CLT FAQs - useful quick guide
Updated November 2009 - also down loadable under 'publications' section
CLT FAQs So what is a CLT? A CLT is a not for profit organisation based in and run by the community, permanently owning land and property for the long term benefit of local people. Examples exist of affordable housing, community buildings, community farms and community owned retail premises. (See www.crht.org.uk CLT section Case Studies) Are CLTs recognised as suitable deliverers of affordable housing? Yes, a definition was included in the 2008 Housing & Regeneration Act which enables Local Authorities to have confidence in whether an organisation is recognisable as a CLT, and means that CLTs can obtain Housing Grant from the Homes & Communities Agency. The definition is as follows: A CLT is corporate body which 1) is established for the express purpose of furthering the social, economic and environmental interests of a local community by acquiring and managing land and other assets in order to provide a benefit to the local community; and to ensure that the assets are not sold or developed except in a manner which the trust's members think benefits the local community 2) is established under arrangements which are expressly designed to ensure that any profits from its activities will be used to benefit the local community (otherwise than by being paid directly to members); and that individuals who live or work in the specified area have the opportunity to become members of the trust (whether or not others can also become members); and that the members of a trust control it. What forms of incorporation are used for CLTs? Most commonly a Charitable Company Limited by Guarantee, or an Industrial & Provident Society (see CLT Handbook pages 13 & 14 and the Practitioners Guide at www.communitylandtrust.org.uk). The IPS form may also have ‘exempt charity’ status, and is the form used where the intention may be to raise share capital from the local community. Is there a financial risk for Trustees? CLTs are not companies limited by shares. They are non-profit-making and do not have paid directors. CLTs are governed by voluntary trustees whose liability would typically be limited to £1. Trustees would only be at risk in a situation where it was shown that they had knowingly acted illegally. How do you meet start up costs? The Community Land trust Fund has been set up to bridge the risk funding gap which community organisations would otherwise be faced with in developing high value assets. The Esmée Fairbairn Foundation and the Tudor Trust are the first contributors to the Community Land Trust Fund, initially standing at £2 million, which is intended to support the development of around 30 operational Community Land Trusts, and the construction of around 150 affordable homes, over the next four years. The Feasibility Fund – to provide community groups or fledgling CLTs with a free day of consultancy support and guidance around establishing their CLT. The Technical Assistance Fund - to provide grants of up to £2,500 to CLTs or emerging CLTs to employ a consultant or consultants for up to five days in order to cover legal set up costs and develop initial ideas into a comprehensive business plan. The Investment Fund - to provide secured and unsecured loans to eligible CLTs. Pre development finance – up to £30,000 to finalise business planning, commission scheme design, planning applications etc, with special provision to convert sums advanced to grant if schemes are not able to progress. Scheme development finance – providing match funding for commercial loans, repaid or converted to medium term loans at the point schemes are occupied. Contact details below Where do you find sites or buildings? Rural Exception Sites Policy: Enables land to be used to meet local affordable housing need if sold at modest value. Land owners may have more confidence in the CLT ‘asset lock’ rather than risk land value being lost through some future Right to Buy. Quota sites: Planning policy requires new residential schemes to provide a % of affordable housing. Existing local charities: Often happy to transfer land into a CLT to provide benefit to the community. The Church: Churches Together and other church movements have made land available to CLTs. Public Body Asset transfer: The Quirk Review established the desirability of transferring publicly owned land into community ownership. Advice available from the DTA Asset Transfer Unit below. Also check out the Power of Wellbeing and the Disposal of Consents Act. Gifts and legacies: Landowners have made land available through a desire to help communities. Existing buildings: Run down, unused or closed buildings may be a liability for the owners who may be receptive to sell at reasonable value. This kind of opportunity may involve challenge regards cost of renovation but are likely to be easier in planning terms. Meeting the costs? Some of the scheme costs will be met through income from rents or the sale of part ownership homes. The rest has to be provided from some form of subsidy. Who does all the work? CLTs spring up where there are enthusiastic individuals determined to achieve results for their community. Some CLTs want to be more hands on than others according to the skills within the group which are usually very diverse including senior management, legal, farming, tourism etc. However volunteers & trustees do not have to be expert in scheme development. Usually schemes are delivered in partnership with local Housing Associations, firstly involving a Memorandum of Understanding, then contractual arrangements for project management and or housing management. The CLT steering group and later directors of the trust can bring in professional support at early stages from Local Authorities, CRHT, the Development Trust Association, Housing Associations and other sources. Much support can be obtained for free, while detailed scheme development and project management will become part of the cost of the scheme. Which tenures can CLTs provide? Whilst also subject to the financial pressures of delivering a scheme, CLTs aim to provide permanent and locally affordable tenures. This could be in the form of a sliding scale matching the range of incomes falling within affordable housing, from low ‘social’ rents, to sub-market rents, to subsidised part ownership, to unsubsidised part ownership. Where subsidy for rented homes cannot be found, CLTs may begin with all part ownership schemes. The ability of a CLT to provide part ownership will depend on lender support which in turn will depend on achieving the right balance of interests in the Section 106 Planning Agreement with the local Planning Authority. This should include reasonable timescales where homes are offered locally, then further afield. And ‘pre-emption’ arrangements which reduce the risk of repossession for part owned homes to a minimum. Is the recession affecting CLT schemes? Despite the failure of open market housing, the Council of Mortgage Lenders (CML) tend to see shared ownership type tenures as ‘more risky’ when in fact, if carefully structured, this type of tenure can be very affordable, and present greater security due to generous loan to value ratios. In the U.S. lenders recognise CLT shared ownership as a stable niche market. To date local Building Societies in Cumbria are showing a greater willingness to work with CLT shared ownership than national lenders and are looking at more reasonable deposit requirements. Where can CLTs obtain development finance and individual mortgages? Lenders who will consider scheme development and residual long term loans: Charity Bank - up to 100% in some circumstances Unity Trust Bank Furness Building Society Cumberland Building Society Penrith Building Society Triodos Bank Barclays Local Authorities Lenders who will consider part ownership mortgages Furness Building Society Cumberland Building Society Penrith Building Society Triodos Bank HBOS Nationwide Ecology BS - lower interest for higher eco-standards Local Authorities? Local Authorities used to provide affordable mortgages for local people and there has been some recent discussion about making this possible again. Further information: Andy Lloyd The CLT Facilitation Fund Further info from Andy Lloyd, David Brettell or www.tudortrust.org.uk www.esmeefairbairn.org.uk Community Finance Solutions Consultants leading national work on CLTs with the Carnegie Trust and the Government Community Empowerment Fund Contact Thomas Moore email:
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CLT networking and info share site http://communitylandtrusts.ning.com The Development Trust Association 33 Corsham Street, The DTA provides expertise in developing community assets which includes the Asset Transfer Unit help transferring public assets into community ownership. The DTA web site has a wide range of resources including ‘So you want to build a house… Community Housing: a practical development guide’ by David Brettell David Brettell Hands-on-Help for Communities consultancy Tel: 01289 388680 Mobile: 07900 978291 Post: Charbagh Lickar Moor Berwick-upon-Tweed Northumberland TD15 2TG
The fund is divided into three stages:
Community Land Trust Project Officer
Cumbria Rural Housing Trust
Redhills House, Redhills, Penrith, Cumbria, CA11 0DT, Tel. 01768 210265, Mobile: 07525688662
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CLT resources and news at www.crht.org.uk
Part of the Investing In Communities Initiative & ‘Under One Roof’ Project. Contributing partners: Lake District National Park Authority; Eden District Council, South Lakeland District Council; South Lakeland LSP, Eden Housing Association, Westfield Housing Association, Carlisle City Council, The Tudor Trust
London N1 6DR
Tel: 0845 458 8336
Fax: 0845 458 8337
Email:
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