Making housing affordable (Conclusion)

(Conclusion)

The Houston Community Land Trust (HCLT), a non-profit in Texas, offers a three-bedroom detached house for $725 a month, $675 of which goes to the bank for the 30-year mortgage on the house.

The remaining $50 goes to the HCLT for the 99-year ground lease for the land which it owns. In the same neighborhood, the rental rate for a similar house on freehold land is $1,200 a month. According to the buyer of an HCLT house, she isn’t bothered that she doesn’t own the land, and with the restriction that limits how much the house can appreciate in value, because now she can think beyond her next payment—to save for retirement, to go on vacation, and to pay fowr the braces her daughter needs.

HCLT is trying to provide opportunity to a population that has historically not had any opportunity to enter the housing market. They see CLT as a starting point, a stepping stone between renting and owning, and for building wealth by having stability and being able to pay for mortgage and having something left over.

The main challenge in providing affordable housing is the continuous increase in land values as urbanization proceeds, but people’s incomes do not increase commensurately.

Once the engine of capital revs up and investors begin to speculate in a plot of land’s future value, the machine is hard to stop. A community land trust is one way to remove the profit motive from land ownership.

The CLT offers an elegant solution tow the housing backlog: by separating ownership of a house from the land it sits on, you can ensure the home remains affordable.

This concept is not new to the Philippines. It was used for the BLISS housing in the 1980s and is still being used in some projects up to now. However, it’s not widely promoted and is limited in scope in its present form.

One possible approach in providing affordable housing in the Philippines is to combine the CLT with transit oriented development (TOD), wherein government or non-profit organizations acquire land near identified commuter rail stations, and to develop these lands for low-income households through the CLT approach. Land acquisition for this needs to be done immediately because the longer it takes, the higher the land prices will be as the construction of the commuter rail progresses. This might be worth pursuing under the Balik Probinsiya Program.

Another strategy is for local governments to acquire tax-delinquent properties, designate these as CLTs, and retrofit the existing structures (if any) into affordable housing. In this strategy, the affordable housing units can be spread out in different locations and integrated with existing communities.

While CLTs are too young, too small, and too few to render a final verdict on their performance, arguments for their superiority are compelling nonetheless. They illustrate that land may be deployed as creatively as other factors of production in doing affordable housing provision.

They suggest that community-owned land, in particular, may be transformative in ways that other strategies are not, creating places where justice is deepened and sustained. There are good reasons for giving CLT a try.