Community Land Trusts Unpacked

Over many years, the community housing sector has been developing innovative ways to provide safe and secure housing for people on low incomes and in need of security of tenure that often the private market is unable to provide. However due to ongoing underinvestment in affordable housing over many years, many households that aspire to home ownership have been locked out of the market, particularly in inner urban areas where infrastructure and job markets are strong.

Community Land Trusts, already established in many countries, seek to provide another form of tenure to low income households that aspire to own their home.

What are Community Land Trusts?

A Community Land Trust (CLT) is a new form of housing tenure in Australia that aims to maintain housing affordability in perpetuity for low to moderate income earners. One main purpose of a CLT is to assist people living on low to moderate incomes to invest in their home. A second purpose is to assist those same people to live in the areas where they access services or work but where housing has become unaffordable.

How Does This Work?

In cities such as Melbourne the high cost of inner urban housing is being driven by the escalating cost of the land – rather than the cost of the actual housing.

In a CLT, the land is held and owned by the CLT. Therefore a prospective lessee in a CLT only has to pay for the building. For example, say the median price for a two-bedroom unit in Inner Melbourne is $550,000. The fortnightly mortgage repayment on a loan for this property could be as high as $1430 at current interest rates.

However, if the cost of the land, $300,000 is removed from the purchase price, then the fortnightly mortgage repayment would be around $650.

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