Community land trusts are nonprofit, community-based organizations designed to ensure community stewardship of land. Community land trusts can be used for many types of development (including commercial and retail), but are primarily used to ensure long-term housing affordability. When the homeowner sells, the family earns only a portion of the increased property value. The remainder is kept by the trust, preserving the affordability for future low- to moderate-income families.
By separating the ownership of land and housing, this approach prevents market factors from causing prices to rise significantly, and guarantees that housing will remain affordable for future generations. Today, there are nearly 250 community land trusts across the United States.
How Rondo CLT Keeps Home ownership Affordable
A community land trust achieves permanent, long-term housing affordability through the use of a ground lease. CLT home buyers purchase only the house, and enter into a 99-year Ground Lease with Rondo CLT for the exclusive use of the land.
Rondo CLT’s Ground Lease states that when a CLT homeowner decides to sell their home, the house is sold to another low to moderate-income household for the original purchase price plus 25% of any appreciation in the home’s value.
By limiting market appreciation, permanent affordability is ensured and initial subsidies invested in making the home affordable are spread across generations of low to moderate-income home buyers. Most importantly, this affordable housing option gives households that could otherwise only afford to rent the opportunity to take advantage of all of the benefits of home ownership — stability, security, tax benefits, and the opportunity to earn equity and appreciation in real estate that is not available through renting.