment is safely installed and maintained by a Gas Safe registered engineer
  • Have a registered engineer do an annual gas safety check on each appliance and flue
  • Give a copy of the gas safety check record to the tenant before they move in, or within 28 days of the check

 

• Make sure all electrical equipment is safely installed and maintained. ’Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020’ came into force on 1 June 2020 These new Regulations require landlords to have the electrical installations in their properties inspected and tested by a person who is qualified and competent, at an interval of at least every 5 years. Landlords have to provide a copy of the electrical safety report to their tenants, and to their local authority if requested.

 

• Make sure the property complies with fire safety regulations. You must:
  • follow safety regulations
  • provide a smoke alarm on each storey and a carbon monoxide alarm in any room with a solid fuel burning appliance (for example a coal fire or wood burning stove)
  • check access escape routes are available at all times
  • make sure any furniture and furnishings provided are fire safe

 

• Provide an Energy Performance Certificate for the property.  Landlords cannot let properties with EPC ratings below E since April 1, 2020 unless they have a valid exemption. If a property has a rating of F or G, the rating must be improved to E or an exemption must be registered before starting a new tenancy. If the property is already being rented with a F or G rating, improvement to E or registering an exemption is required immediately. Empty properties with a low rating do not need to take any action until they are ready to be rented again.

 

• Where a deposit is paid, protect your tenant’s deposit (where a deposit is paid) in a government-approved scheme

 

• Check your tenant has the right to rent your property if it is in England

 

• Give your tenant a copy of the How to rent checklist when they start renting from you (you can email it to them).

 

• Have in place property owners insurance and comply with insurers’ conditions.

In addition to these responsibilities, it may be necessary to consider limitation on noise and nuisance on Sundays, if a property is adjacent to a chapel building.
It is also good practice to be responsive to your tenants' needs and to provide a high level of customer service. This may include being available to address any problems or issues that arise during the tenancy and being willing to work with your tenants to resolve any disputes or problems that may arise.

Government guidance

The website Renting out your property: Landlord responsibilities - GOV.UK (www.gov.uk) is a resource provided by the UK government for landlords who are planning to rent out a residential property. The website provides information on the various responsibilities that property owners have towards their tenants, as well as the legal requirements that they must adhere to in order to comply with UK law.

The website covers a range of topics, including:

• Preparing to rent out a property: This section provides information on the steps that property owners should take before renting out their property, including carrying out necessary repairs and maintenance, obtaining the necessary safety certificates, and preparing a written tenancy agreement.
• During the tenancy: This section covers the responsibilities of property owners during the tenancy period, including maintaining the property in a good state of repair, protecting tenants' deposits, and complying with fire safety regulations.
• Ending a tenancy: This section provides information on the process for ending a tenancy, including serving notice to the tenant, dealing with tenants' deposits, and returning the property to the property owner.
• Legal requirements: This section provides detailed information on the various legal requirements that property owners must adhere to, including those related to energy efficiency, gas and electrical safety, and the protection of tenants' deposits.

The website also provides links to a range of other resources and documents that may be useful for property owners, including guidance on how to prepare a written tenancy agreement, information on the different types of tenancy agreements available in the UK, and details on the government's tenancy deposit protection schemes.

Summary

In summary:
 

• Chapel houses are assets of the chapel, and it is the responsibility of the trustees and church officers to ensure that all assets are used effectively for the benefit of the charity as defined by the Trust Deeds, and that their duties as landlords are fulfilled.
• Occupation of a chapel house should only be allowed with the formal agreement of the trustees, which should be documented in a lease or tenancy agreement.
• Trust deeds may contain specific requirements regarding the ownership, occupation, maintenance, and repair of the chapel house, which should be followed.
• Pastors and caretakers may occupy chapel houses rent-free.
• Trustees are required by law to obtain the best terms for the charity when determining the terms of the lease and should seek advice from a property letting agent or solicitor.
• If a chapel house is not needed for use by a pastor or caretaker, it can be rented out to others and the income used for the benefit of the chapel as defined by the Trust Deeds.
• As a property owner, it is necessary to ensure that the chapel house is safe, well-maintained, and compliant with all relevant regulations, including those related to gas, electricity, fire safety, and energy efficiency.
• Landlords must check the tenant's right to rent and provide any necessary documentation to the immigration authorities if required.
• Landlords must also follow any notice requirements when ending a tenancy.

This is a summary of the law as we understand it at 3 February 2023 but GST cannot be held liable.  Chapels and trustees should take their own professional advice and enquiries made as appropriate.