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Trust in land partnership
• I READ with interest Councillor Roger Robinson’s plea to Councillor Chris Naylor, and with dismay the short-sighted plans of the Department for Culture, Media and Sport to sell off the British Library land to private developers for yet more yuppie high-rises (August 9).
Your readers may be interested to know that there is, in fact, an emerging sustainable development model for affordable housing which takes new techniques in use in the private sector and improves upon them.
A “Community Land Partnership” keeps the land in community ownership by transferring it to a trust entity. Instead of entering into conventional leases, debt finance agreements, and development/ management contracts, the stakeholders enter into a simple “partnership” agreement within the framework of a new hybrid legal vehicle – “Limited Liability Partnership”.
“Investor” members introduce money, or as an alternative, “money’s worth” of land (for example at an agreed value acceptable to DCMS), materials, labour, or services.
“Occupier” members pay a reasonable, index-linked “capital rental” to the investors in relation to the amount invested in the land and buildings and also a maintenance and management charge to a “developer/ manager” member.
Anything an occupier pays more than the rental due automatically becomes an “equity” investment.
Housing is truly “affordable” because: (a) there is no capital repayment (a major part of conventional property financing);
(b) since rentals increase with inflation, the return will be less than the interest rates charged by banks and building societies on loans where the lender’s capital erodes with inflation. Moreover, the model is “sustainable” because the developer/ manager does not risk or borrow a penny, but “invests” time and expertise. The better the quality, and the more energy efficient the building, then the lower will be the maintenance and energy costs, and the higher will be his “equity share” return.
So we see an outcome of land maintained in community ownership; affordable “co-ownership” housing; a simple new long-term asset for investors; and a “sustainable” development model.
It’s not rocket science is it?
Merely imaginative use of new legal possibilities.
CHRIS COOK
Southcote Road, N19
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