Community Land Trusts: A Different Path to Affordable Homeownership
Most people think buying a home means buying both the house and the land underneath it. A Community Land Trust, or CLT, works differently. The Community Land Trust owns the land. You buy and own the house. Because you're not purchasing the land, the home may be available at a more affordable price.
How Is This Different From Traditional Homeownership?
| Traditional Homeownership | Community Land Trust | |
|---|---|---|
| Home | You own it | You own it |
| Land | You generally own it | The CLT owns it |
| Repairs | Your responsibility | Your responsibility |
| Mortgage | Traditional financing | Mortgage financing is available, but special CLT requirements may apply |
| Selling | Generally sold at market value | A resale formula helps determine the future sales price |
| Equity | You generally keep the increase in market value | You build equity, but your share of appreciation may be limited |
| Inheritance | Can pass through your estate | Can generally pass through your estate, subject to the ground lease |
If You Don't Own the Land, Are You Renting?
No, you own the home and lease the land from the Community Land Trust through a very long ground lease. Many CLTs use 99 year leases. You are also the homeowner when it comes to taking care of the property. If the HVAC system breaks, the roof needs replacing, or the plumbing needs repairs, those expenses are generally your responsibility.
The Community Land Trust isn't your landlord.
Can You Get a Mortgage?
Yes, Community Land Trust homes can be financed with mortgages, but the process is a little different because you're buying the house while leasing the land.
Working with a lender who understands Community Land Trust purchases can make the process easier. The CLT may also be able to connect you with lenders familiar with its program.
Some buyers may also qualify for down payment or other homebuyer assistance depending on the mortgage and program.
What's the Tradeoff?
The biggest difference usually comes when you decide to sell. With traditional homeownership, you generally sell your property based on its market value. Community Land Trusts use a resale formula that limits how much the home's price can increase. That means you can build equity, but you may not receive all of the appreciation you could have received from a traditional home.
Why would someone agree to that?
Because the same restriction that limits your future sales price is what helped make the home more affordable when you bought it. It also helps keep the home affordable for the next buyer.
Can You Leave the Home to Your Family?
Generally, yes. CLT ownership is designed for long term homeownership, and homes can generally pass through the owner's estate. However, the ground lease determines exactly how inheritance and future occupancy work.
If leaving the home to your family is important to you, review those terms before purchasing.
Are Community Land Trusts Available in Georgia?
Yes, Atlanta Land Trust is one example. It creates affordable homeownership opportunities using the Community Land Trust model.
The organization keeps ownership of the land while the buyer owns the home. When the homeowner eventually sells, a resale formula helps keep the property affordable for another buyer.
CLT homes aren't available everywhere, so buyers have to find properties that are part of a Community Land Trust.
Why This Matters
If traditional home prices have made homeownership feel out of reach, a Community Land Trust may offer another path.
You own the home. You can build equity. You are responsible for maintaining it. And you may be able to purchase at a price below what a similar home would cost on the traditional market.
The tradeoff is that when you sell, there are limits on how much the price can increase.
For some buyers, that tradeoff may be worth exploring.
Sources: Atlanta Land Trust, Fannie Mae, Freddie Mac