- Land for development given to CLTs, free of charge, by a local authority.
- CLTs working with developers, who donate the freehold to the CLT after they have made their profits.
- Scottish focus has been more on the community ownership of land, rather than homes, after the law was changed to allow residents to buy land that comes up for sale.
Most CLTs are in rural areas rather than urban ones, typically set up where local house prices have risen far above what residents can afford. Re-sale value is limited to 31.3% of what it would be on the open market, ensuring future affordability and helping communities retain younger people.
The government is expected to announce a programme of support for coastal and rural CLTs in the Autumn Statement (2016), funded out of the extra stamp duty chargeable on second homes.
London example. An old mental health hospital in Tower Hamlets has been converted into 23 flats. Buyers pay a third of market value. When they come to sell, the price they are allowed to charge will be limited by the increase in local wages, as measured by the Office for National Statistics.
Amongst the buyers are a young couple with one child; despite their joint income of £33,000, and savings of nearly £70,000, they have been unable to afford anything in the area. But the wage link is significant as typically, wages have risen by less than 2% a year over the last decade, while despite a few dips, house prices have soared by up to 9%. If that trend continues, the relative value of their flat will decline, making it hard for them to move elsewhere.
If Rachael and Nathaniel eventually decide to sell, their property's value will not have gone up in line with the market. Linking house prices to wages requires a different attitude, believing that the security of owning a home is more important than its value - no letters saying you've got two months to leave. The mortgage for the flat will be lower than their current £1,000 a month rent, allowing them to save something each month, to help if they move out at some point, and house prices have risen.
Critics say CLTs are not a solution to the UK's housing crisis, as they can only ever build a relatively small number of properties and often rely on land being given away for free, or at a discount and that access to land is the real issue.
Source: How to keep house prices low for generations to come by Brian Milligan, 18 Nov. 2016 [Read in full on BBC website]
