A short CLT primer

Originally, community land trusts were designed to enable Black land ownership and land-based livelihoods.
May 20, 2022
Stuart Yasgur
Stuart Yasgur
Economic Architecture
Andre Perry
Andre Perry
Senior Fellow
Brookings Metro

The first one was established in rural Lee County, Georgia in 1969 by New Communities Inc. to help Black famers overcome forces excluding them from owning land such as industrial farming, racial discrimination, and predatory lending.

Through the 1970s, most CLTs were designed to help Black farmers buy rural land. Starting in the 1980s, the CLT model was adapted to make urban homes affordable amid growing gentrification. Urban CLTs proliferated during the housing boom of the 1990s.

CLTs are based on an alternative conception of property rights and homeownership. The standard form of property ownership in the US is fee-simple ownership, where the buyer becomes the owner of the house, the land, the production rights, etc. Instead, CLTs are based on the English leasehold model in which the buyer becomes the owner of the building, but not the land. The trust retains the deed to the land, which the buyer leases. This lowers the purchase price and carrying costs of the house.

In ordinary fee-simple homeownership, land is a store of wealth. It is finite and scarce, so it appreciates rapidly, continually driving up property values and prices over time. This is what makes traditional homeownership a vehicle for speculation, and allows for those with sufficient capital and credit access to make large profits and build wealth by buying housing cheap and selling it dear.

Housing is the only basic human necessity we treat as a vehicle for speculation, using it to build wealth for privileged groups. Imagine what would happen if we treated other basic necessities like food or water the same way, concentrating them in wealthier hands, driving up prices. It would result in price gouging, hoarding, and shortages. We’d reject that as unethical and unacceptable. But since all people need shelter, just as they need food and water, why should driving up housing prices to build wealth for speculators be any more acceptable?

CLTs represent a structural shift in homeownership that precludes using housing in this way. Instead of buying and reselling homes to make a profit, CLTs keep them affordable and enable residents to stay in them long-term. Most community land trusts are non-profit organizations governed by residents, community members and public representatives. CLT leases are long (typically 99 years) and can be inherited by the owner’s heirs or designees. The owners have responsibility for maintaining the house and can improve it as they see fit.

In that sense CLTs offer the same kind of housing security and self-determination as fee-simple ownership. But because the buyer leases the land instead of owning it, the house can be purchased for much less, often as low as a third of market price. The land trust raises or finances the money to make up the difference between the sale price and the market price, subsidizing the initial purchase and enabling people with limited income to buy the home.

In exchange for that opportunity, buyers accept a limit on how much equity they can build, since the appreciation of their property is tied to the value of the house itself and excludes the rising value of the lot it sits on. For CLT homeowners, appreciation might be capped at 1% or 2% of the base price annually. While that severely limits homeowners’ upside, it has one crucial benefit: it also limits how much the market value of the house can rise off the base price, keeping the house affordable far into the future.

In the CLT model, an owner can build at least some equity, though the house is no longer a store of wealth and a vehicle for speculation. It can’t be bought and flipped for a big profit, for example. Even if other housing prices in the area skyrocket, the price of a CLT home will stay low, no matter how many times it is sold. This helps keep neighborhoods stable and affordable and helps protect residents from being displaced.

At the same time, the pooled resources and inclusive governance structures of the land trust give community members control over how the trust’s assets are managed, and as the trust’s portfolio grows, they can influence how their own neighborhood develops.

In addition to their inherent advantages, CLTs also have disadvantages that make them difficult to scale. For example, they are capital-intensive, and there’s a mismatch between available funding vs. what would be required for CLTs to meet more of the need. In fact, some analysts argue that because they’re chronically under- resourced, community land trusts may actually perpetuate an artificial scarcity of affordable housing in Black neighborhoods, whereas wealthy neighborhoods have all the development resources they need.

Real estate transactions happen relatively fast, and it’s often difficult for CLTs to assemble financing and move fast enough to take advantage of buying opportunities. Since CLTs are managed by community members, not real estate professionals, there’s a steep learning curve to climb, and a need for outside expertise that not every community-based organization can access readily. And although they are designed to help counteract structural racism in housing markets, CLTs in marginalized communities can still be subject to it themselves, encountering explicit or implicit discrimination and exclusion when they try to obtain the assets, funding, financing, or expertise they need to succeed.

At the same time, CLTs are proving versatile and fertile ground for innovation, and they are evolving solutions to these problems. Some innovations described below are designed to attract more financing, facilitate mortgage lending, or broaden the scope of community-led development, while growing CLT networks are building and sharing expertise. It’s a complex ecosystem. There are hundreds of CLTs nationwide, and a large body of work which studies and explains them in detail. Resources for exploring them further include the Grounded Solutions Network (profiled below), Shelterforce magazine, and the Lincoln Institute of Land Policy and its Community Land Trust Reader.

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