Negative equity: Part 3, what price farmland?
[Continued from yesterday's Part 2 and the previous Part 1.]
Let there always be an
In a story that proves there’ll always be an England, in Part 1 we met our plucky, ‘attractively disheveled’ English couple, as profiled in a Daily Mail article, who were being assessed the cost of repairing the chancel on a pre-Reformation church in their vicinity, solely because they owned a 6.5-acre parcel of ‘glebe land’ that carried with it the a periodic chancel-maintenance obligation. We heard their tale of woe and how the singularly unsympathetic Church of England was seeking to extract a sum that by now had totaled nearly £500,000. By that part’s end, we were ready to expunge the glebe land obligation.
In Part 2, we discovered that people can get title insurance for glebe land obligations; that the deed clearly referenced the duty; that the owners knew of it when they bought the property; that the property, which is being farmed as one might say in the medieval manner, would be worth £2,000,000; and that this represents a 48x increase in value over the 39 years the Wallbanks have owned it, making it four times as valuable, in real terms, as when Ms. Wallbank’s father bought it in 1970.
I don’t like the tone of your blog, young man
While you, our jury of readers, ponders your verdict, a word from our pedagogical sponsors, seeking the policy lessons.
1. Glebe law has very fuzzy boundaries. It all began with a polite letter:
And then, out of the blue one day at the beginning of 1990, a letter arrived from the church wardens of
‘We hope that you are well and are enjoying your life in that beautiful part of
We’ve previously noted that the Wallbanks are absentee landlords, owning the property for its income potential and not for their use or occupancy.
Here’s the annual rent
But it then continued: ‘As the owner of Glebe Farm, you know that there is a charge … for the maintenance and the repair of the Chancel of St John the Baptist.’
Observe that casual ‘you know that,’ suggesting that the church’s solicitors had a hand in drafting this letter..
It went on to detail the outcome of an architect’s report, which suggested that a large amount of expensive work needed to be done to the Grade I listed church - among which were three windows that needed repairing at a cost of £2,000 each - and concluded that, ‘if a large job is necessary, we are obliged to ask for your financial support’.
To the Wallbanks, it sounded like a blank check:
To Gail and her husband Andrew, far more alarming than this polite request for money was its open-ended nature. As Mrs Wallbank puts it: ‘We didn’t mind making a voluntary donation to its upkeep - someone, after all, has to pay for these beautiful old buildings and we’d got married in this church - but the fear was that this would go on and on. If we paid one year, how much the next, and the next? How much would it end up costing us?’
The chancel-repair liability sounds like a blank check because it is one.
Just sign, we’ll fill in what you owe later
Blank checks set up a classic public-choice problem: those who incur the expense (the church wardens) do not pay its cost, and those who pay have no say in the bill they will face. This is a fuzzy boundary, and as I’ve previously written, fuzzy boundaries are bad boundaries.
In my youth, I thought the goal [of regulation] was a perfectly precise boundary. Now I care much less about the boundary’s accuracy and much more about its clarity. Crisp boundaries end arguments; and curiously enough, that also leads to greater stakeholder satisfaction. Fuzzy boundaries lead to arguments:
“I saw chalk! Chalk flew up!“
- John McEnroe, appealing to the umpire when a line call didn’t go his way.
Further, perceived unfairness in adjudication only makes program participants even more irate!
“You can not be serious! This is outrageous! I’ve never seen anything like this in my life! These are the pits of the world!“ – John McEnroe, still not getting the overrule and now in full tantrum mode.
2. Glebe law cases need principles of adjudication. It’s absurd that something as old as this has so little documentation:
[The Wallbanks] have had to become experts in tithe law, and spend days poring over the minutes of PCC (Parochial Church Council) committee meetings. They have even commissioned experts to transcribe an 18th-century Enclosures Award document written on vellum - fine parchment made from calfskin - so fragile it can be handled only by someone wearing gloves and whose script is so faint it must be examined under ultraviolet light.
Further, litigating the matter has brought no one any relief:
The Wallbanks say they have tried to negotiate a mutually agreeable exit deal with the church, but that, ‘thus far, they have refused to name their price’.
If true, and I have no reason to doubt its veracity, then the church is making a huge mistake.
Meanwhile, after receiving one very low offer of £700,000 for the six-bedroom farmhouse, its outlying buildings and 174 acres, the Wallbanks claim that they promptly received a letter from the PCC solicitors saying they knew of the offer and that it was clear they had the wherewithal to pay the charge. ‘All this stinks,’ they say.
It does stink, and although right now the church has leverage vis-a-vis both the Wallbanks and any other holder of an individual parcel of glebe land. But if the church is seen as piggy, that could change.
Piggy? Overdue for reform? Moi?
3. Glebe law is overdue for reform. Some may find it remarkable that glebe law exists at all. Start with its unknown reach:
The question now is this: how many more unsuspecting ‘lay rectors’ will soon fall victim to the church’s grasp?
The simple answer is: nobody knows.
Such chancel repair liabilities are thought to apply to some 5,200 pre-Reformation parishes in England and Wales - though nobody knows for sure how many properties might be affected, as the legal documents are, in some cases, both ancient and in poor condition. That’s if they can be traced at all.
Glebe law is one of the few remaining holdovers from a time that predates the modern state. Before there were nations, before there were written Constitutions, moral authority derived from the church, which was the only institution that was both long-lived and perceived as impartial (even pro-poor). Parish registers became the official records of births, deaths, inheritances, and land rights.
Title is a recursive continuum: my title is good because my seller’s title was good, my seller’s title was good because his seller’s title was good.
‘Tis sweet and commendable in your nature, Hamlet,
To give these mourning duties to your father:
But, you must know, your father lost a father;
That father lost, lost his,
Unless title is thus formalized, the recursive search for records goes back and back to the time when the mind of man runneth not to the contrary. The records could be lost, imperfect, or out of date with facts on the ground:
After the dissolution of the monasteries, that land was dispersed but never separated from the obligation to pay for chancel repairs, making the new landowners ‘lay rectors’.
It will doubtless console the Wallbanks immensely to know that they would have a claim for uncompensated eminent domain taking … against Henry VIII. Or his heirs, as two commenters tartly noted:
As for the CofE not being part of the State – err, isn’t the Queen still the Supreme Governor of the of CofE – and still the constitutional head of State?!
And:
As the Head of the Church of England, why isn’t the Queen being touched to fund all these repairs? And why in heaven’s name are the law lords upholding such old and archaic laws?
Please, archbishop, don’t let those landowners near me
When I sold my house in Oxon a few months ago, there was a clause like that in my sale agreements – I refused to accept it as I lived nowhere near the church and that was that.
That hurts the Wallbanks’ case; other people read their deed restrictions and struck them out.
Sounds like the original buyer (at least the one from this century!) should have taken proper legal advice and got something in written. Caveat emptor.
By the way, for sheer entertainment value, read the comments; they are far too numerous to do justice to here.
4. Are church obligations a form of tax? The Mail commented:
Oddly enough, given the arcane nature of the case, when the first judge found against them they were advised to appeal on the rather more modern grounds that their human rights had been infringed by an unfair and arbitrary tax.
In the US, we have strict separation of church and state, but in the UK, there is a state religion – the Church of England – and thus one can establish privity with the monarchy, and hence with the Treasury (it’s always called Her Majesty’s Government):
This was initially successful, but when the PCC (funded by the Archbishops’ Council) took their case to the Lords the original judgment was reinstated, on the grounds that as the PCC is not a public body, church repairs are a private matter and the Wallbanks’ liability could not be a tax.
The Lords are right; the PCC is a private body. This isn’t a tax. Perhaps in time immemorial it was a tax, but not now.
Given the long and complex historical connection between Church and State this seems unusual. ‘How can they argue that the church is a private body?’, says Gail Wallbank. ‘A vicar has legal status to act as a registrar when he conducts a wedding. And a church is a public place of worship.’
Nice try on both counts. It’s still private property.
No, the real problems are these:
5. Farmland produces minimal yields. Much is made in the mail article that the Wallbanks, despite owning more than a quarter-mile of land, are not rolling in dough:
The couple drive a battered old blue Land Rover and have raised seven children, whose ages range from 16 to 32. They certainly don’t give the impression of having an unlimited slush fund.
You don’t have to be rich to drive one of these
Children being net cash drains – at least until our dotage – having seven children probably contributed not a little to their relative penury:
Indeed, they say they have remortgaged to the hilt to fund their legal fees, and seen chunks of cash kindly donated by relatives eaten up by their struggle through the legal quagmire.
Annual income of £33,000 on land valued at £2,000,000 is a yield rate of barely 1.5%; how can that be? If the property yielded a more normal 7.0%, that would be £140,000 annually, certainly enough to cover the every-three-decades cost of repairing the chancel. (The Wallbanks have been fighting this case for 18 years!)
Which means that, unless the Wallbanks are utterly incompetent landlords …
6. The land is underdeveloped. The land’s assessment has to embrace the possibility of development. Capping £33,000 annually at 7.0% would make the land worth £475,000, before deducting the accumulated glebe law claim.
7. What price greenfield? We’re going to find out what the farm is worth:
But the law lords have had their say. And the Wallbanks must now find the money.
“We now have until February 16 to find the money and I just don’t know how we’re going to do it. We’re at our wits’ end.”
Here’s one answer:
Subdivide the farm. Put the 6.5 acres subject to the glebe land obligation into a bankruptcy-remote entity.
Sell the remainder to a developer.
See the community go into an uproar.
Find out how much greenfield the community will pay for.
More green fields!
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