The Federation believes that with the Church of England owning an average of eight acres of land per Anglican village church, in addition to parsonages and church halls, every rural place of worship could deliver an average of one new affordable home.
Other denominations such as the Methodists, Baptists and other free church denominations also have rural churches that could be used for affordable housing.
The Federation said that with a number of rural churches at risk of closure, because of low attendances, the selling of land, for new homes, could help many safeguard their future – with the money raised being used to pay for desperately needed repairs or the construction of new places of worship.
During the last few decades, all major denominations have been hit by declining congregations and resulting church closures.
Recent research has shown that rural churches have been disproportionately affected by falling numbers. This is in part because of population shifts, with around 500 Anglican churches being situated in hamlets of around 80 people.
However, the Federation believes many rural churches could help safeguard their future by making underused and redundant assets, such as glebe land, parsonages and church halls, available for the development of housing – with just half an acre being sufficient to deliver four affordable homes.
The Federation said churches wanting to deliver affordable housing could sell or lease glebe land to a social housing provider, exchange the existing church building and grounds for a modern new one, or adapt the existing building so that it contains both social housing and a place of worship.
It said churches could sell land to housing associations at a price which represented the best price for the community – placing greater emphasis on the role the new affordable homes will play in helping local families than the cash value of the land.
In some cases, churches would give up their existing, often crumbling, places of worship, which are a drain on their resources.
Then, having raised income through making land available for housing, their congregations would be released from the continual worry of paying for the upkeep of the building and meet for services instead in alternative places, such as people’s houses, cafes and pubs.
Overall, the Church of England owns around 129,000 acres of glebe land – which are controlled by the church’s 43 dioceses. While it would not be practical or desirable for every single village church to deliver a new home, many rural places of worship would be able to deliver several units.
The Federation said that with 750,000 people on waiting lists for an affordable rural home, those churches that do give over land for affordable housing would help both themselves and local village communities. The Federation believes that 100,000 new affordable homes are needed in rural England.
With many country pubs, shops, and schools closing in recent years, village churches have become an increasingly important piece of the fabric in rural communities – especially as, according to the Church of England, the overwhelming majority of the rural population, 78%, classifies itself as Christian.
There are more than 16,200 Anglican churches in England, with 9,600 (60%) in rural areas.
Federation chief executive David Orr said: "The village church is often at the heart of our rural communities but many are now at risk of closure because of falling numbers.
"By making land available for housing, rural churches would increase their chances of survival and also help meet local housing need.
"If rural parishes could deliver an average of one affordable home per church they would go a long way to helping us end the rural housing crisis."
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