Community Land Trusts – an emerging component of Third Sector Housing

Historically, communities have been conceptualised as proponents of NIMBYism (not-in-my-backyard) in the housing sector. Yet, increasingly these attitudes are reversing. In the last decade, a new significant component of third sector housing has emerged: community-led housing. Dissatisfaction with the unaffordability of housing has spurred a desire in communities to change housing conditions that has been catalysed by political discourses, like Cameron’s Big Society and the Coalition’s Localism agenda.  What was once a niche portion of housing delivery has become a national movement. There are 15,000 community-led homes in the pipeline and 87,000 people are members of community housing organisations.

A key organisational and property model that is part of this growth is the Community Land Trust (CLT). There are nearly 290 CLTs in England and 78 of these were formed in 2018/19. CLTs are organisations that create and manage property for their surrounding community. CLTs remove land from private property markets, award the community indivisible ownership rights and secure a land use in perpetuity for community benefit. CLTs achieve this through establishing an “asset lock”, a legal protection meaning the use cannot be sold on the open market and must remain in community use, so ensuring long-lasting affordability. CLTs are not-for-private profit, so all financial surpluses must be reinvested into the community.

CLTs, along with the wider community-led housing sector, have just received a substaintal boost thanks to government funding. The GLA have created the London Community Housing Fund: a £38 million fund that aims to create a pipeline of 1,000 community homes by 2021, with 500 of these delivered by 2023. This builds on the Mayor’s consistent support for community-led housing projects, particularly CLT schemes. For the rest of England, the central government created the Community Housing Fund: a £163 million fund for delivering 10,000 homes through community-led housing projects and aiming to make the community-led housing sector self-sustaining, in terms of skills and finance. CLTs are expected to be significant beneficiaries of these funds. There are though concerns from the National CLT Network that the present deadline of the central government fund of March 2020 is too tight and organisations will miss out on funds. Regardless, these funds will have strong impact for CLTs nationally and set CLTs on a positive trajectory of growth.

Yet, the model is not without its challenges. Given the high cost of land, funding and finance have historically been a significant obstacle for CLTs. This has been compounded by a lack of awareness of the model troubling efforts to pursue mortgages or other private finance routes. Spatial inequalities have thus threatened to become principal determinates in the geography of CLTs usage. Hopefully, the government funding should tackle this issue.

CLTs often suffer from skills shortages, particularly given the breadth and depth of skills needed for housing development and management. If the model is going to be successfully grown and scaled-up, this limit must be tackled. Strong organisation and management are subsequently an imperative for CLTs. One solution that has been utilised is partnerships. CLTs have partnered with developers, local authorities and housing associations bypassing their skill shortages.

CLTs also are in danger of losing their properties through Right to Buy (RtB) or leasehold enfranchisement. These threaten the ability of CLTs to exist in perpetuity and override the asset lock protection. Any partnerships with RPs or use of funding that requires a CLT to become a RP contains the threat of RtB. The government has recently said that any RtB is at the discretion of the RP, yet there remains scope for legal challenge. RtB can be legally avoided through a range of methods, such as writing terms into tenancy agreements banning the exercise of RtB. Similarly, the Leasehold Reform Act 1967 permits leaseholders of CLT properties to staircase a percentage of their ownership and eventually buy the freehold. However, this can be avoided by utilising Community Right to Build Orders, though these are lengthy and resource intensive. The National CLT Network is campaigning for explicit exemption for CLTs on both issues.

The CLT model offers an attractive, growing and effective mode of housing delivery that is likely to become a firm component of third sector housing. Yet, given these challenges, it is imperative that CLTs are well-organised and aware of these obstacles so their potential can be fully realised.

Altair have worked with a range of CLTs on multiple different issues, including governance advice and financial appraisals. If you would like to hear more about the services we can offer CLTs, please contact Matt Carroll, matt.carroll@altairltd.co.uk.