What is a Community Land Trust (CLT)?

What is a CLT?

A Community Land Trust (CLT) is a not-for-profit community organisation that protects land in order to provide permanently affordable housing for local communities.

What do they do?

CLTs buy or are given land which they promise never to sell. CLTs then build affordably-priced homes on that land which they sell to local families with low incomes.

How do they work?

The land the houses are built on forever remains the property of the local community through the trust. So when families buy an affordable home, they buy the bricks and mortar not the land it is on. This removes the cost of the land from the overall house price and makes it significantly cheaper.

What's the catch?

There isn’t one! You get full usage rights over the land your new home is on, so you can still make improvements, plant trees or do whatever you want to the grounds of your new home. However, when (if ever) you eventually choose to move and sell your house, the Land Trust gets the right to buy back the house at a fixed increase (normally 25% of the market rate increase). This way it can then be sold again at an affordable price to the next generation. You effectively trade an initial price reduction in return for a decrease in equity.

What is a CLT?

CLTs exist in order to aquire and hold land permanently, so to prevent market factors from causing prices to rise. Our CLT is an Industrial and Provident Society - a business that is registered for the expressed purpose of benefitting the local community, and which does not make a private profit for individuals but ploughs any money it makes back into the houses it has built and new projects for more homes.

What do they do?

The goal of CLTs is to balance the needs of homeowners to build equity and gain stability in their lives, along with the needs of the community to preserve affordable home ownership for future generations. They can prevent families and communities who have lived in an area for generations from being uprooted by ever increasing house prices. They also serve as a way of revitalising local communities - giving a sense of common ownership and bringing people together. In more expensive areas, they can be used to prevent 'gentrification' - and corresponding areas of 'ghettoisation' - by ensuring that a mix of people on a mix of incomes can afford to live in every area.

How do they work?

It is estimated that in London 50% of the cost of a house is the cost of the land it is on - building materials and everything else make up only half. So by separating the ownership of homes from the ownership of the land they are on, via a ground lease, you can make them signficantly cheaper.

However, unlike other forms of subsidised housing, the beauty of land trusts is that the subsidy lasts forever - it is not just given away to the first family lucky enough to move in.

This happens because, when buying the house, the home buyer and the Trust enter into an agreement about the resell price. The East London CLT is working along the lines of the original sale price plus 25% of the equity (price increase).

For example, the average house price today in Tower Hamlets is £317,094 (April-June 2009). This means that - after building costs and administration and everything else that goes into the cost building new houses - you could expect to pay about half that price for a new CLT home in the borough: £159,000.

When, if ever, you choose to sell your home, you sell it back to the Trust at the original price plus 25% of its market value increase. So... if you bought the house for £150k, and when you came to sell its worth was £200k on the open market, you would sell it back to the Trust for £150k + (25% of 50k equity) = £162,500

This way the homeowner does not lose out by owning a land trust home. They still acquire equity - it is still an investment. But it also means that the trust can then sell the home to another family at around £162,000 when it is worth £200k. This way the subsidy actually gets bigger with every generation of sale.

Champlain Housing Trust - Vermont, USA

Founded by a progressive city council in 1984 with a grant of just $200,000, CHT is now the world’s largest and most widely recognised Community Land Trust:
 over 2,000 residential homes, in both urban and rural locations16 non-residential community service buildings total assets worth $220 millionrecently awarded the World Habitat Award for developed countries has also been internationally recognised for its environmental sustainability.

Within the state of Vermont, it is particularly respected and works closely with local officials as part of their ‘inclusionary zoning’ practices – similar to the UK’s Section 106 agreements – whereby private developers ensure a proportion of affordable units per development.

Hyresgästernas Sparkasse – Sweden

A European variant on the American model, it has its roots in the co-operative movement: a nation-wide residential organisation over 540,000 members owning their own homes through co-operative associations100 000 ’homesavers’ making savings in the HSB bonds so as to be able to buy their own house or departmentnot-for-profit organization works closely with national government and greatly reduces burden on direct welfare costs