Community land trusts and indigenous housing options

There is considerable interest in Australia at present in increasing home ownership rates among Aboriginal people and Torres Strait Islanders (hereafter Indigenous people). There is a current drive for housing policy reform to enable innovation and nuance and appropriate tenure adjustments for an important group within the Australian population. As a body of commissioned research in response to a targeted application process, this research project is a direct result of that interest. While a strong political and policy objective, increasing Indigenous home ownership is a complex issue that gives rise to many legal, policy and practical challenges. Core challenges relate to: existing Indigenous land tenure systems; income and employment profiles of Indigenous households; the capacity and viability of Indigenous organisations; and, diverse conditions across local housing markets. Existing land tenure arrangements on Indigenous lands might not readily enable mainstream forms of home ownership, especially where land is held collectively and not currently subdivided. Many Indigenous households - especially in remote areas - experience low and fluctuating income levels that suggest mortgage-backed home ownership could be problematic. Many Indigenous organisations that operate in the housing field and support local communities have come under pressure from policy and regulatory changes and face uncertain futures. Lastly, many Indigenous communities have small populations and would not open their market to non-community members, so the potential market for ownership in such situations would in all likelihood be very small. In other locations such as mining areas and tourist towns, market conditions are displacing Indigenous people and are unfavourable to affordable home ownership. Local housing market characteristics are especially relevant to policy positions that are considering home ownership as a wealth creation and economic development vehicle for Indigenous communities and households, as the reality of markets in many Indigenous communities would suggest these objectives would most likely not be realised. Policy interventions and program developments therefore need to be considered carefully in order to not unduly expose Indigenous populations to any unreasonable risks of market-based ownership. Previous research shows that there is interest amongst Indigenous communities in core traits associated with home ownership, such as stability, a sense of ownership and inheritability (Memmott et al. 2009). That research found less interest amongst Indigenous communities in the house as an asset or a wealth creation vehicle; in many locations it may also be unreasonable to expect housing to act as a wealth creation vehicle due to market constraints. Consideration of these aspirations highlights the potential relevance of utilising hybrid tenure forms to diversify appropriate housing options for Indigenous people and communities. 'Hybrid tenure forms' refers to a suite of tenure options that span the gap between rental and full ownership models (see Figure 1). The terms 'intermediate tenure' 'shared equity', 'shared ownership' and 'shared equity home ownership' are also used to describe models in this space. These include various forms of housing co-operatives, dual mortgage schemes, deed-restricted mortgages and Community Land Trusts (CLTs), which are the focus of this study. All of these hybrid variants reflect attempts to provide accessible tenure forms that can offer stability without undue exposure or vulnerability, most often by balancing or sharing the equity of the housing with a partner organisation. Such hybrid tenure forms exist in marginal numbers in Australia, despite ongoing and growing affordability concerns. There is a need to explore the potential of such models in the Australian housing market in general and in Indigenous communities, as they might be more responsive and appropriate to local housing aspirations and market conditions. Given the challenges of achieving home ownership among Indigenous households just outlined, consideration of alternative tenure models must begin with recognition that what is required is a range of housing options that do not present unnecessary risk to the resident nor 'trap' residents in a housing tenure and location from which there is no viable exit pathway. Research aims and questions: This report presents the findings of AHURI-funded research into the potential relevance of models based on Community Land Trusts (CLTs), one form of hybrid tenure, for the Indigenous housing sector. The aims of the project have been to tease out relevant aspects of CLTs as developed overseas and to investigate their resonance with and applicability to Indigenous housing policy objectives, with a practical focus on their potential operation in New South Wales (NSW) and Queensland. To address these aims five research questions were posed: 1. What are the key features of CLTs as implemented overseas? 2. What outcomes have been achieved? 3. What are the possible applications of CLTs for Indigenous households and how would this vary geographically? 4. What are the legal implications of CLTs? 5. For Indigenous housing policy and housing programs, what are the implications (especially financial) of establishing CLTs? Research process: Research for the project was undertaken in two phases. Phase 1 addressed the first two of the above research questions and consisted of a desk-based literature review combined with material collected from previous discussions with CLT researchers and practitioners in the United States of America (US) and the United Kingdom (UK). The second phase responded to questions three through five via field work with communities in NSW and Queensland, and by examining Indigenous land title and relevant Acts, undertaking financial modelling and exploring potential governance issues. The outcomes of Phase 1 were presented in the Research Report 'Principles and practices of an affordable housing community land trust model' (Crabtree et al. 2012), which is a companion report to this Final Report. This Final Report presents findings from the second phase of the project, responding to the remaining questions listed above and documenting the processes through which the research was undertaken. An Indigenous Advisory Group (IAG) formed at the commencement of the project was central to bringing Indigenous knowledge and engagement to the project. The IAG: workshopped core research questions with the research team; provided guidance on case study selection criteria developed by the team; reviewed the case study shortlist; provided feedback on fieldwork findings and scenarios; and, provided feedback on the draft Final Report. Following the field work, the IAG was expanded to include members of communities that were visited over the course of the research. Primary research for the project was centred on a case study approach to assessing the potential for adopting or adjusting CLT models for Indigenous housing in specific locations in two state jurisdictions, NSW and Queensland. This fieldwork was supplemented by expert analysis of three areas that would be critical to the successful establishment of a CLT type model for Indigenous housing. First, specialist advice about legal issues that would need to be addressed in order to implement CLTs was obtained. In particular, expert legal consideration was given to the implications of the NSW Aboriginal Land Rights Act (ALRA) and the Queensland Aboriginal Land Act (ALA). Second, preliminary financial modelling of the costs of core CLT activities in different market contexts was performed, supplemented by interviews with Indigenous and mainstream financial agencies. Third, possible governance mechanisms for delivering CLT programs were examined, in the context of both the existing institutional arrangements for the delivery of Indigenous housing in Australia and international best practice. What is a Community Land Trust?: As discussed in detail in Crabtree et al. (2012), CLTs are a form of common land ownership where land is held by a private non-profit entity and leased on a long-term basis to members of the community or other organisations. Buildings and services on that land are then held as owned or leased properties by residents, businesses and/or other community housing providers. Ground leases are inheritable, and properties on leased land can be bought and sold at prices determined by a resale formula. This arrangement can offer many of the widely acknowledged benefits of home ownership, including resident control over a dwelling, security of tenure and transfer of occupancy rights, and the potential for asset-based wealth building. Further, this arrangement provides housing that is affordable to residents - whether buying or renting - and which remains affordable for subsequent residents. Affordability is retained most commonly through a locally-determined resale formula contained within the ground lease. Crabtree et al. (2012) found a high degree of flexibility in CLT programs in the US and UK, whereby CLTs can and do deliver affordable rental, co-operative and owner-occupied housing, as well as provide opportunities for additional commercial and/or community facilities. The sector in the US has provided secure and affordable housing, and has experienced much lower default and foreclosure rates than the open market average during the recent US mortgage crisis. That sector is a few decades old, having started in the 1960s and experienced exponential growth since, fuelled partly by interest in the sector's ability to provide affordable and stable home ownership for lower-income households. There are now over 240 CLTs in the US. The UK sector is only a few years old and emerged from interest in the success of the US sector.