CLT Legal Toolkit
Welcome to the CLT legal toolkit. This toolkit provides guidance on the legal structures that a CLT can adopt and, once a CLT has determined the most appropriate legal form, template constitutions for adoption.
Contents:
1. Introduction
A Community Land Trust (CLT) is a non-profit distributing community-based organisation run by volunteers that develops housing and other assets at permanently affordable levels for long-term community benefit.
A CLT is also a business like any other and faces the same risks and uncertainties operating within the wider environment. It is therefore essential that as a business your CLT remains properly governed, maintains financial viability and is properly managed. This should help ensure your residents continue to receive an excellent service in the long term.
In order to demonstrate that you are properly governed, a CLT board and staff will need to ensure that you operate according to the law and your rules and that you comply with all regulatory requirements. Governance also covers a set of behaviours and skills. The board of a CLT sets the strategic direction for the organisation and as such, will need to have a diverse range of skills and competencies to enable them to do this. A well governed organisation will know what its key stakeholders want and will be responsive to residents’ views and priorities. You may wish to consider adopting the National Housing Federation's Code of Governance ‘Excellence in governance: code for members and good practice guidance’.
A CLT must be a viable business. It should have adequate resources to meet its current and future business and financial commitments and this should be based on a robust business plan agreed by the board. The board and staff should be aware of real and potential risks that face the organisation and should have a framework that manages these risks effectively.
If you are developing housing for rent, the rents should be set at a level that is fair but which ensures financial viability of the organisation. It should also enable you to maintain the properties in a satisfactory condition and be able to respond to your residents’ preferences and provide a high standard of customer care.
2. Why do you need to become a legal form?
CLTs must be an incorporated body. This means that a CLT must be established as a separate legal entity. CLTs received statutory recognition in the Housing and Regeneration Act 2008. The definition of a CLT is a relatively broad one designed to capture the aims and distinctive characterises of the CLT sector and of promoting for the benefit of the wider community. Importantly, the definition is not exclusively linked to affordable housing but to the wider regeneration interests of a local community.
Formally setting up a CLT will bring certainty to partners and stakeholders, attract funding, give confidence to the local community and provide protection from personal liability.
3. How does the toolkit assist?
This toolkit provides guidance on three legal structures that may be suitable for you in establishing a CLT: Company Limited by Guarantee (CLG), the Industrial and Provident Society (IPS) and Community Interest Company (CIC). It covers many of the issues you will need to consider in establishing a legal form and highlights some of the differences and regulatory requirements that may influence which legal structure and governance arrangements are more suited to your local situation.
4. The toolkit
The toolkit is comprised of a list of documents that are downloadable. If any of the language used is unclear please visit the Jargon Buster.
1. Introduction to Legal Formats
This document, produced by Wessex Community Assets, sets out the different forms of legal formats suitable for a CLT to adopt. For the template constitutions, see below.
2. Ambition/ethos questionnaire
This questionnaire is designed to help you identify your aims and ambitions as well as the ethos of your CLT and what legal format might be right for you. Each template constitution is also accompanied by a specific questionnaire or checklist.
3. Registration with Regulatory Authorities
Depending on which legal format you select and whether you or not you choose to access public funding from the Homes and Communities Agency, you will need to consider the regulatory requirements of the appropriate Regulatory Authority.
4. Governance
It is vital that your CLTs acts in a transparent and accountable way to its community. This note outlines the policies you will need to ensure good governance.
5. Introduction to Example Object Clauses
Depending on the activities that your CLT intends to carry out, example object clauses are available to articulate your intended activities.
6. Findaform - not yet available
This has been developed by Wessex Community Assets and will be available from their website shortly.
7. Template Constitutions
Click on the link above to access the template constitutions.
If you have any queries regarding the Toolkit, or any suggestions for improvement, please contact Hannah Fleetwood at the National CLT Network on hannah.fleetwood@housing.org.uk or 020 7067 1039.
Please read the note below before using the guidance and documents contained in this Toolkit.
This Toolkit on the formation of a CLT has been produced by Cobbetts LLP (legal advisers) and Wessex Community Assets in conjunction with the National CLT Network to provide assistance and guidance to community groups interested in the setting up of CLTs. Whilst every effort has been made to ensure that the information provided is accurate, it does not constitute legal or other professional advice.
The Toolkit has been published in good faith by the National CLT Network and neither the National CLT Network nor Cobbetts LLP shall incur any liability for any action or omission arising out of any reliance being placed on the Toolkit documents of guidance by any individual, group, organisation or other body. Any individual, group, organisation or other body in receipt of this Toolkit or any of the documents or guidance contained therein should take their own legal, financial and other relevant professional advice.
Please note: Neither the National CLT Network nor Cobbetts LLP can be held responsible for the contents of any pages referenced by an external link.