The Brussels Community Land Trust: A model of shared governance for permanently affordable housing

2014

Fonds mondial pour le développement des villes (FMDV)

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The Community Land Trust (CLT) system, which originated in the United States in the early 1970s, separates land and building ownership based on a horizontal property regime and distinct management rules. Each CLT has its own operating principles adapted to the area in which it is found. They are all non-profit organisations, which share three basic principles: separation of ownership of land and buildings, permanent affordability of housing for low-income households via a formula that limits the increase in value of the property, and joint governance between owner, inhabitants, and local government. The land is considered to be collective property, while households individually acquire buildings for a lower price than in a standard real estate transaction.

The Community Land Trust : theory and practice in Brussels-Capital

The Brussels CLT is made up of two organisations: the Brussels CLT Public Utility Foundation, which owns the land on which the housing units will be built, and the ASBL Brussels CLT², which is in charge of the daily management of the foundation’s assets. The ASBL Board of Directors has tripartite representation: building residents, people from the surrounding community (inhabitants and associations) and appointed representatives from the BrusselsCapital Region each have one-third of the seats. This tripartite collegial structure generates virtuous interactions fostering shared local interests. Since 2009, this new model for buying a home has been trying to offset the increasing price of real estate in Brussels. To develop, it has purchased three buildings in the municipalities of Anderlecht and Molenbeek. Its objective is to enable low-and medium-income families³ to purchase their own home, while encouraging the development of collective activities for local inhabitants, such as affordable community day nurseries and community gardens. Land use rights are formalised in an emphyteutic lease for the use of the land granted by the CLT to a homeowner. This lease includes several clauses and legal mechanisms that include CLT principles and enable this land use right to be extended if the housing unit is sold. For example, in Brussels these clauses stipulate that when a home is sold, its owners receive only 25% of the increase in value and the CLT 6% to offset operating costs. When the transaction is made, in addition to the initial purchase price, the new purchaser will only pay for 31% of the increase in value. These clauses make it possible to maintain the property at an affordable price with no additional subsidies from the local government.

The Brussels CLT—a participative community-based initiative actively supported by local government

Launched in 2012, the Brussels CLT is the fruit of an active and balanced partnership between a network of experienced local association sand the Brussels-Capital Region along with support from its Secretary of State for Housing, who commissioned a feasibility study in 2009. He then introduced the notion of Community Land Trust into the housing code and planned the investment of €2 million per year between 2012 and 2016 to finance the first property acquisition operations, by integrating it into the Habitat Alliance, a multi-stakeholder regional housing plan. Support from the local government has also had a financial impact through a dual subsidy guaranteeing the model’s accessibility: the first enabling purchase of the land by the CLT (up to €350/m² of land) and the second paid to the CLT (€415/m² of built surface) to reduce the sales price more for households. The aim is for the owners not to have to spend more than 30% of their income for their mortgage, which is subject to a 25-year contract with a social credit organisation (the Housing Fund). It gives households the extra help they need, and offers proof of the Region’s strong commitment.

An atypical but profitable approach to homeownership for residents, people in the surrounding area, and local government

From the local authorities’ point of view, this model guarantees the permanent accessibility of homes to low-income households, with no need for further government investments. CLTs help to put local savings to work, and produce significant financial leveraging effects, while also enabling more diversified funding opportunities, which would have been impossible the public sector was the only involved. The Brussels CLT acts in favour of social cohesion because it is against speculation and promotes open relations with the local neighbourhood. This CLT is an additional tool, relativity inexpensive in the medium term for the local government, and it will enable the latter to diversify its affordable housing stock. From the point of view of households, who gain stability and feel more integrated into the local community when they become homeowners, the CLT enables them to accumulate capital, even if only a limited amount. Support for households is one of the major missions of the Brussels CLT to ensure stability and help residents feel well integrated in their building and neighbourhood. In Brussels, potential buyers receive training on how CLTs function, buying a home, and energy management, which is beneficial to the local government. CLTs in the United States have been remarkably resilient during the crisis. The number of foreclosures was ten times less in 2010 than for traditional homeowners⁴.

Issues in adapting the model

European cities, which are becoming increasingly densely populated, must meet two major interrelated challenges: providing affordable housing while ensuring social diversity. In its role as a public service, social housing must find the means to meet these challenges. With the increasing pressure on housing today, it would be useful to draw on the lessons learned during the development of Community Land Trusts, with a view towards creating a public-interest service that guarantees everyone the right to permanently affordable housing. The experience in Belgium highlights three principal factors for developing CLTs successfully in Europe: the respect of basic CLT principles, long-term support for households, and significant political and financial backing by the local government. In addition, the separation of land/buildings and the collegial management of the CLT represent a novel approach to property ownership, leading to a more general reflection on “public goods” and their governance. As a result, this approach requires awareness-raising activities for the local authorities and for people living in the surrounding area. The separation must be legally authorised, which is common in countries like the United Kingdom, but less obvious in other countries, where there is a different conception of property. There are two basic pillars for the operational development of CLTs in Europe: the CLT economic model, backed and supervised by public authorities, and control over land management.

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