What Is a Community Land Trust?

A community land trust (CLT) is a private, nonprofit organization that owns land on behalf of a community, promoting housing affordability and sustainable development and mitigating historical inequities in homeownership and wealth building. CLTs are a response to the increasing lack of affordable housing in major metropolitan areas, particularly for underserved minority communities.

How Community Land Trusts Work

Community land trusts are a form of shared equity ownership. CLTs use public and private investment funds to acquire land on behalf of a specific community. The CLT owns the land in perpetuity (that is, forever).

Community residents can purchase their homes but not the land on which the houses sit. Instead, residents enter into low-cost, long-term property leases with the CLT, known as ground leases, typically for a 99-year period. Monthly charges for the ground lease can be $100 or lower.

Although CLT residents can never sell the land their home is on, they otherwise have the same rights as other homeowners. During the term of the ground lease, they enjoy full and exclusive use of the property, as well as common privacy rights associated with homeownership.

CLT residents also have many of the same obligations as other homeowners, including liability for property taxes. Historically, property taxes have presented difficulties for CLTs when states assessed taxes based on the actual market value of CLT property rather than the managed values that the CLT sets. 

CLT residents can sell their homes, although the CLT has a right of first refusal for every sale, and there is a cap on resale profits so that the housing remains affordable for the next owner. CLT residents may not sublet their properties. Instead, CLT leases typically include an occupancy requirement that the property must serve as the owner’s primary residence. Critically, however, CLTs allow residents to pass the property lease and ownership of the home to their children, which promotes generational wealth building within families.

CLT members are primarily responsible for CLT management. But in some cases, CLT boards may also include members of local government organizations or other non-CLT members.  

Community Land Trusts vs. Mutual Housing Associations

There are other forms of not-for-profit, community property ownership intended to promote affordability and neighborhood development, such as mutual housing associations (MHAs). Like CLTs, MHAs are community-governed organizations that facilitate low-cost housing for low- and middle-income families while also working to rehabilitate and revitalize neighborhoods. 

There are several important distinctions between CLTs and MHAs. Whereas CLTs focus on land ownership, MHAs focus on the housing itself. MHAs also rely on economies of scale to minimize property costs and ongoing maintenance expenses. MHAs frequently own one or more multiunit buildings, allowing them to share resources, spread operating and maintenance costs, and generate bulk purchasing power.

MHAs are also generally more inclusive of the larger community surrounding them, frequently including nonresidents as board members. This allows MHAs to seek management expertise from outside experts and associations. Indeed, MHAs frequently have experienced, professional property management staff.

Finally, unlike CLT homeowners, MHA residents cannot sell their units for profit; that is, they do not develop equity in the property. Instead, the organization uses resident rents to continually provide services and improvements that increase the overall value of the MHA.

Advantages and Disadvantages of Community Land Trusts

There are numerous advantages of CLTs, both to CLT residents and to the larger community, including that they:

• Keep home prices from escalating out of reach for low- and moderate-income buyers
• Provide access to homeownership for underserved minority communities
• Help reduce the wealth gap for minority communities by building generational wealth through home equity
• Help revitalize urban neighborhoods and provide opportunities for minority-owned businesses
• Reduce delinquency and foreclosure rates
• Give neighborhood residents control over development

CLTs have disadvantages as well. For one, potential homebuyers may be reluctant to buy property in a CLT because they do not actually own the land, even though CLT property owners have ownership benefits that are similar to those of traditional homeowners. Overcoming this obstacle requires CLTs to educate prospective buyers about their rights and responsibilities, particularly regarding intergenerational transfers.

A more significant obstacle to CLT participation is the cap on resale profits. One of the causes of housing unaffordability has been the large price spikes that occurred just before the 2008 housing bubble crisis and during the COVID pandemic. Providing an affordable alternative is the goal of CLTs. But it also limits the equity growth that those who buy CLT properties can achieve when they sell them.

All prospective homebuyers come into homeownership with preconceptions about the appreciation in value that they expect to achieve, and historical price increases keep these expectations high. So, when given a choice between a CLT and alternative affordable housing from commercial builders that do not have similar resale restrictions, potential buyers may shy away from the limited profit potential of the CLT. 

CLTs must also compete with other nonprofit housing organizations for scarce public and private resources. Lack of resources can make it difficult for CLTs to achieve critical mass and build sufficient inventory to serve the community.

Real World Examples of Community Land Trusts

More than 260 CLTs operate in the United States, and more exist in Canada, Belgium, Kenya, New Zealand, and the United Kingdom, many of which have been very successful. Among the CLTs that have generated recognition for their efforts—which often include organizing community political action in support of affordable housing—are New York City’s development, Boston’s , the , and .