How CHT’s Land Trust Works

The land trust model is simple.  A subsidy is incorporated into the purchase transaction that makes buying a home in Sarasota County affordable.  The subsidy is secured by the underlying land so that in effect, the buyer is only purchasing the housing unit. 
CHT maintains ownership of the land and enters into a 99-year ground lease with the buyer.  It can be renewed for an additional 99-years.  A nominal lease fee is collected each month.  The buyer purchases the unit at an affordable price in exchange for agreeing that when they sell the home, they will sell it at an affordable price.  This is enforced through the ground lease which provides the buyer with a 25 percent share of the appreciation of the housing unit and land when they sell the property.  The 75 percent of remaining equity stays in the property making the unit affordable for the next buyer.

The land trust is a shared equity model of homeownership.  It should be viewed as a third housing option: an alternative to rental housing or full appreciation homeownership.  Land trust buyers achieve many of the same benefits as full appreciation home ownership.  When they sell their homes they receive all of the mortgage principal they have paid off, plus the down payment and 25 percent of any appreciation.  They also receive the tax benefits of their mortgage interest and property tax deductions, as well having a permanent, fixed housing cost that protects them against rising rents.  Land trust owners receive Florida’s homestead exemption. 
This provides additional savings every year.  This shared equity model of homeownership allow owners in the land trust to benefit from some appreciation, but not so much as to preclude the next generation of working families from moving into the community.
 
Land trust homes are created with local, state or federal resources.  These public resources consist of land donation, direct taxpayer grants, development incentives or increased housing densities.  Grants allow CHT to construct new homes or assist buyers to purchase existing homes.  The incentives or bonuses provide CHT with a finished unit at a below market price.  Public resources are becoming increasingly scarce and fewer families are able to be served.  Meanwhile, the number of families being priced out of the market grows.  Because the financial costs of creating new housing in our community is so great, existing resources are being stretched thin. 
We must act as strong financial stewards and preserve the land trust housing we create for future generations of Sarasota’s workforce.

Frequently Asked Questions About the Land Trust

Q - If I can’t own the land, why buy the house?

A - If you are able to afford a house in the full appreciation market that’s what you should do. Unfortunately, many working families and individuals can not afford to purchase something without some assistance.  Instead of renting, the land trust provides a home of your own with other benefits similar to full appreciation ownership.

Q - Why Do I Only Get 25% Appreciation?

A - The capped appreciation is structured to be fair to the buyer while ensuring that CHT will be able to help people just like you in the future.  A better way to look at your financial return is to look at your down payment (which is nominal under the program) and see that you are making a minimum of 25% return on that money. That’s a great return under any measurement!