KEY LEARNING POINTS
- Working with a supportive housing association can make a huge difference; community organisations (on their own) sometimes struggle to understand the technical processes, funding and skills needed to deliver larger projects
- Initial support by the council – funding a development officer and making the site available at significantly below market value – was vital
- There has strong demand for the homes (150 people joined the CLT when it was launched), and the new residents are all eligible for social housing
- The process of setting up, acquiring the site, securing permission and getting a contractor on board for the budget that was available was torturous and time consuming. Determination and flexibility are key qualities needed to deliver developments like this
- Recruiting a committed and enthusiastic development officer – and securing support for them from a local housing association – has underpinned the success of the project
- It has taken a long time for the CLT to build trust with the council’s housing development team. Some departments are still not fully on board, and continuity can be challenging when individual staff move on
The idea of creating a Community Land Trust (CLT) to help deliver homes across Bristol dates back to 2008. The council initially employed a specialist CLT consultant to prepare a feasibility study. A number of community meetings were organised as part of this work, but most were poorly attended, and the experience almost prompted the council to withdraw support. Then a small group of local housing campaigners volunteered to promote the project and organised a launch event.
The council agreed to fund the production of a poster and the cost of a hiring a venue. The local housing campaigners threw lots of energy into promoting the ‘launch’ in early 2011, and the meeting was attended by around 250 people. Around 150 of these joined as members of the CLT by purchasing a £1 share.
Enthused by the levels of interest the council then agreed to loan the CLT money to fund a Development Officer for 18 months, so that a pilot project could be delivered. The CLT Management Board was also constituted – made up of local housing activists, various professional consultants, future residents, local politicians and a housing association.
The council also allocated £300,000 to help fund the initial pilot project.
A typical three bedroom home in the CLT’s first project will be valued at £195,000 (but can be purchased for £118,000 under the shared ownership scheme); a one bed apartment will be valued at £115,000 (but can be bought for just under £70,000). Residents that choose to self-finish their homes will earn a discount of more than £5,000 in return for the work they put in. The United Communities housing association has played a key role in facilitating and supporting the project.
The initial pump-priming investment in setting up the CLT and the experience of organising the first pilot project will enable the team to deliver – and fund – similar projects in the future. A second self-finish scheme – that will provide 36 homes and also include some fully self-built homes on serviced plots – should start on site in 2016.
Bristol City Council has established a Community Land Trust (CLT) to help deliver affordable homes to rent/intermediate homes to buy on a shared ownership basis across the city. Its first project involves converting a redundant school into six apartments and building six new homes (for self-finish) in the former playground, and a second project – for 36 homes, including full self-build – is now in the pipeline.
Initiator: Public Sector and Community
Scale: Small and Medium
Site: Urban and Suburban
Affordability: Low Cost and Intermediate
Built Form: Terraced and Apartments, including Refurb
Completed expected 2016
No. Units 12 (first project), 36 (pipeline)
Costs £70,000 (one-bed; shared ownership), £118,000 (three-bed; shared ownership)
What is a Community Land Trust?
What are CLTs?
CLTs are local organisations set up and run by ordinary people to develop and manage homes (as well as other assets important to that community, like community enterprises or workspaces). The CLT’s main task is to make sure these homes are genuinely affordable, based on what people actually earn in their area, not just for now but for every future occupier.
There are now more than 170 CLTs in England and Wales, half of which have been set up in the last two years. The largest Trusts have more than 1,000 members. CLTs are expected to deliver 3,000 new affordable homes by 2020.
People set up CLTs for different reasons. For example there might be a lack of affordable homes for young people or families in a neighbourhood, where local people are having to move out of the place they call home, and communities want to do something about it; or it might be that assets the community considers valuable – such as land or existing buildings – are under threat from speculative developers, and the community would rather have a greater say in what proposals are made.
CLTs are not a legal entity (like a company) but they are defined in law, so there are certain things they must be and do: –
- A CLT must be set up to benefit a defined community
- It must be not-for-private-profit. This means that it can, and should, make a surplus as a community business, but the surplus must be used to benefit the community
- Local people living and working in the community must have the opportunity to join the CLT as membersThe members control the CLT (usually through a Board elected from the membership)
CLTs are usually constituted as Community Benefit Societies or Registered Societies under the ‘Co-operatives and Community Benefit Societies Act 2014’ and have successfully delivered affordable, self-build housing all over the UK, including the St Minver CLT in Cornwall and Broadhempston CLT in Devon (see the Broadhempston case study).
For further information see the rich array of resources on the National CLT Network’s website – www.communitylandtrusts.org.uk
For the purposes of this Toolkit we have made the following definitions:
- ‘self and custom built homes’ as properties commissioned by people from a builder, contractor or package company (this is known as ‘custom build’ housing). When people physically build themselves, sometimes with help from sub-contractors, this is known as ‘self build’ housing. We call all these people ‘private homebuilders’.
- ‘serviced building plots’ are shovel-ready parcels of land with planning permission, laid out and ready for construction with access and utilities/services provided to the plot boundary. Some private homebuilders just purchase a plot; others opt for a ‘shell’ home (that they then finish off), or they select from an extensive menu of options offered by developers/builders.
- ‘group projects’ mean homes built by private homebuilders who work as a collective.
THE FIRST PROJECT – 325 FISHPONDS ROAD
The site is in the city’s Eastville neighbourhood, and was a former school building (derelict since the 1980s) and playground; it was costing the council around £3,000 per year for maintenance and security.
The newly created CLT team spent the end of 2011 searching for possible properties or sites, and in early 2012 the school building was brought to its attention. The school had previously been advertised on the open market, and a local non-profit developer had been selected as the preferred bidder. However, there were problems over access and planning, so the developer suggested it might be better suited to the CLT, especially as the Trust had the backing of the council.
Unlocking the site
The local authority elected to ‘unlock’ the site by parceling it with some land from an adjacent council depot in Eastville Park, and a car-park that lay between the depot and an alternative access road.
VALUATION AND DISPOSAL
The total site, once planning permission had been obtained by the CLT, had an open market valuation of £286,000. However, the council opted to forego this capital receipt in return for the delivery of the self-finish homes, arguing that the benefits this delivered outweighed the money it would get from just selling on the open market.
The site was therefore sold to the CLT for the nominal sum of £1, on the condition that the Trust would refund the full market value if the land was ever sold for purposes other than housing.
DISPOSING OF LAND AT AN UNDERVALUE
The council recognised the positive value the project would bring to the area, across a number of social, economic and environmental fronts, including: –
- Receiving nomination rights in perpetuity for three of the affordably rented dwellings
- The self-finishers would obtain NVQ qualifications through working on the homes
- Regeneration of a site that had been deteriorating over a number of years and represented a maintenance and security burden
- Piloting a new form of community led housing, in line with city housing objectives
The council also recognised that it would enable the CLT to use the asset value of the land to attract finance and produce other homes on additional sites without further financial aid – effectively establishing a ‘rolling fund’ for the CLT, and contributing to the strategic aim of diversifying housing options in the city.
The local authority calculated the total social, economic and environmental (“wellbeing value”) benefits as being worth £234,000, so the ‘under value’ was in effect just £52,000.
The council recognised there could be some EU public procurement ‘state aid’ implications in disposing of the land for just £1, but it concluded that the risk of a successful legal challenge was extremely low. The report to Cabinet detailing the councils’ position on this issue ‘Disposal of 325 Fishponds Road to Bristol Community Land Trust’ dated 4th March 2014 can be found on the council’s website at www.bristol.gov.uk.
Design, planning and procurement
As the CLT was spending public money it set up a transparent process for the selection of the architect. Firms could apply to be on an Architect Panel if they had a local connection, and they were selected by competition. Four practices were identified by the Panel and Stride Treglown was chosen to design the project.
PLANNING AND ACCESS
The CLT was prohibited from using the adjacent busy road at the front of the site for access. The new access that the council facilitated involved building a replacement toilet block on the council depot, and providing replacements for the original car-parking spaces. This added £101,000 to the overall costs.
Don’t insist on the market price
Non-profit community groups such as CLTs stand a chance of making developments stack up on challenging sites, but they won’t always be able to offer a capital receipt
Disposal at an undervalue can be justified
Disposal of the first site at an ‘under value’ was instrumental in getting the CLT off the ground; the council was able to justify the disposal by accounting for ‘well-being value’ generated by the project , the nomination rights received and progress against its policy objective of diversifying Bristol’s housing market
Because of the various delays during 2013, by the time the project went out to tender construction costs had risen significantly – prices came in at around £1,800 per sq m (when the CLT had been targeting £1,500). A process of value engineering was then undertaken to get the scheme back on budget.
Jones Building Group of Portishead was appointed as the main contractor. The project has not run smoothly – a report by local bat group halted works for four to five weeks while surveys were carried out (and no bats were found in the existing buildings).
Although the contractor was able to continue work on the new build element of
during this period, the survey work hampered his ability to access the existing building once building recommenced, and this has pushed back the anticipated practical completion date.
The bat group remained concerned, and reported sightings again during the summer of 2015 – although again, no bats were found. The CLT recommend that groups ensure their survey information is always up to date – especially when dealing with existing buildings and when there have been delays in starting on site – to protect against similar issues.
In addition, warranty provider Premier Guarantee needed reassuring about the self-finish aspect of the works, which meant the CLT was unable to pay the contractor for the first four to five months of the build, and this caused a degree of tension between the CLT and the builder.
Keep surveys up to date
Delays to the development programme mean that survey information can become out of date and can lead to further delays if challenged – Bristol CLT recommend that groups make sure their survey information is up to date, especially when dealing with existing buildings and wildlife!
Engage early with warranty providers
Warranty providers may need extra reassurance about self-finish construction, particularly on practical completion issues. This can affect the point at which sales can go through (and income comes in), and when self-finishers can move in. Bristol CLT recommends early engagement during the design phase
The well-attended ‘launch’ of the CLT in January 2011 demonstrated demand. It also generated a bank of around 150 interested members to select from for the Fishponds Road project.
As the project was being publically funded the CLT needed to be able to demonstrate the housing need and eligibility of its members; to facilitate this it has developed an allocations policy for the homes.
Applicants must firstly be members of the CLT. They then have different options dependent on whether they want to buy equity, or rent.
If applicants intend to rent their home, they must also sign up to the city’s housing register by joining Home Choice Bristol. They are then placed in a banding determined by their level of housing need, and if applying as an individual or a couple renters are only eligible for a single bedroom unit.
Those intending to buy an equity stake must register with Home Choice Bristol, and also with Southwest Homes (the zone agent for shared ownership in the south west). Purchasers are eligible for a spare bedroom on top of their direct housing needs.
The successful applicants come from a range of backgrounds.
The terraced, shared-ownership homes are all occupied by families drawn from the CLT’s membership, including: –
- A couple in their forties with two children, both employed full time in the public sector, moving from a rented housing association property
- Another couple in their forties with two children, employed full time (one public sector, one an architect), moving from a privately rented home nearby
- A self-employed, single mother with a young child moving from a privately rented home nearby, active in Bristol’s creative industries
- Another couple with two children moving from privately rented accommodation nearby, one of whom is employed full time
- A fourth couple moving from privately rented accommodation, one of whom is self-employed, with the other looking to retrain and currently looking after their young son
- A couple moving from shared accommodation in the private rental sector, each with their own children (three in total), one employed as an electrician, the other within the creative sector
- The shared ownership studio apartment has been allocated to a couple moving from the private rental sector, one of whom is employed full time in the public sector and the other works part-time
Bristol City Council has nomination rights to three of the five affordably rented properties. These applicants come through Home Choice Bristol (the local housing register). All are on housing benefit and seeking employment and two are homeless. These applicants will be asked to become CLT members and were selected by interview; the CLT worked with the housing register team to assess their commitment and their aptitude for self-finish.
The remaining two affordably-rented homes have been allocated to single CLT members – one is full-time employee and the other is training to be a teacher.
The properties are offered as shared-ownership or affordable rented tenures. Occupiers of the shared ownership properties initially purchase 60.5 per cent of the open market value of the property and have the option of earning ‘sweat equity’ by self-finishing. The sweat equity can be retained by the self-finisher as a stake in the CLT, or redeemed as a cost saving against the price of the home. They have the legal right to purchase up to 100 per cent of the property and will then own the freehold.
The CLT will establish a residents association (with a sinking fund) that will be responsible for on-going management and maintenance of the homes. This allows the residents to carry out their own work if they wish to – a facility identified in the initial briefing for the project, as many CLT members had negative experiences with expensive service charges and poor workmanship in their existing accommodation.
The CLT is also exploring the potential for a Service Level Agreement (SLA) with United Communities to cover annual maintenance items, such as gas safety checks. Both the SLA and sinking fund would be financed by some kind of service charge, which is yet to be finalised.
Occupiers of the affordable rented properties can earn a rent reduction of around £3.50 per week through sweat equity (on a rent that is already set at 80 per cent of the Local Housing Allowance ‘market’ rent). Their service charge is included in the rent.
The unit types, sizes, values and costs are as follows:
CO-OP HOME SAVER ACCOUNT
Bristol Credit Union has launched a savings account for CLT members called Co-op Home Saver. This account has been designed to help members to save toward the cost of buying a shared equity stake in a home, or to put toward the cost of preparing and moving into a new home.
Set an appropriate level of self-finish
The level of ‘self-finish’ is important to get right – Bristol CLT’s initial self-finishing group were reticent about taking on very raw, unfinished shells when they had to work full-time to service their shared-ownership mortgages
Development Costs and Finance
The project at Fishponds Road has cost around £1.9m to develop – including a build cost of around £1.3m, a £100,000 contribution to works in the adjacent park and all design, legal and ‘developer’ fees.
Bristol City Council has supported the CLT since its inception in a number of ways. The funds were identified through the council’s Enabling Budget, and ring-fenced as a ‘CLT Capital Fund’. Support to date has included: –
- A small amount of funding to help ‘launch’ the CLT (poster printing, room hire, etc)
- A grant of £45,000 to fund a part-time Development Officer for two years to further develop the CLT and identify its first project
- A £300,000 capital grant to fund pre-development work (estimated at £67,000) and some development work (£133,000), with £100,000 set aside to underwrite any third party loans (a requirement of early negotiations with potential lenders)
- Disposal of the site for a pilot project at an ‘under value’ of £286,000; initially a long lease, with the freehold transferring upon practical completion
The CLT has also been able to access a HCA grant of around £425,000 by becoming a registered provider, and further development loans totaling around £390,000 from Community Land & Finance CIC specifically for the installation of solar panels and the provision of rented and shared-ownership housing.
The council’s grant payment equates to £30,000 per three-bed family home and £12,500 per single bed apartment; these grant levels are comparable to other grant funded schemes across the city. The equivalent public subsidy of £286,000 for the land equates to a plot value of £35,000 per family unit and £76,000 per plot for the conversion of the school building.
The Trust has generated an income of around £790,000 through equity sales and a further £50,000 through sweat equity across the scheme, which represented the cost saving achieved through self-finish. The CLT also expects to generate an income from the solar panel installation, using both the government Feed-In-Tariff (FITs) incentive for generating renewable energy and sales to residents (at below commercial energy rates).
Upon practical completion, the CLT will pay off its development loans with a long-term mortgage from Resonance, which it will service through the rental income on its retained equity. At this point, the freehold of the land will be transferred to the CLT, which will allow shared-ownership purchasers to complete on their mortgages. The Trust anticipates a potential delay in conveyancing, however, as it can take up to four months for the Land Registry to register a new title.
MANAGING THE SELF-BUILD PROCESS AND ASSESSING THE VALUE OF THE SELF-FINISH WORK
The CLT has recruited a self-build manager to supervise self-finishers – the manager has a background in construction and had a close involvement with the successful Ashley Vale self-build scheme in Bristol. The general contractor has also agreed to return to site if needed for specific packages of work.
The CLT undertook a comprehensive skills audit of its members using online survey tool ‘Surveymonkey’ to gauge the many different ways individuals can contribute to the self-build process.
The manager will record the hours each household puts in and this will be used to calculate their individual sweat equity from the overall cost savings achieved across the project.
The CLT initially found it hard to appraise the likely value of self-builder input – both in terms of potential for reducing the costs of the scheme, and in terms of ‘reward’ to the individual self-builder for their efforts – and has had to work hard to balance the cost-saving of self-finish with the desire for individual customisation of the dwellings.
Council support encourages other supporters
The council’s initial financial support – funding a development officer post and then providing capital for a first project – was crucial. This commitment from the council triggered further support from lenders and local housing associations
Housing Association ‘in-kind’ support is also valuable
A committed housing association can play an important enabling role. United Communities has enabled Bristol CLT in many ways – advising and supporting the development officer, offering a representative to the CLT Board, facilitating access to land (on the second project) and generally championing the CLT approach
Harness social investment
CLTs can be vehicles to bring in investment from sources of finance and funding not usually accessible to a council or commercial developer, particularly social investment
Recruit a self-build manager
Recruiting a self-build manager can be tricky, but people with the relevant construction and communication skills are out there
The contractor is responsible for delivering weather-tight shells with walls finished to ‘mist-coat’ level, ready for decorating. Self-finishers are then expected to: –
- Install kitchens and bathrooms
- Decorating from ‘mist coat’ finish, tiling and floor finishes
- Internal doors, shelving and architraves
- External landscaping and planters
- Bin stores and bicycle sheds
For this they qualify for a discount of up to £4,700.
The occupants can begin to self-finish their homes once the contractor has left site – they have three months to complete the internal works and a further three months to complete the external works to the shared spaces. If they do not meet these targets, the contractor is brought back to finish the work and the self-finishers lose a portion of their sweat equity equivalent to the uncompleted work. The self-finishers will be required to sign a contract committing to this arrangement.
The CLT has experienced some challenges with its warranty provider who initially insisted that bathrooms and kitchens must be installed before a warranty can be issued. The CLT always intended that these items would be installed by self-finishers after practical completion (and before moving in) and is currently working through the issue with the warranty provider. The Trust advises other groups to open early discussions about self-finish with warranty providers in order to establish a mutual appreciation of the associated challenges.
All of the residents are planning to self-finish their homes and the CLT has encouraged them to work as a group and pool their skills. The idea is that if someone is particularly good at tiling, they might do all the tiling in the project – although in practice this has made it difficult to calculate the value of work done by an individual self-builder.
Generally, the CLT works out the value of self-build labour by omitting items (labour or materials) from the contract with the general contractor and totting up the value in a spreadsheet. Items can be fully or partially omitted, depending upon the level of involvement the self-builders have, and the savings generated.
Additional flexibility is possible for some items – for example, where some shared ownership residents have elected to choose their own skirting and architrave.
However, these alterations to the common specification have meant that the contractor is unable to pass on cost-savings achieved through bulk-purchase. It has also relied on the generosity of the contractor to not charge extras for variations from the contract, which it has not done to date.
Engage early with mortgage providers
The timing of freehold transfer to a CLT can affect the time it takes to register new property titles and therefore the conveyancing of mortgages and home purchases. This can adversely affect a CLT’s cash flow, if not well managed. Engage with mortgage providers early to identify these challenges and work through them
Think about how to evaluate sweat equity
Financial modelling of ‘sweat equity’ can be tricky. For its second project, Bristol CLT has elected to develop an easy to use model that can be understood by lay people
Council makes its first commitment to support the formation of a CLT
Council sets aside £300,000 from its approved Enabling Budget (total £1million), to be made available as a CLT Capital Fund to undertake predevelopment/feasibility work
Bristol CLT officially launched following promotional campaign organised by local housing campaigners; the well-attended event demonstrated the appetite for the project and was instrumental in persuading members of the Council that the project was worth supporting
The CLT is formally constituted; council approaches local housing campaigners to sit on the CLT’s Board
CLT appoints Development Officer
Development Officer works closely with the Board and builds relationship with United Communities’ development team. Thirty possible sites evaluated
CLT applies for planning permission for 325 Fishponds Road; CLT also holds open day to kick start recruitment of self-builders
Council approves sale of 325 Fishponds Road to the CLT for £1
Project stalls due to change of administration at the council; during this time construction costs increase; CLT continues to look at a range of lenders, identifying Charity Bank as its preferred funder; changes to HCA funding rules in (100 per cent grant on completion, rather than 50/50 in tranches) means the council has to provide written assurance to Charity Bank that £100,000 is to be placed in an escrow account to act as security against unforeseeable cost over-runs
Project resumes; council agrees £200,000 grant plus £100,000 underwriting of loan. CLT finds alternative lender (Community Land & Finance CIC) who doesn’t require the council to underwrite costs, which frees up development finance for second project. CLT begins tender process to select a contractor
Tender process is complete and several rounds of value engineering are required due to rising construction costs in the market
Self-finishers begin training – including toolbox talks, health and safety and spending some time on the contractor’s other sites
Practical Completion of the project; contractor leaves site and the self-finishers can begin to fit out their homes
Likely long-stop for completion of internal self-finish works
Likely long-stop for completion of external self-finish works
THE NEXT PROJECT – SHALDON ROAD
The ambition at the CLT’s second project is much greater; self-builders will be able to take on much bigger packages of work and the CLT will work directly in partnership with the United Communities housing association.
The site at Shaldon Road in the city’s Lockleaze district has a number of challenges including existing wildlife and restricted access, and has been disposed of by the council with a planning brief encouraging highly sustainable development.
The CLT is working with another architect from its framework, Architype, to integrate self-build construction with the aspiration to build the homes to Passivhaus standards. At the time of writing, the CLT is about to complete pre-development work and submit a planning application (December 2015).
- Construction of roads and services infrastructure for all 36 homes (including six serviced plots)
- Full construction of 15 homes, built by United Communities to CfSH Level 4 or 5 and offered on a social rented of affordable rented tenure
- Construction of the frames for 15 self-finish homes for shared ownership, to be completed under the supervision of a site manager provided by Bristol CLT. Homes comprise five x 1-bed (46 sq m) homes, five x 2-bed (68 q m) homes, five x 3-bed (80 sq m) homes
- Servicing and open market sale of six individual building plots, suitable for the construction of four-bed, 120 sq m homes with a condition that CfSH Level 5 is achieved
The site’s access issues affected its development value. United Communities took the lead in drawing up proposals, and offered a land value of £1, reflecting the development challenges of the site and liabilities associated with the brief to provide highly sustainable homes. It was the only bidder.
Pre-development costs are around £124,000, with a £51,000 contribution from United Communities. The CLT also successfully applied for £50,000 from the ‘CLT Fund’ administered by CAF Venturesome – a £2m fund that provides pre-development and development finance for CLTs – and allocated the remaining £23,000 from its council-funded capital reserves.
Recently, through an event organised as part of the National CLT Network’s ‘Urban CLT Project’, the team has been able to access specialist financial modelling support, and has constructed an easy to use model that reflects the project’s objectives and can be understood by lay members.
Duneland Ecovillage, Scotland
Orwell Housing Association – affordable self-finish
Broadhempston CLT, Devon
Beauly, Scottish Highlands
Cohousing Vinderhoute and other Cohousing projects
Continental Refurbishment Projects
The NaCSBA Research & Development Programme is funded by the Nationwide Foundation and aims to promote the self-build and custom build sector as an affordable route into housing for a greater number of people in the UK.
For further information, please visit:www.nacsba.org.uk or www.selfbuildportal.org.uk