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Steps towards a Community Land Trust (CLT)



A Community Land Trust is a non-profit, community-based organisation run by volunteers that develops housing or other assets at permanently affordable levels for long-term community benefit.

It does this through local ownership and control, reducing the value of the land that the homes are built on and, in the case of shared-equity homes, fixing the resale percentage, thereby enabling occupiers to pay for the use of buildings and services at prices they can afford. The value of land, subsidies, planning gain and other equity benefits are permanently locked in by the CLT who holds the asset in trust for long-term community benefit.

 

Steps

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Visioning – developing a community plan

·         defining the problem   a needs survey

·         building a consensus amongst local stakeholders

·         assessing whether a CLT is a potential solution

·         identifying people who can drive the scheme

 

Forming a steering group

·         drawing on local capacity and expertise

·         determining what outside help will also be needed

 

Creating the Trust

The legal definition is set out in Section 79 of the Housing and Regeneration Act 2008. (see below)  It is necessary to meet this definition to be eligible for funding from the Homes and Communities Agency and the CLT Fund.

The Trust’s legal structure

The CLT’s legal structure should be designed to enable it to achieve its objectives. Issues to consider include: 

·      the CLT’s objectives and the powers needed to achieve them.

·      The geographical area to be served.  If large, does it need a two-tier legal structure?

·      Who will be the members (i.e. owners) of the CLT? How widely will membership be spread?

·      Who will direct and manage the CLT? How will the board of management be made up?

·      How will it engage with the community it seeks to serve and how will the community be able to have its say.

·      The powers of the board to delegate matters to others and to exercise the CLT’s powers

·      Whether it is appropriate to seek charitable status.

 

Determining the best legal form

The three most common types of legal structures are a Company Limited by Guarantee (CLG), which can be charitable, an Industrial and Provident Society (IPS) and a Community Interest Company (CIC).

 

Points to consider in choosing the form and over which to get advice include:

·         need to deal charity to charity?

·         the strength of the asset lock to protect the asset created being sold for purposes other than those for which it was developed.

·         cost and regulation associated with each form.

·         charities - tax advantages versus heavy regulation, limitations on activities/need to set up subsidiaries, impact on capacity.

·         use of cross subsidy? i.e. sale of market housing to fund affordable housing.

·         whether diverse activities would be supported by regulators.

·         the need to raise investment from the community.

·         attracting other potential investors.

 

Charitable objects

Providing housing can serve various charitable purposes, such as relieving need, serving the needs of those who are elderly or disabled, or purposes promoting urban or rural regeneration in areas of social and economic deprivation.  The Charity Commission sets out suitable charitable objects for a CLT providing affordable housing.  Compliance can be very time-consuming and costly.

 

Continuing community engagement

The membership structure and forming a board is an important part of the community engagement process. The board should both be a means of democratic control and a vehicle to recruit the range of local knowledge and expertise needed to run the organisation.

 

Governance

Governance arrangements need to set out:

·      the CLT’s Objects (i.e. purpose);

·      the powers it has to fulfil the Objects;

·      make up of the membership, their rights and how they apply, retire, resign and/or may be removed and a restriction on them being able to access the CLT’s assets;

·      how general meetings of the CLT are to be convened and held;

·      make up of the membership of the board, how Board members are to be appointed, retirement provisions and powers to remove a Board member;

·      the powers granted to the Board, how it is to conduct its business, voting rights and powers to delegate to sub-committees and others;

·      a rule preventing Board members profiting by their position (this deals with conflicts of interest);

·      provisions dealing with paid officers of the CLT if applicable;

·      provisions for annual reports, accounts and the appointment of an auditor;

·      what happens to the CLT’s assets if it were ever to be wound up;

·      the use of a seal to execute documents as deeds;

·      how to make changes to the constitution; and (if relevant) powers for the Board to make bye-laws regulating how the CLT is to be run.

 

Policies

Additional policies needed include:

·      duties of Board members: fiduciary, statutory and best practice;

·      avoidance of conflicts of interest; 

·      professional indemnity insurance for Board members;

·      financial regulations to govern all financial transactions undertaken by the CLT;

·      allocations, rent setting and other policies for the management of its housing stock;

·      equalities and diversity policy;

·      health and safety policy;

·      other policies which are required by the CLT’s regulators (Charity Commission, Tenant Services Authority etc).

 


Definition of a CLT as set out in Section 79 of the Housing and Regeneration Act 2008

A Community Land Trust is corporate body which:

(a) 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

i. to provide a benefit to the local community;
ii. to ensure that the assets are not sold or developed except in a manner which the trust's members think benefits the local community.

(b) is established under arrangements which are expressly designed to ensure that:

i. any profits from its activities will be used to benefit the local community (otherwise than by being paid directly to members);
ii. 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);
iii. the members of a trust control it.

The combination of these provisions create an ‘asset lock’ enabling a CLT to deliver long-term solutions for the community it serves, by ensuring the assets are permanently owned and retained for the community’s benefit.

National Community Land Trust Network is the national body for CLTs that promotes and supports the work of CLTs across England. It aims to achieve a growing and flourishing CLT sector. The Network was established in September 2010 and is hosted by, but independent of, the National Housing Federation. It is funded in part by the Department for Communities and Local Government Empowerment Fund, via Carnegie UK Trust. http://www.communitylandtrusts.org.uk/

The Community Land Trust Fund administered by the Network is a £2m fund to support fledgling Community Land Trust projects by providing:

· funding where there is a lack of access to risk capital and bank finance: the Investment Fund can support eligible CLTs by providing loans (not grants) – both pre-development finance at the outline concept stage and development finance capital loans to top up finance already secured from banks and other investors.

· expert support for the preparation of development and business plans when the necessary professional and technical skills are not available: the Technical Assistance Fund gives grants of up to £2,500 for groups to emply consultants for up to five days to assist with working up ideas into a business plan.


Note: the author is grateful for the assistance of Andy Lloyd, CLT Project Officer at Cumbria Rural Housing Trust.