Community Land Trust Fund 1 report

COMMUNITY LAND TRUST FUND I What we’ve learned by supporting communities to build their forever affordable homes

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Background

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Notes on reporting

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Alongside the Fund, the Technical Assistance Fund was an important source of funding that supported CLTs. It provided grants to fund the early stages of setting up a CLT. This fund was first managed by The Tudor Trust and then by the National CLT Network. It has since closed and been picked up by the CLT Start-up Fund, also managed by the National CLT Network.

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Key Findings 

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Introduction

Source: National CLT Network.

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Technical Assistance Fund (today the Start-up Fund, managed by the National CLT Network) fund initial costs (technical assistance) and help scope a project (feasibility)

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CLT Fund I

Pre-development funding scheme specific costs to get to planning permission

Development funding the costs of construction

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Detailed Findings

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The second CLT Social Investment Fund charges a higher interest rate of 7.5% fixed to encourage other funders to come in as second secured lenders.

4 The Fund supported 24 unique CLTs. At the close of the Fund in 2013, there were an estimated 110 CLTs. We know that about half of CLTs are at an advanced stage (including advanced not yet on site, started on site, and completed a site). This means that c. 55 CLTs were at this advanced/past incorporation stage in 2013. Thus, the Fund supported c. 22% of CLTs and c. 44% of CLTs that were at an advanced stage. Source: the National CLT Network, CAF Venturesome.

5 Although the initial Fund size was £2.1m, the Fund managed to offer £3.2m because £1.1m was recycled.

6 Note: Some schemes were offered more than one loan.

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Were Fund Objectives Met?

Affordability Homes are made affordable into perpetuity by the CLT to ensure that affordable housing is available to local people for generations to come. This can be done in several ways including through shared ownership/shared equity (where CLT retains a portion of the ownership) and resale price covenant (resale price has to be affordable to the new buyer). It can also be done through providing affordable rental homes where rents are defined based on local affordability criteria.

A typical scheme supported by the Fund aimed to develop 9 affordable homes. To make affordability viable, some schemes develop open market homes to subsidise the construction costs while others partner up with housing associations which develop social housing.

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This total does not include several schemes which were undrawn or were not granted planning permission.

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Leveraging additional capital Lyvennet Community Trust needed £1.06 million development finance to build 12 affordable homes. Of this, they raised funding from several sources, including the Homes & Communities Agency (HCA), the local authority and a high street bank, but they needed to borrow an additional £300k. The Fund enabled the scheme to go forward by providing a secured loan for the remaining £300k (28% of the total), enabling 12 affordable homes to be built. All loans were repaid and the Fund leveraged in £760k of external finance.

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Fund activity

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What was the Fund’s financial performance?

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One pre-development loan was offered to a CLT based in Wales but fell away as it did not need the funds.

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A success fee (if a pre-development loan) or interest rate income (if a development loan) is not included in this figure here.

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The mean average development loan provided was ÂŁ228k, indicating there were not significant outliers.

The mean average pre-development loans provided was ÂŁ29k, indicating there were not significant outliers.

12 Five repaid in full; five repaid without drawing down; and one repaid after partially drawing down.

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What were the major challenges?

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Section 106 is a type of planning obligation where planning approval is granted subject to a restriction e.g, the number of homes being build, how affordable homes will be allocated, etc.

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Based on the survey, approximately 23% of schemes had a self-build or self-finish element ranging from light self-finish work such as painting walls to self-build schemes where homes are built entirely by the prospective residents.

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What does the future hold for CLTs?

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Conclusion

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Appendix I: Community Land Trust – a technical definition

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Appendix II: Acknowledgements

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Charities Aid Venturesome

Foundation

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(CAF)

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CAF