What is a Community Land Trust, and how does it work?
A Community Land Trust, or CLT, is a way to help people buy homes at prices they can afford. The trust owns the land, and the homeowner owns the house on it. This keeps the cost lower because the buyer doesn’t have to pay for the land. If the homeowner decides to sell, the CLT helps make sure the next buyer can also afford it. This helps keep homes affordable for many families over time.
The Trust Owns the Land – The CLT buys and holds land to keep it affordable.
Homeowners Buy the Home – Buyers purchase the house at a lower price but lease the land from the CLT.
Affordability Lasts – When selling, homeowners agree to a resale formula that keeps the home affordable for the next buyer.
What is permanently affordable homeownership?
Affordable housing is typically created through public subsidy, which establishes a specific compliance period within which the units must remain affordable. Perpetual affordability restrictions are what set Community Land Trusts (CLTs) apart from other forms of affordable housing development. CLTs ensure that the homes that they develop are affordable not only to the first occupant but to future generations as well. They do this by (1) removing the land and home from the speculative market, (2) reselling the same home over and over, and (3) using resale restrictions.
What are the benefits of CLT home ownership?
CLTs can be invaluable in building community wealth and opportunity:
Prevents Displacement: CLTs help residents remain in their communities despite rising property values, combating displacement.
Provides Community Control: By holding land in trust, communities have a say in local development, fostering stability and empowerment.
Encourages Wealth Building: Homeowners can build equity, contributing to personal financial growth while maintaining community affordability.
How is the sales price determined?
A target sales price range is determined based on the target income range for a unit. The final sales price for each unit will be determined based on the actual income of the qualified homebuyer to ensure that the homebuyer will not be cost-burdened.
Are ALT properties taxed at a lower valuation than non-ALT property?
Presently, ALT properties are taxed at the same rate as non-ALT properties. ALT is working with partner organizations to develop a policy agenda that would seek to ensure that ALT property tax assessments reflect the resale restrictions.
Does the homeowner get to keep any of the equity in the home when they sell?
When the homeowner decides to sell, the resale formula is used to determine the resale value. ALT uses two different resale formulas. One permits homeowners to realize 25% of the appreciated value of the home, and the other uses average income growth to determine how much equity a homeowner can realize.
