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Arpeggio

Community land trusts - what's the catch?

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I'd buy a house which price is linked to actual wages and on the condition I am not allowed to sell it for any more than inflation, anyday. The only use for a house I would have is to live in it.

http://www.communitylandtrusts.org.uk/

I don't understand. Surely there's lots of opposition to this? It will take some of the buyers out of the HPI market and Obviously many Baby boomers won't like it.

So what's the catch? You won't actually own the house? It's kept on such a small scale it won't affect the market? Bit confused, seriously. The government recently gave 60 million to CTLs which sounds promising.

Edited by Arpeggio

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Nice diagram. According to this it's the "asset lock".

http://www.communitylandtrusts.org.uk/funding-and-resources/faqs

"The CLTs legal ‘asset lock’ dictates that assets can only be sold or developed in a manner which benefits the local community. So if a home is sold the cash realised is protected and can be re-invested into something else that the trust’s members think will benefit the local community."

It doesn't say whether the new owner is subject to asset lock, only that the money from the sale goes back into the CLT. If this doesn't apply to the new homeowner they might as well be using tax payers money to build houses for people to flip. e.g. buy a house built by taxpayers for say 90k then sell it for a profit.

Edited by Arpeggio

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This article seems to give more detail than the limited "small print" on the CLT website.

http://www.bbc.co.uk/news/business-37941426

"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."

 also for a different CLT elsewhere....

"While future prices are not linked to wages, their re-sale value is limited to 31.3% of what it would be on the open market, ensuring future affordability."

So if there is boom and bust in the housing market, there will be boom and bust in the CLT at 31.3% of it's scale. The % difference would be the same. I.e. Buy a house on the market for 300k then sell it later if it goes up by say, 150% for 450k. Or buy a CLT house for 100k and sell it for say, 150% profit at 150k. This lower the barriers to entry for house flipping and somewhat defeats the point surely. Link it to inflation would be better.

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Some CLT schemes have either leasehold properties (not too unusual) where the CLT always own the lease, or - more onerous - a S106 or restrictive covenant around who to /how much the home can be sold on. Many mainstream lenders have tighter / more expensive lending criteria for this additional "risk" as it restricts the "open marketability" of their charge. Additionally, without a good supply of CLT homes across the size spectrum, if it comes to upsizing into the "open market" then the modest (but much fairer) increase in equity in a S106 property may mean unaffordability is simply deferred. Personally I'm I huge fan of CLTs. Our local one has been stymied by land owners insisting on "full market value" at £1m acre for land that can never be openly sold-only to the CLT for self build affordable homes. Gr33dy F*****Z. 

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3 hours ago, hp72 said:

Some CLT schemes have either leasehold properties (not too unusual) where the CLT always own the lease, or - more onerous - a S106 or restrictive covenant around who to /how much the home can be sold on. Many mainstream lenders have tighter / more expensive lending criteria for this additional "risk" as it restricts the "open marketability" of their charge. Additionally, without a good supply of CLT homes across the size spectrum, if it comes to upsizing into the "open market" then the modest (but much fairer) increase in equity in a S106 property may mean unaffordability is simply deferred. Personally I'm I huge fan of CLTs. Our local one has been stymied by land owners insisting on "full market value" at £1m acre for land that can never be openly sold-only to the CLT for self build affordable homes. Gr33dy F*****Z. 

Thanks for the info. It makes sense to not allow them to be sold on for profit, otherwise they might as well give taxpayers money for free to house flippers and save themselves the effort. Not sure how bothered I would be about upsizing, just being able to buy a house at all. 

1 million pounds per acre? While they hold the land they are probably getting free money from taxpayers through land subsidy. Bring in LVT and they won't be able to demand 1 mill for doing Fu%* all. I agree that CLT seems the right idea, but it's just part of a solution that needs to be a sum of parts.

 

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