In many ways, Landed resembles a traditional community land trust. The challenge with existing community land trusts is that they are very hard to scale and grow, thus their impact has been limited. Landed is a new form of land trust.
What is a community land trust?
In most circumstances, a community land trust is a fund that buys land. In many cases, this is a fund created by a municipality or government, but it can also be funded by private community members. Once the trust buys the land, the trust then leases the land on a long-term basis to people interested in owning homes on land owned by the trust.
Because homeowners don't have to buy the land (and therefore don't get the appreciation generated from increasing land prices), being a homeowner ends up being significantly more affordable. There are many benefits to community land trusts, but there are also a few challenges:
- In markets where housing is expensive, starting a trust requires an overwhelming amount of money to acquire nearby land. As a result, most land trusts are very small.
- The land bought by the trust is most often clustered, which leads to segregation of community residents.
- Homeowners receive little to no gain from rising land values and have no pathway to owning the land under their homes.
In fact, Bernie Sanders helped start one of the country's first community land trusts. Before eventually agreeing to fund the trust, one of his longstanding fears was that community land trusts would create a second class of homeownership where homeowners would have little ability to share in the gains of rising land values.
How is Landed different?
Instead of buying a large amount of land and renting it out to homeowners, Landed makes an investment at the exact same time you buy a house. It's kind of like Landed is buying some of the land alongside your home purchase and giving you the full rights to use it. When you sell, Landed gets money that it can then invest alongside new homebuyers. The benefits are:
- By investing alongside you and not in competition with you, Landed can help many more families with the same amount of money compared to a traditional land trust.
- The families that Landed support are spread out across communities. Families can use Landed funds to buy any home, not just ones in designated neighborhoods.
- The families that Landed support can buy back the investment from Landed at any time. They have a clear path to owning all of the land under their homes and becoming financially independent.
But if Landed's goal is to help, why can't Landed share more of the appreciation with me?
Landed has made the decision to build these funds largely from investment capital instead of donations. Why? Investing in homes requires an overwhelming amount of money. For every dollar that individuals donate to affordable housing the US, they have thousands invested in real estate. To have meaningful impact and help more families, we need to find ways of accessing investment capital that is seeking a fair return. This is a deal that all of us at Landed would take, as both investors and homeowners.
If you want to learn more about how Landed works or why we started Landed in the first place, don't hesitate to contact us at hi@landed.com.
