CLTs along side Land Value Tax is a way of capturing publicly created land value for public benefit. As residential land increases in value annually. It’s the increase in the land value not what’s on it. As properties need maintenance and improvement’s, if not kept up property devalues, not so the land. Therefore it makes sense to separate ownership of land from property built on it. When land is owned by a CLT it never changes hands, therefore never enters the land market, giving a secure tenure for leaseholder and property built upon said land. Allowing real perpetual affordable homes for both home owners and rent payers. In many cases the CLT enters a covenant on the land that stipulates; that the property upon the land cannot be sold it must always be for rent.
The relationship between CLT and leaseholder, such as mutual housing co-op’s and housing associations can have a stabilising effect within their community.
How CLT’s look for funding for land varies from, given by benefactors with land, community fund raising events, crowed funding, local authorities giving land or funds, long term loans from such as pension funds or open market, where’s the leaseholder secures through long term mortgages based on the rent income, or partnerships with local authorities. These different approaches could be said to leave a more stable market.
Another approach is to create a relationship with developers whom don’t or cannot afford to build affordable homes under section 106 agreements. That the Developers give the percentage of land required to fulfil their commitments to affordable housing under section 106 aggrement to a CLT, thus allowing the CLT to work with their chosen leaseholder to develop rentable homes.
Local Authorities over the years, on what they have deemed as run down estates, or just want arms length management of their housing stock, have transferred or set up, not for profit housing companies with local Councillors, Tenants and Community members on the board. I feel an opportunity was missed here to separate land from property, as strapped for cash companies have merged or sold off land to the point of hole estates have been sold off, with little or no rentable homes being built, thus bring no benefit to the local community in fact could be classed as gentrification.
In other countries such as USA CLTs have many approaches to whom the leaseholder is; some are direct home ownership through open mortgage, where the sale of property carries on as usual to the open market with little effect from market hyping, this doesn’t mean to say values don’t fluctuate, however the land seems to stay stable. There are rent to buy models, which seem to get first time buyers on the homeownership route. Then there’s varied Co-Housing Groups, where like minded people own or rent personal space then share community areas. Municipal authorities have also jumped on board, with very large CLTs some up to 6000 homes with mixed leaseholders. Then there’s community hubs, they tend to be straightforward community leaseholders bring a real value to the local collective. There seems a concern in some communities that racism has crept in, with whom lives next-door syndrome.
In the UK we are starting to have CLTs branching out all over the place, rural and urban bring benefits to communities with different models as in USA, There is no model fits all, nor is it the answer to our rentable or affordable homes problem, yet it does have benefits. The bit I really like is the leaseholders give rent to the CLTs they in turn use that monies for the good of the all in the community.