COmmunity Land Trust

Why A Community Land Trust?

A community land trust is a nonprofit organization that retains land ownership, ensuring future housing affordability.  Purchasers buy DCLT homes and lease the land these houses sit on.  DCLT’s land is leased to homeowners for 99 years (renewable) at a low monthly fee.

  • Owners can improve and maintain their homes.
  • They can leave their home to their children.

If a homeowner decides to sell, DCLT retains an option to repurchase the home to sell or rent to a future low-income resident or to assist the homeowner in identifying a new income-eligible purchaser.  Homeowners share the equity they earn on their homes with future buyers, thus fostering long-term affordability even as surrounding neighborhood property values grow.

How It Works

Shared Equity Model

Land trust houses remain affordable because homeowners share a percentage of the increase in market value (i.e. equity) of the house at the time of resale with future buyers. This resale restriction ensures that the house will be affordable to the next family needing affordable housing and the next, and the next.

As per the chart below, we use an appraisal-based formula to calculate final shared equity. As you’ll see, the owner’s equity depends on the difference between the initial price and appraised value at the time of sale.

First, we determine the increase in the house’s value by looking at the difference between the initial price and the appraised value at the time of sale. Then, we determine what the shared equity percentage will be (25-45%). Then, we add the initial purchase price.

Sample breakdown of the
shared equity model:

Description AMount
Appraised value of house at time of sale$125,000
Minus initial price/appraised value of house$95,000
Equals increase in appraised value (“appreciation”)$30,000
Homeowners’ share of appreciation is therefore*$10,500
Equals the new sale price$105,000
Minus cost of paying off home loans$80,000
Equals Total Homeowner’s Equity$25,000