Talk to others and form a steering group
A CLT is a community initiative. You may think that there is a need for affordable housing or other assets or enterprises in the community, but what do others think? You'll need to talk to others about what they want to see in the community, or what the issues are.
Or perhaps you're already part of such a group - this could be an informal group of local people, or a more formal group starting from the Parish Council or Neighbourhood Forum - and you've decided that you want to tackle housing issues or set up an asset or enterprise.
Soon the group will need to become a CLT steering group, usually with a mix of different skills and reasons for wanting to be involved. If the project progresses, in time the steering group will become the founding Board of the CLT.
Decide what the CLT will do
One of the first things that an emerging CLT will begin to think about is what the CLT will achieve and how it will achieve it. All CLTs are different, and have different aspirations. The vision of a CLT could be as simple as: "To develop affordable housing to enable young families to live and work in our village and make our community more sustainable". It will be vital that all members of the group share the vision.
Have a Plan of Action
There will be lots to do when setting up a CLT. Although all groups are different and your journeys will be different too, some early steps are likely to be:
- Get some initial support to scope out what you want to do and how. First contact the National CLT Network to find out what support is available;
- Hold a public meeting to inform the wider community of your plans, gain their agreement to go ahead, and ask for people to volunteer and join you;
- Plan meetings or establish working groups to look at specific tasks. This could be establishing the CLT's legal structure, looking for sites, and collecting evidence of housing need;
- Open a bank account and start raising funds. See the Funding section on sources of funding.
- Get the word out about your plans via articles in the local press or newsletter.
Building Membership and Support
Once you have a vision for your CLT and have set up a steering group it will be important to try to involve the wider community. CLTs must be directly accountable to the community: anyone living or working in the community should have the opportunity to join the CLT as a member, and those members control the CLT. The most effective CLTs have broad membership across the community. This way the CLT is genuinely representing local people.
Having the support of local people will also be critical around the time of a planning application for your scheme as some local people may be worried about the impact of development in the community and objectors may come forward. Having broad local support and membership means that rumours can be quickly corrected and the community can feel confident that plans reflect the needs and aspirations of local people - rather than those of any outside agency.
It will also be important to engage with key partners (such as the local authority and, where applicable, housing associations or develoeprs) at an early stage. That way you save making time consuming mistakes and can gain credibility and get your project moving forward quickly from an early stage.
If there is a neighbourhood planning group or other kind of community planning group in your community that you're not already working with, you should make contact. A CLT can help a neighbourhood or community plan to realise its aims.
There are lots of different ways to build community support genuinely engage local people, and engage with key partners. For information on this, including information on successfully running meetings and engaging all sections of the community, please see the CLT Handbook, available to purchase or free for Members (see the Members' Area).
Governance and Legal Structures
When your steering group has decided that it definitely wants to set up a CLT it will be important to set up a legal form and think about how the CLT will be governed.
A CLT is a non-profit community-based organisation run by volunteers for community benefit, but it 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 that your residents continue to receive an excellent service over the long term.
Being well governed
In order to demonstrate that you are properly governanced, 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 of 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 using the National CLT Network's CLT Organisations Health Check to assess your organisation's governance. Please download at the bottom of the page. This is also given to Members when they join the Network.
There is also further information on good governance in the CLT Handbook in the Members' Area.
Being a viable business
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 homes for rent, the rents should be set at a level that is fair but which ensures the 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.
CLTs must be an incorporated body. This means that a CLT must be established as a separate legal entity. CLTs as a brand are recognised in statute in the Housing and Regeneration Act 2008. However, a CLT is not a legal form in and of itself.
The definition of a CLT is a relatively broad one designed to capture the aims and distinctive characteristics of the CLT sector and of promoting for the benefit of the wider community. Importantly, the definition is not exclusively linked to affordable housing.
The legal definition is set out in Section 79 of the Housing and Regeneration Act 2008, as follows.
A CLT is a corporate body which
1. Is established for the express purpose of furthering the social, economic and environmental interests of a local community by acquiring and managing land and other assets in order:
- to provide a benefit to the local community;
- to ensure that the assets are not sold or developed except in a manner which the trust's members think benefits the local community.
2. Is established under arrangements which are expressly designed to ensure that:
- any profits from its activities will be used to benefit the local community (otherwise than by being paid directly to members);
- individuals who live or work in the specified area have the opportunity to become members of the trust (whether or not others can also become members);
- the members of a trust control it.
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.
There are certain things that a CLT must be and be able to do, so there are only a limited number of legal forms that are suitable for a CLT.
For more information on getting your legal form right, please see the 'Introduction to Legal Formats' and 'Charitable status and the implications' guidance at the bottom of the page, as well as the CLT Handbook in the Members' Area.
For those CLTs that want to become a Community Benefit Society (one of the most popular legal forms), the National CLT Network has template constitutions that have been previously approved by the Financial Conduct Authority (FCA). Using these templates keeps your costs of registering with the FCA down and provides a straightforward course to legal incorporation.
To learn more about our templates and our incorporation service, head here.