Collaborators & Friends
Creating affordable homeownership opportunities
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General
What situations could this model apply to?
The Left Coast Housing Trust transaction model can be used to support a variety of situations, with different priorities, values, and motivations:
- A group of young people seeking to live communally form a housing cooperative and work with a willing homeowner to transition ownership of the home to the co-operative (or to a land trust that leases the home to the co-op).
- Renters who have a solid relationship with their landlord could approach them and work together to transition the house to a land trust or co-op, so that the tenants have long-term stability while the former landlord retains a source of income.
- A homeowner seeks to return their home to the people whose land they’re on, in support of decolonization and Indigenous resurgence. A Community Land Trust is created and controlled by a local Indigenous nation, assumes ownership over the house, and provides housing to the people of that nation.
- An aging farmer works with a group of young farmers to transition the property to a land trust that provides stable housing and land access to farmers who are committed to sustainable agriculture.
- A homeowner transitions their home to a co-op or land trust that supports a specific community or identity group they’re tied to, such as BIPOC folks or Syrian refugees.
What is a Housing Co-op?
Housing co-operatives provide housing to their members, and the membership is composed of the people who live there. This means that all members can participate in the governance of the co-op, and the housing will stay affordable because it is run on a non-profit basis.
What is a Housing Land Trust?
Simply put, a housing land trust is just a non-profit society with a mandate to own / acquire land for the purpose of affordable housing. Beyond that, there is a lot of variation. Some develop housing, others are non-profit rental housing providers, others provide limited-equity housing through leases, and some provide affordable housing indirectly by leasing the land to a cooperative or non-profit housing provider.
What does 'affordable' housing mean?
The word ‘affordable’ housing gets tossed around a lot. The Canadian Mortgage and Housing Corporation defines ‘affordable’ rent as 30% of a household’s income before tax… but they don’t say which households they’re talking about. Definitions of affordability can get a bit ridiculous. Here’s some quick math:
- In 2018, the City of Vancouver defined a 2-br house as ‘affordable’ if it was less than $2756/mo in West Van. That wouldn’t count as meaningful ‘affordable housing’ to most of us.
- For instance, a couple working full-time at minimum wage ($15.75 at this writing) would be spending 67% of their income on rent.
- To spend the recommended 30% of their income on that 2-bedroom, they’d need to work 72 hours per week (basically two full-time jobs each).
- These definitions apply to “market rental housing,” which, from our perspective, is basically a dismal cycle of tax breaks, incentives, and profits for developers and landlords. One thing that makes the SHS model different is that no one is profiting from housing, so that money can be used to deepen affordability.
- The Canadian Mortgage and Housing Corporation conceptualizes affordable housing is as a ‘continuum’:
In the context of this continuum, we envision this model supporting “affordable rental housing” and “affordable homeownership” (in the form of limited-equity leases or co-op memberships). Any house that undergoes this transition will be permanently removed from the market (because it’s owned by a non-profit) and insulated from housing booms. Rents and leases will always be significantly lower than market rental housing, becoming more affordable over time.
We know that $2700 for two bedrooms is not affordable for the communities we’re part of, but a single definition of ‘affordable’ might not be very useful. What counts as ‘affordable’ will depend on the specific situation, house, background, community, values, priorities, habits, and supports available to residents. Rather than coming up with a universal definition of affordability, we hope to support conversations among homeowners and residents about what it takes to live a stable, thriving life. This means homeowners assessing what they need in terms of monthly payments, and prospective residents assessing what they can afford to pay.
Home Owner
What sorts of homeowners might be interested in this model?
Broadly speaking, we envision three main situations in which this model could work for homeowners:
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A homeowner wishes to downsize to a smaller living space, and monthly payments from the land trust or co-op provide a sustainable income to the homeowner.
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A homeowner wishes to remain in their home while sharing it with others. They can remain in a suite of their home, while others move into another portion. The homeowner could receive free rent in perpetuity, in addition to monthly payments.
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A landlord wishes to transition away from the responsibilities of renting their home. The co-op or land trust rents it to others on an affordable basis, and the former homeowner receives a monthly income without having to manage the property.
It’s important to note that in each of these scenarios, there are for-profit versions that will provide better returns for homeowners. A homeowner could sell, rent, reverse-mortgage, or contract a property management firm to manage renters. They could share their home with others without giving up ownership, or engage in a rent-to-own arrangement with tenants. What makes this model different–and means it won’t be right for everyone–is that the house is removed from the private market and turned into permanently affordable housing, so that it will never be sold or used to make a profit.
What are the benefits to homeowners?
While a private sale or rental will always provide greater individual economic benefits to homeowners, this model provides other benefits that the private market can’t. In transitioning their home to provide permanently-affordable housing, homeowners:
- Mitigate displacement and support new residents to put down roots and contribute to their neighbourhoods in ways that become possible when they can make plans 5, 10, or 20 years into the future.
- Leave a legacy and offer an example to others. Each homeowner who participates in this model makes it more likely that other homeowners would consider it as a possibility.
- Receive a stable, dependable income without the hassle of property taxes, repairs, managing tenants, and other obligations associated with property ownership.
- May create an agreement to continue living in their home while others move into another suite or unit of the house. Elders in our society are increasingly isolated and segregated, and we are excited about the potential for intergenerational relationships of mutual support here.
- May transfer the monthly payment arrangement with the CLT/co-op to another individual (i.e. to their heirs if they pass away) or they can stipulate that outstanding payments be forgiven upon their death, which will further deepen the affordability of their home.
Do I need to have my mortgage paid off to transition my home?
Not necessarily. In partnership with a credit union, it may be possible for the CLT or co-op to assume the mortgage debt.
Who will guarantee I get paid?
LCHT or the co-op (the non-profit owner of the property) and its community partners are ultimately charged with ensuring regular monthly payments to the homeowner. The specific contractual arrangements for different properties may vary depending on context, such as monthly payment amounts, property value, partnerships with credit unions, and other partners involved. Before any transition is made, the financial feasibility would be assessed to ensure that the organization could reliably make monthly payments to the homeowner, based on revenues from residents and other sources. However, due to unforeseen circumstances, it is possible that the organization, as the mortgage-holder, could be unable to make payments and end up in default. In this case, efforts would be made to find a community partner who could take over the mortgage and monthly payments and continue to provide affordable housing. If this proves impossible, the organization could be forced to sell the house and repay the homeowner in accordance with their agreement.
Will the monthly payments be equal to the market value of my home?
Probably not. In most cases, homeowners engaging in this transition would do so knowing that they are subsidizing permanently affordable housing by giving up part of the value of their home. That means the revenue they receive in monthly payments will never be as much as they could get from renting or selling their home privately.
That said, depending on the specific region and the property, it’s possible that the homeowner could receive monthly payments comparable to what they’d receive if they sold their house at market rate and financed this through a vendor take-back mortgage. However, in regions like Vancouver and the Capital Regional District, property values are so high that the monthly payments of a VTB mortgage would be well above market rent for the house, let alone affordable rent.
What if I want to stay in my house?
If you want to stay in your home and you’re willing to share some of it with others, this model could help facilitate this. The house could be divided (and renovated, if necessary) into several suites, so that you remain in one suite while new residents move into others. Ownership of the home would transition to a non-profit, and you’d retain the right to remain in your suite for as long as you wish.
How will this support my community?
This housing transition will benefit your community in a number of ways. Numerous studies have emphasized the benefits of stable, affordable housing, including health benefits, neighbourhood diversity, and increased safety. When folks have access to stable housing, they can spend more time with their families and loved ones, contribute more to local projects and causes, and put down (or deepen) their roots in community.
Are there any special conditions that I can request?
Yes, within reason. For instance, one more common request is to include your family name as part of the building’s name. This request is often considered as part of the transfer process.