Community Land Trusts (CLTs) have recently achieved one of their major strategic objectives by persuading the Government to insert into the Housing & Regeneration Bill a statutory definition of “Community Land Trusts” in the House of Lords. The definition was approved and is part of the act which received the Royal Assent in July. In essence, the statutory definition provides that any CLT must include the following essential components:-

  • The body must be established to further the social, economic and environmental interests of a local community by acquiring and managing land in order (a) to provide a benefit to the local community and (b) to ensure that the assets are not sold or developed except in a manner which benefits the community. 
  • The body must ensure that (a) any profits will be used to benefit the local community, (b) individuals who live or work in the community can become members of the trust and (c) the members of the trust control it.

 Having a statutory definition allows CLTs to approach funders with much greater certainty and credibility, in that funders now have the reassurance that any CLT must have the same basic composition as defined in the act.

Lenders can therefore assess risk and classify CLTs generally for credit ratings with a degree of certainty which was missing previously. It also gives CLTs greater credibility in negotiations with local authorities to acquire land at a discount or at £nil cost and in relation to negotiating the provisions of Section 106 agreements for affordable housing.

The other major development is that the Housing Corporation has agreed to allow CLTs to bid and receive social housing grant in their own right.

Previously the Housing Corporation had been insisting that CLTs had to enter into an agreement with a registered social landlord who would then bid for and utilise the grant on behalf of the CLT.

This would have proved problematic, as it is likely that the registered social landlord would have had to acquire a major interest in the site to satisfy the grant conditions, when its role was only as either development agent or simply as an enabler.

This would have been difficult for CLT and in particular local authorities to accept, particularly if they had disposed of land to the trust for a specific purpose at £nil value or at a significant discount, because the land would have to be transferred to the registered social landlord.

At the request of the CLT movement, Cobbetts has prepared a model form of Declaration of Trust Lease (similar to shared ownership) which has been submitted to the Housing Corporation for approval. If this form of lease proves acceptable to the Housing Corporation, the Declaration of Trust Lease will form a model upon which all CLT schemes receiving social housing grant should be based.

Cobbetts has also reviewed the Housing Corporation’s general grant conditions applicable to registered social landlords and has advised on areas where these would need to be amended to be appropriate for CLTs.

In other developments on CLT, Cobbetts has been invited to enter into negotiations with a national park planning authority, with a view to agreeing standard documentation to be applicable to all CLTs in that national park.

We have also been asked to advise on other issues which will need to be raised in the forthcoming autumn consultation between the CLT movement and central government.

Issues arising include: 

  • The possibility that if CLTs receive their own social housing grant any assured tenancies they grant could be susceptible to the right to acquire as the legislation stands. 
  • The Housing & Regeneration Act extends protection from enfranchisement on sale to restricted staircasing shared ownership leases in areas which are to be designated as protected areas by the Communities and Local Government Department. Cobbetts proposes as part of that consultation that all sites operated by CLTs (as defined in the act) should automatically be declared protected areas so that any restricted staircasing shared ownership leases granted by CLTs would automatically be protected from enfranchisement.