Letting Property and Third Party Use

Letting Property and Third Party Use

• Lease, licence or a one-off hire
• The grant of a lease of Methodist property to a third party
• Entering into a licence
• Use of Methodist property for a one-off occasion
• Use of Model Trust Property by another Christian Church or congregation
• Residential tenancies

Introduction

Managing Trustees play a valued role in ensuring that church premises best serve the mission of the Methodist Church. Managing Trustees across the Connexion encourage the local community to use church premises to seek, amongst other things, to;

• create links between the local community and the Methodist Church;
• support local community and youth projects; and/ or
• raise additional income to support Mission purposes

Depending on whether the arrangement with a third party is a one-off hire, regular part-time use under a licence or exclusive use under a lease, the requirements under charity law, Methodist law, policy and best practice are very different.

The information and links on this page should help Managing Trustees to find the guidance that they need to help them to ensure their arrangements with third parties are on the correct legal footing.

Managing Trustees who are starting a property project may find it helpful to refer to the First Legal Steps on a Property Project Chart. This can be used as a tool to help Managing Trustees identify potential legal issues early in the process so that they can be taken into account and built into the project plans and/or resolved where possible.

Lease, licence or a one-off hire?

Sometimes it can be difficult to decide exactly what sort of arrangement Managing Trustees have with a third party group. The resources referred to below may assist Managing Trustees to determine whether a particular group's usage can be treated as "one-off", regular but part-time, non-exclusive use (a licence) or a lease:

• Licence Flow Chart - a tool to help Managing Trustees ascertain what sort of arrangement they are dealing with and how this is treated under charity law and Methodist law, policy and best practice
• When to Use the Standard Licence - a Guidance Note accompanying the Licence Flow Chart which explores the differences between a "lease" and a "licence"

If the Managing Trustees are still uncertain about how to best deal with a proposed use of Methodist premises then they can contact TMCP for further guidance. It is also strongly recommended that Managing Trustees obtain independent legal advice from a local solicitor to satisfy themselves that the proposed arrangement is properly documented and protects the best interests of the charity.

The grant of a Non-Residential lease of Methodist property to a third party

A lease can be described as giving an occupier exclusive possession of a defined area of land, for a fixed period of time, for rent. This is in contrast to a licence as there is an intention to create an interest in land capable of being assigned or sold.

• Granting a Non-Residential Lease to a Third Party

Entering into a licence

A licence can be described as merely granting permission to use land and/or a building. A licence can be viewed as allowing something that would otherwise be a trespass and does not grant any interest in land. It is a personal right that is not capable of being assigned or sold.

• Licence

Use of Methodist property for a one-off occasion

If use is for a one-off occasion only, such as a child's birthday party or annual meeting, a booking form may be suitable. This often takes the form of a simple contract setting out the terms and conditions of use including; what the premises will be used for, payment, and a cancellation policy.

Unlike leases and licences, Managing Trustees are free to use their own booking forms without the need for approvals under Standing Order 931(3). The Template Booking Form produced by TMCP is just a template, although use of the same is recommended. The Template Booking Form is an example of the type of provisions that Managing Trustees may want to include in their own booking forms:

• Template Booking Form

Sometimes it can be difficult to decide when “one-off use” becomes “regular part-time use” requiring a licence. Three occasions of use in a 12 month period is often used as a rule of thumb but Managing Trustees should speak with their insurer about when it would consider “one-off use” changes to "regular use".

Use of Model Trust Property by another Christian church or congregation under Model Trust 14(2A)

Methodist Model Trust Property can be used by other Christian churches or congregations for worship separately to the Methodist congregation under Model Trust 14(2A), Model Trust 14(1) and Standing Order 920.

Managing Trustees are required to obtain the consent of the Methodist Council if they want to permit another Christian church or congregation to use Methodist property for worship. In order to obtain that consent Managing Trustees will need to complete a Schedule 14a and submit it, along with the applicant’s statement of belief, to the Connexional Ecumenical Officers for consideration and approval. Please refer to the Sharing of Buildings page on the Methodist Church website for details of the process to be followed.

The Methodist Conference 2021

Following the decision of the 2021 Methodist Conference, it is now possible for other Christian Churches and congregations to use Methodist property on a part-time non-exclusive basis under a licence of any duration or on an exclusive basis under a lease.

Although since the 2021 Conference took place, it has been possible to enter into leases or licences of any duration under Model Trust 14(2A), “policy considerations” must be applied. The Methodist Council approved the policy to accompany the revised Model Trust 14(2A) in their meeting in January 2022. Further details can be found on the Sharing of Buildings page on the Methodist Church website including a link to the Methodist Council’s recommended “policy guidelines”. Details of the new policy and accompanying guidance will soon be available from the Connexional Team and available from the Sharing of Buildings page on the Methodist Church website.

Please bear in mind that these two legal arrangements; a licence and a lease, are very different. You can find general guidance on the Licences page of TMCP’s Website. Licence Guidance 1 - When to use the Standard Licence is a good place to start.

Licence under Model Trust 14(2A)

Although the Model Trust 14(2A) policy allows for licences to be entered into for a period of up to three years, please also note that as with any licence of Methodist buildings, it is best practice for a licence to be limited to 12 months. Where a licence is granted for more than 12 months, Managing Trustees must first obtain legal advice to confirm that notwithstanding the length of the licence, the arrangement is a true licence and not a lease. Guidance on the difference between a lease and a licence, how to decide which is right for your circumstances and the steps to be taken to put in place a longer licence or lease can be obtained from TMCP Legal. The policy also confirms that the terms of the licence should be on the standard Methodist licensing terms as reflected in the Standard Form of Licence for Use of Premises for Christian Worship.

Lease under Model Trust 14(2A)

The Model Trust 14(2A) policy confirms that, at this stage, it is not possible to set out detailed heads of terms and parameters under which a lease can be granted under Model Trust 14(2A). It does however set out basic ground rules. Please see the Methodist Council’s recommended “policy guidelines” using the link from the Sharing of Buildings page on the Methodist Church website. The policy allows for leases of self-contained premises only for a period of up to five years, ideally allowing the landlord to terminate the lease early on at least one occasion during the term (landlord break). Such leases should be outside of the Landlord and Tenant Act 1954 meaning that the tenant does not enjoy an automatic right to a new lease at the end of the original term and the usual market rent requirements apply. Please note that the building does not have to be in use by a Methodist congregation at the time a lease is granted. Leases of a former place of worship i.e. a redundant building previously used for worship are permitted.

For guidance on leases generally and the requirements to be fulfilled under charity law and Methodist law and policy, please refer to the Leases page of TMCP’s website.

The following Resources may be of assistance:

• Schedule 14a - the form to be completed and submitted with the statement of beliefs to the Connexional Ecumenical Officers to obtain Methodist Council approval.
• Standard Form of Licence for Use of Premises for Christian Worship (Worship Licence) - standard form of licence for regular but part-time, non-exclusive use of Methodist premises by another Christian church or congregation under Model Trust 14(2A)
• Template Booking Form for Use of Premises for Christian Worship (Worship Booking Form) - template booking form for one-off or very occasional use of Methodist premises by another Christian church or congregation under Model Trust 14(2A)
• Licence and Booking Form for Use of Premises for Christian Worship Document Guide – for guidance on use of the specific forms of worship licence and booking form

If Managing Trustees would like any further guidance on the processes involved or the standard documents please contact TMCP Legal. If Managing Trustees would like guidance on the statement of beliefs or the Schedule 14a please contact the Connexional Ecumenical Officer, who will refer your query to the Faith & Order Committee if necessary.

Residential tenancies

Managing Trustees often enter into tenancy agreements, usually Assured Shorthold Tenancies (ASTs) of residential property such as Manses, investment property or caretakers flats, that are not required from time to time.

There are charity law and Methodist law, policy and best requirements that need to be fulfilled before residential tenancies are entered into. TMCP has provided detailed guidance for Managing Trustees on residential tenancies including guidance notes on issues surrounding the grant of a tenancy and managing tenancies, a checklist and revised template clauses. Please contact TMCP Legal if you have any queries. Managing Trustees may also find the following News items of assistance:

• Legislation Update – Residential Tenancies
• Legislation Update – Right to Rent

TMCP Legal has also produced a template form of AST including the template clauses that can now be used by Managing Trustees. This has been prepared for use by Managing Trustees only and is available on request from TMCP.

Managing Trustees in Wales may find the following guidance of assistance:

• Rent Smart Wales Focus Note
• Rent Smart Wales Property Information Form

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