A look at Land Trusts and Co-Ops in the homeownership space

We talk a lot about homeownership here at the Homeownership Center. And we’ve created guides on alternative financing methods created for those needing to avoid interest payments for religious reasons, and for those who do not qualify for a US Social Security number.

There also are alternative ownership models, two of which we will briefly discuss in the article – land trusts and co-ops.

What Is a Land Trust?

In the world of homeownership, a community land trust is typically a plot or plots of land administered by a nonprofit on behalf of the community. Such land primarily hosts single-family homes. The land trust acquires land and maintains ownership of it permanently. It then enters into long-term lease transactions allowing low- to moderate-income individuals to live in the homes. When the occupants leave, they retain a portion of the increased property value (excluding the value of the land). The remaining value is retained by the trust, thus preserving affordability of the property for future low- to moderate-income households.

By separating the ownership of the land and the housing structure, this alternative ownership model keeps land trust homes deeply affordable for future generations. According to Grounded Solutions Network, there are more than 225 community land trusts in the United States today. These include One Roof Community Housing, Central Minnesota Housing Partnership, City of Lakes Community Land Trust, Greater Metropolitan Housing Corporation and Rondo Community Land Trust among others here in Minnesota.

What Is a Co-Op?

In the world of homeownership, a housing equity cooperative is an entity that owns one or more multi-family residential buildings. The co-op is membership based, with membership granted via purchase of a share in the cooperative. Each shareholder is granted the right to occupy one co-op housing unit.

By pooling member resources, this alternative ownership model achieves significant economy of scale thereby reducing the cost of owning one’s home (unit). According to Cooperative Housing International, there are about 6,400 housing cooperatives in the United States today. A partial list of housing equity co-ops in Minnesota is available on the Shared Capital Cooperative website. Be sure to filter the map list by “housing co-op” as this list includes all cooperative business types.

Want to Learn More?

Housing equity co-ops and community land trusts will be the topic of an upcoming episode of the Welcome Home Podcast, featuring experts from City of Lakes Community Realty and Urban Homeworks. We’re looking forward to learning more!