Many of the UK ’s leading charities have welcomed a new initiative that could help more of them to buy their own properties.

Unity Trust Bank is marking the start of 2003 by the launch of a ‘rent to buy’ scheme aimed at established charities and voluntary organisations.

Members of the Association of Chief Executives of Voluntary Organisations (ACEVO), who were consulted by the bank, were very positive about the scheme.

Unity Trust director Jeremy Wagg said: "There are over 1300 members of ACEVO who lead organisations in the third sector in the UK .   The response of ACEVO members confirms that there is a strong potential demand for this lending”.

Mr Wagg says that the bank has had close ties with the charitable and voluntary sectors, since it was established by the trade union and co-operative movements eighteen years ago.

"Almost half our business comes from the social economy. Charities tend to be reluctant borrowers, even when they have evident needs to acquire properties, and this is why we decided to devise a scheme to help them," he explained. 

"We intend to offer up to 100 per cent of the purchase price, through a combination of a traditional mortgage topped up by our equity stake”.

One charity which has used a rent-to-buy facility with Unity Trust Bank is Birmingham-based Future Housing, which provides accommodation for homeless, single Caribbean men.

The charity has borrowed under the arrangement to purchase a property for three of its tenants.   Unity Trust has lent Future Housing £90,000 and retains a 25 per cent stake in the house.

The charity’s chief executive Roger Telphia says that the aim is for his organisation to buy back the Unity Trust stake

“With the long-term trend for house prices to rise, the value of the bank’s stake will rise.   But the loan has enabled us to achieve something that would otherwise not have been possible” he said.

Though the principles used in the Future Housing instance are broadly similar, Unity Trust’s new rent-to-buy scheme is primarily aimed at helping charities to buy premises for their own use rather than that of their clients.

Unity Trust’s rent-to-buy scheme has already received tacit approval from the DTI's Social Enterprise unit, which is keen to see charities take charge of their own properties.

“Despite the short term doubts about property prices, I expect there to be a high rate of take up by charities for rent-to-buy.   It will make long-term sense for many of them” said Mr Wagg.