A business plan brings together in one document all the aspects of a scheme that need to be in place to make it a success. It sets out how your project will work in practice and will be needed for when you approach an organisation for a loan or grant, for example.
Before you start writing the business plan though you will need to carry out a feasibility study, often at an early stage,to help clarify how you will deliver your aims, the potential costs of the project, and what issues you may face.
CLTs often begin with a preliminary feasibility study, which is carried out once a group has been formed, a vision set, housing need identified and a site identified (see below). It will address whether the project is viable or not. Following this a more detailed feasibility study can be carried out to analyse in detail all of the parts of the project. The information from the feasibility studies then forms the basis of a business plan.
A financial viability assessment will often be a useful part of business planning too. The CLT Network has a financial appraisal tool available on our dedicated CLT Fund website, which you can find by following this link.
For more detailed information on carrying out feasibility studies, assessing financial viability, and business planning (including a business plan template), please see the CLT Handbook. A hard copt of the CLT Handbook is sent to all new members of the National CLT Network, and an electronic copy is also available in the Members' Area of the website. If you are not yet a member of the National CLT Network and would like to join, you can find out how to do so by visiting this page. Our Handbook is also available to non members for £29 inc delivery, you can order one by emailing email@example.com with your request.
Proving Housing Need and Eligibility
Often people within a community are anecdotally aware of local housing need, but sometimes housing need is hidden and less well understood. Perhaps adult sons and daughters - maybe with families of their own even - are still at home as they are unable to afford to move out, or people have been forced to move away because of high house proces.
Usually a CLT will need to provide evidence of housing need to the wider community and also to the local planning authority. In a rural area a housing needs survey will be conducted for the village or parish and will provide this evidence. In urban areas, you may be able to find data on housing need in your neighbourhood without having to do a housing needs survey.
The CLT will also need to make a decision about who will be eligible for the homes and this will eventually be put into an 'Allocations policy'. Eligibility will vary from community to community but your policy will need to be a fair and defensible, supported locally by community members and often supported by the local authority too. When setting the eligibility criteria CLTs will consider issues such as how long a person has lived locally, whether they have family or employment connections in the community and whether they can afford the property.
There is more information on gathering evidence of housing need and housing allocation policies in the CLT Handbook in the Members' Area.
CLTs have to consider the condition under which the homes will be made available to local people i.e. will the homes be for sale or for rent. This is called the 'tenure' and, because you will be providing homes that are affordable and will remain affordable for local people in perpetuity, the different tenure options are:
- Shared ownership
- Equity Loan
- Resale Price Covenant Sales
- Mutual Home Ownership
If you are applying for Government Grant you will need to look at what tenure the grants will fund.
You will also need to consider the issue of leasehold enfranchisement, which essentially means that in some (non-protected) areas i.e. urban areas, a person who owns a share in a home has the right to buy out the freehold and then potentially sell it into private ownership. This would be a problem for your CLT as one of your main tasks is to make sure that homes affordable to local people in perpetuity (rather than ever been sold onto the private market).
There are ways round this issue and more information on tenure options and leasehold enfranchisement is available in the CLT Handbook in the Members Area.
One of the first things a CLT will need to think about is where suitable land might be for a development of affordable houses and how it might be able to acquire that land. Usually community members themselves have the best knowledge of what land might be available and who owns that land.
Sites may come forward through a search, and a fair evaluation will need to take place of the suitability of each site.
A site that could be transferred to the CLT, or sold for a nominal sum, may already be owned by the local authority, parish council, or another sympathetic body. In villages and small towns it may be possible to build on a rural exception site - essentially developing land that, as a condition of planning consent, can only be developed as affordable homes for local people.
Sometimes a CLT may gain land and/or homes as part of a larger development where a private developer is required to provide a contribution of affordable homes too (known as a section 106 site). Also, in urban areas sites may come forward as part of a regeneration scheme.
Or a CLT may just purchase the site on the open market.
There is more information on the options for CLTs in terms of finding a suitable site, and practical considerations when acquiring land in the CLT Handbook in the Members' Area.
Most CLTs gain planning consent for homes through the normal planning process. However, since the introduction of Neighbourhood Planning within the Localism Act 2011, CLTs can use Neighbourhood Planning and the Community Right to Build to gain permission to build without having to use the normal planning process.
Either way much work will go into planning considerations. There is more information on planning considerations in the CLT Handbook in the Members' Area.
For more information on Neighbourhood Planning and the Community Right to Build visit My Community Rights.
An excellent Plain English guide to the Localism Act is available online here.