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A community land trust (CLT) is a non-profit community based organization that provides permanently affordable homeownership opportunities to families of low and moderate income.  A CLT acquires land and legally separates ownership of the buildings (homes) from ownership of the land.  Homebuyers in CLT programs purchase only the house and all the improvements and enter into a renewable 99 year ground lease for exclusive use of the land.  Removing the cost of the land from the transaction makes the home more affordable.  

What are the benefits of CLT homeownership?

Community land trusts provide access to homeownership for people priced out of the traditional real estate market. CLT homeownership benefits include:

  • Lower costs to enter homeownership
  • Greater housing security than renting
  • Stable affordable monthly payments enabling savings for other life goals ie retirement, education, etc.
  • Security from eviction
  • Opportunity to build equity through homeownership
  • Home and ground lease can be willed to dependents
  • Ongoing support from the CLT

How does a CLT home remain affordable in perpetuity for future low or moderate income homebuyers?

In exchange for a reduced purchase price and affordable homeownership opportunity, when a CLT homeowner decides to sell a CLT home (which does not include the land), he/she agrees  to sell the home to another low to moderate income household for a price that is predetermined by the resale formula contained in the ground lease.  The formula is designed to balance equity gain for the owner at the same time that it sets a resale price that is affordable for future buyers.

By limiting market appreciation, permanent affordability is ensured and initial subsidies invested in making the home affordable are spread across generations of low to moderate-income home buyers. Most importantly, this affordable housing option gives households that could otherwise only afford to rent the opportunity to take advantage of all of the benefits of home ownership — stability, security, tax benefits, and the opportunity to earn equity and appreciation in real estate that is not available through renting.

What are the similarities and differences between CLT homeownership and conventional homeownership?

CLT HOMEOWNERSHIP CONVENTIONAL HOMEOWNERSHIP
Mortgage is with a bank
Mortgage is with a bank
Accumulates limited equity
Accumulates full equity
Purchase price is below market rate
Purchase price is market rate
Homeowner pays property taxes
Homeowner pays property taxes
Homeowner can make improvements
Homeowner can make improvements
Homeowner receives federal tax deductions for mortgage interest and property tax
Homeowner receives federal tax deductions for mortgage interest and property tax
The CLT owns the land and leases it to the homeowner through a 99-year land lease
The Homeowner owns the land
Homeowner must sell to a low to moderate homebuyer for a predetermined price
Homeowner is not limited to who they can sell their house to and for what price.

Watch the videos below to learn more about how a CLT works.

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