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Community Land Trusts


A CLT offers "the most economical and best value for money way of using public or private investment to meet housing needs. It provides for the needs of successive generations in a way which acknowledges the ownership aspirations of most people in this country, and the need to bridge the gulf between renting and owning." - Ken Bartlett, Joseph Rowntree Foundation Land Inquiry Commission

The copyright of the information about community land trusts in this section is owned © Community Finance Solutions, University of Salford, www.communitylandtrust.org.uk


What is a CLT?

A Community Land Trust is a mechanism for the democratic ownership of land by the local community. Land is taken out of the market and separated from its productive use so that the impact of land appreciation is removed, therefore enabling long-term affordable and sustainable local development. The value of public investment, philanthropic gifts, charitable endowments, legacies or development gain is thus captured in perpetuity, underpinning the sustainable development of a defined locality or community. Through CLTs, local residents and businesses participate in and take responsibility for planning and delivering redevelopment schemes.


What do CLTs do?

Activities include: -

1. Developing affordable housing to rent or buy for members of the community;
2. Enabling residents on lower incomes to acquire an economic interest in the success of their community;
3. Developing land for affordable workspace and retail units;
4. Providing and maintaining community facilities for social and public services;
5. Managing green spaces, conservation areas and providing access for new entrants to farming;
6. Promoting resident involvement, local democracy and active citizenship.

CLTs allow for local people to democratically 'manage the commons'. Compared to private and public ownership of land, 'commons land' and 'wasteland' in the UK is under 8 per cent. Its extension and prudent management is possible through CLTs.
 

The origins of CLTs

The Community Land Trust mechanism was first developed in Britain and Ireland out of experiments in practical land reform by the Co-operative movement and the Chartists in the nineteenth century. These experiments led to the development in 1903 of Letchworth Garden City using the 'co-operative land society' system devised by Ebenezer Howard to capture value for community benefit. Howard's radical innovation was not replicated in Britain but it was revived in the 1950s by Gandhian land reformers under the Gramdan ('village gift') co-operatives in India. This movement led by Vinoba Bhave brought over one million acres of gifted land into 'village trusteeship'. This success came to the attention of Dr. Martin Luther King, and the first CLT in the USA was established by the civil rights movement in 1967 in Georgia to provide access to affordable farmland for African-American sharecroppers. Community Land Trusts are now a well-defined legal form in the US and over the past fifteen years more than 130 CLTs have been developed in urban and rural communities. The US Federal government provides financial assistance to local communities for legal and other technical expertise. In the early 1990s, CLTs were revived in Britain by crofters in Scotland for collective purchase of land from absentee landlords. The CLT established on the Isle of Eigg was at the forefront of this movement.

There are a growing number of CLTs in Scotland and the Land Reform (Scotland) Act 2003 has created an enabling framework that gives rural Scottish communities the Community Right to Buy as a pre-emptive right to purchase land in which they have registered an interest and for which they have demonstrated that it would be in the public interest for them to own. As in the USA, communities in Scotland can access technical assistance, packages of finance and other resources to establish a CLT locally.
 

The Benefits - Why a CLT?

Capturing Enduring Value for Communities

The key benefit of CLTs is that the enduring value of land is captured for community benefit in perpetuity. CLTs communalise and mutualise, rather than privatise assets. Once the value is captured, CLTs prevent the leakage of assets into private hands. Welwyn Garden City, for example, gifts over £1m pa to the community. Stonesfield Community Trust will soon give £40,000 p.a. as an income stream from assets.
Other benefits include:

1. Stewardship: Preserves scarce resources in perpetuity

  • Affordability: the land costs are kept out of the equation and the property is either bought or rented from the land trust.
  • Preserves public subsidies: subsidy for land purchase locked in for future generations.
  • Preserves the condition and design of publicly funded amenities.


2. Mobility: Rebuilds the Housing Tenure Ladder

  • New rungs between social housing and first time freehold home: research evidence from US that people who own their houses on CLT land can afford to move on to the open market leaving their CLT house for another.
  • More choice for people in type and tenure of housing: both rental and owner occupied, co-operative and individual part equity
  • Builds housing tenure choice in gentrified areas


3. Social Cohesion: Supports Development without Displacement

  • Develops run down areas without fuelling gentrification.
  • Benefits of community self help retained if values increase.


4. Flexibility: Adapts to sites, funds and people

  • Mixes uses of land and types of housing.
  • Can be operated in scattered sites or one site, can be big or small.


5. Economy: Shifts administrative burdens and costs

  • Responsibility for monitoring publicly funded projects is shared with residents and other local trustees.
  • Delegates responsibility for enforcing publicly mandated controls.
  • CLTs can steward land more effectively than remote bodies


6. Security: Backstops low income households

  • Supports first time homeowners before and after home purchase.


7. Community tool for economic, social and cultural development

  • Builds community capacity for managing itself.
  • Builds skills.
  • Builds social cohesion.
  • Creates income stream for community reinvestment



Key Features of a CLT

How are CLTs governed and how can community control be maintained?

All CLTs are not for profit organisations owning land and property on trust for the benefit of the community. Legal structures used in Britain to date include Companies Limited by Guarantee and Industrial and Provident Societies for Community Benefit. Community Interest Companies have potential in the future. Whatever the organisational or legal form, the essence of the CLT mechanism is capturing the enduring value of the land for present and future generations. Democratic and local accountability is also central. Membership is open to local residents and those wishing to endow land or property for the benefit of the CLT's defined geographical area. The members elect directors and the governance system should ensure a healthy balance on the board to protect the community's long-term interests. Where gifters of land (e.g. public authorities or private landlords) have contributed significant assets, their inclusion as a 'constitutional custodian' is a desirable feature.


How is the land acquired by a CLT and how is housing affordability preserved?

CLTs seek to obtain land to meet diverse community needs. Such needs vary in each locality but the provision of housing is common to most CLTs. Land may be gifted or the market price heavily discounted. In rural areas, land on the edge of a village may be bought at agricultural prices with 'exception' planning permission, allowing the CLT to develop affordable housing to meet local need. In other situations, planning permission may be given to private developers on condition that they endow a CLT with a portion of the land for affordable housing development and/or other community purposes. The CLT removes the land from the market, preserving planning gain and other appreciation for the benefit of the community. CLTs either rent or sell housing to local residents or lease workspace. Homeowners only buy the building they occupy. Typically where a property is sold, the homeowner will be given a long-term, renewable lease, enabling the resident to raise a mortgage and allowing for succession rights by family members. The CLT retains the right to buy the building back at a price defined by a resale formula, which aims to provide the homeowner with a fair share in the equity built up from mortgage payments and improvements.


What legal entities could use CLT mechanisms to capture land value for local communities?

Local communities have a choice in developing CLT mechanisms. They can form a dedicated, bespoke legal structure to undertake a particular project or utilise an existing organisation. For example: - Housing associations provide and manage social housing and have development expertise. Some are member-based, democratic, organisations set-up either as 'benefit of the community' associations or 'bona-fide co-operatives'. Unless they wish to obtain government housing grants, they are independent of statutory regulation. Benefit of the community associations are well placed to utilise the CLT mechanism. In partnership with a mutual housing co-operative, they are in a position to provide housing on CLT land. Heritage Trusts exist for a wide range of purposes, usually related to the conservation of land, historic property or cultural/industrial sites. The National Trust is one example. In the USA, they are known as Conservation Land Trusts or Environmental Land Trusts. Unlike CLT organisations, their mission does not usually include the provision of affordable housing. However, some Heritage Trusts, like the Isle of Ghiga Heritage Trust in Scotland do develop affordable housing and have become CLT pioneers. Development Trusts are community-based organisations that undertake regeneration and development projects. They may undertake a specific project or more likely, a range of economic, environmental, cultural or social initiatives. They hold assets in trust for the long-term benefit of the community. The nature of their assets and activities varies widely. Some Development Trusts may already be using or could use the CLT mechanism to underpin affordable housing development and/or mixed use developments. Parish Councils are expected to be given wider local powers and resources from Government to run village and community services in future including: managing parks, maintaining street lighting and employing neighbourhood managers. As democratically elected local bodies, Parish Councils in rural England, Community Councils in Wales and Scotland and Neighbourhood Councils in urban areas might also utilise the CLT mechanism for capturing value for meeting community needs. Indeed if developed in this participative way, CLTs could be the ideal vehicle for seeding a 'micro-democracy' movement that advocates of Parish Councils and Neighbourhood Councils have long argued for.


Examples of Pioneer CLTs

Isle of Ghiga Heritage Trust, Scottish Hebrides

When the absentee landlord put the Isle of Ghiga on the market in August 2001, residents formed a Partnership to consider a 'community buy-out'. The Scottish Land Fund provided support for a feasibility study and a ballot of islanders secured overwhelming support in late 2001. The community borrowed £1 million from the Scottish Land Fund and raised a further £3 million in grants to complete the purchase. The purchase included 41 of the 67 houses on the island. The Trust has since developed six properties for sale to owner occupiers and is developing 18 houses for rent in partnership with Fyne Homes Housing Association. It formed a construction consortium with Fyne Homes and three local builders to carry out home improvements on the old properties and to build the new homes. Building apprentices are being trained, and a small quarry on the island provides local materials.

The Trust has also created Scotland's first community-owned wind farm, which began generating power from three 40 metre turbines in October 2004.

Funding of £400,000 was secured for the renewable energy project, which in turn will generate income of £140,000 a year. Once the loans have been repaid, the profits will fund other community schemes. The Trust also operates a hotel on the island, a number of holiday homes and three dairy farms. In 2004 the £1 million loan from the SLF was fully repaid. The population of the island is on the increase for the first time in decades, the school is expanding and there is now a waiting list of people wanting to move to Ghiga. 'Our island went into receivership and islanders came home one day to eviction notices. The achievements of the Isle of Eigg land trust were crucial as an example of what could be done. At the beginning there was no concept of what community ownership meant. We now have a five-year development plan around debt repayment, sustainable development, social infrastructure and the local economy. None of this would have happened if the community did not own the island.' Alan Hobbett, Isle of Ghiga Heritage Trust


Stonesfield Community Trust, Oxfordshire

Stonesfield Community Trust responds to shortage of affordable housing in high-cost Oxfordshire. The work of the Stonesfield Community Trust is a local and effective response by local residents to the shortage of affordable housing in the Oxfordshire village (population 1,900). Set up in 1983, the Trust has produced 14 affordable homes and 2 workspaces with very little public subsidy. Driving force behind the Trust is Chairman Tony Crofts. In the 1980s he became concerned about the falling roll in the local primary school and the rising tide of wealthy incomers who were driving up housing costs in Stonesfield and other villages. 'I watched villages dying all over the Costwolds,' he says, 'and I didn't want Stonesfield to suffer the same fate.'

Land donation

With two friends he set up the Trust and donated a quarter-acre site in the village for the first scheme. A donation of £3000 from an enlightened local company that had grown up in the village covered the setting up costs, legal fees and the planning submission for the scheme of four houses. Planning permission was granted, instantly increasing the value of the land from £3,500 to £150,000 and giving the Trust the security to raise a bank loan to build the first four houses. One of the houses was later converted into two flats and a granny flat was added to another, making six homes on the site.

Ethical and charitable funding

A second quarter-acre site in the village was bought with a loan of £80,000 from West Oxfordshire District Council. Five houses were completed by 1993 with funding from a variety of sources, among them:

  • Loans from the Triodos Bank and the Ecology Building Society.
  • Advertisements in The Friend, the Quaker magazine, which raised £119.500 in gifts and fixed-interest loans from private ethical investors.
  • Quakers attending in the Witney Monthly Meeting area who donated almost £7,000.
  • The Quaker Housing Trust converted a £20,000 interest-free loan into a grant.


As is so often the case, the ethical concern that led to the creation of the Trust contains a strong green element. The houses are designed for maximum solar gain and insulated to a high standard. The 11 homes are let to people with local connections and modest incomes. They are managed on the Trust's behalf by a professional letting agent, who for many years supplied a free service and now charges only £80 a month. 'Many local people have chipped in to help keep the housing affordable', says Crofts.

Factory conversion

Next door to the Trust's second scheme, Tony Crofts and his architect wife Randi Berild have fashioned two houses, a flat and two work-spaces from a former silk-screen factory with bank loans and a grant from the Rural Development Commission for the work-spaces. The scheme was completed in 1994 and the loans are serviced by rents from the properties. Ten years and many repayments on, the bank has relinquished its claim on one of the work-spaces. Home to a pre-school group, it has been transferred into Trust ownership by the Crofts for the perpetual benefit of the village.

The Crofts are about acquire and transfer to the Trust the second commercial space, which houses the village post office at a fixed rent, the flat above it and one of the houses.

Community initiatives

'When the loans on the schemes are cleared, the Trust plan to use any surpluses from the rental income to fund better Home Help for the Elderly and to employ a youth worker. There is very little for young people in Stonesfield, where the last bus for Oxford leaves at 3.40pm and the last bus comes back at 6.00pm,' says Crofts. 'We are also looking at Individual Learning Accounts for youngsters from the village who are apprentices or in further education.'

The initial donation of land set the financial ball rolling and made all three schemes possible. In addition, many local people have given their money, time and expertise. The clerk to the parish council, a county councillor, a retired teacher and a local Quaker sit with Crofts on the Trust management committee.

Local authority partner

West Oxfordshire DC has been a willing ally. It has a strategic responsibility for providing affordable housing in its area and has supported housing association schemes in 13 other villages that have produced 200 affordable homes. None of them is quite like the Stonesfield scheme, which will be owned by the community when all the loans are paid off rather than an outside body, however well-intentioned. The Trust's homes, the post office and the pre-school group are part of the village fabric along with the pub, the school, the church and the chapel. They are testament to the huge contribution a small organisation can make to sustainable village life.

© Community Finance Solutions, Salford University, www.communitylandtrust.org.uk

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