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Community Land Trust


wealthymatters,com

The concept of Community Land Trust (CLT) is something interesting I came across today.

In CLTs, a not-for-profit organisation builds houses on subsidized land and gives them at a price much below the prevailing market rate. The condition is that when the buyer resells the apartment, the price has to be below the market rate prevailing then. This ensures that the subsidies are passed on to the subsequent buyers and the prices are kept at affordable levels for a longer period.

This model can be tweaked to suit local conditions. The State governments can sell or allocate land to cooperatives at subsidised prices to build affordable housing on CLT model.

This model has been successfully adopted in many cities across the world. For example, in Cooper Square land trust project in Manhattan,(pic above), the rentals are below 30 per cent of the tenant’s monthly income, while in the surrounding area people spend 50 per cent of their salary on rent.

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Affordable Housing Defined


wealthymatters,comThe Government of India defines affordability as follows:

For lower income group, apartment should not exceed four times the household gross annual income. For the middle-income group, the prices should not exceed five times the gross annual income.

Similarly, the rent should not exceed 30 per cent of the monthly salary for the lower income group. For the middle income, it should not exceed 40 per cent.

In other words, for a middle-income family, which earns Rs. 30,000 a month, any apartment costing more than Rs.18 lakh is unaffordable.For the poor  who earn about Rs.10, 000 a month, apartments priced more than Rs. 5 lakh is unaffordable.

This is something to think about when investing in real-estate.

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