The problem every affordable housing program faces
Subsidized affordable housing has a paradox at its core: the moment a household builds equity and sells, the subsidy walks out the door with them. The next buyer pays market price. The affordable unit is gone — forever.
Community Land Trusts (CLTs) solve this with a legal structure: the trust owns the land permanently, leasing it to homeowners for 99 years. But the structure alone isn't enough. You also need a resale formula — a mathematical rule that determines how much of any price appreciation the seller can keep.
The Champlain Housing Trust formula
The most widely adopted formula was developed by the Champlain Housing Trust in Burlington, Vermont — the largest CLT in the US. It works like this:
When you sell your CLT home, you keep your original down payment plus a share of any appreciation in the home's appraised value. That share — the percentage the seller captures — is the single dial.
The seller keeps 25 cents of every dollar the appraised value grew. The other 75 cents stays embedded in the home's price, keeping it affordable. That ratio is tunable — and the three calculators below let you feel exactly how it changes outcomes.
Notice: with a 25% index, the seller captures real money — but the resale price grows far slower than the market. The next buyer gets in at a steep discount. That's the mechanism working as designed.
The trade-off is real, and it's a policy choice
The index percentage is a genuine dial with no objectively correct setting. Set it low (10–15%) and you maximize affordability depth across generations. Set it high (40–50%) and you make CLT homeownership more attractive to buyers who care about wealth accumulation — at the cost of shallower affordability over time.
Most CLTs in the US use an index between 20% and 35%. Champlain Housing Trust's default is 25%.
The "affordability preserved" figure is the ratio of CLT resale price to market value. A lower ratio means deeper affordability for the next buyer — but also a smaller gain for the current owner. The index moves both simultaneously.
What about the initial subsidy?
In most CLT programs, the purchase price is already below market — the CLT or a public grant has bought down the land or construction cost. The resale formula needs to account for this embedded subsidy: if prices track absolute appreciation rather than percentage, an owner who bought at a deep discount could still end up with a price the next buyer can't afford.
The Champlain formula indexes to appraised value (not purchase price) to handle this correctly. The third calculator shows why that distinction matters.
The subsidy preserved figure shows how much of the original public investment stays locked into the next transaction. With a 25% index, most of the subsidy survives each ownership cycle — that's what makes CLTs a genuinely durable tool, not just a one-generation fix.
What you've just learned
- The resale formula is the mechanism that keeps CLT homes affordable through every ownership cycle.
- The index percentage is a policy choice — a dial between owner wealth and future affordability.
- Appraised-value indexing (the Champlain method) preserves embedded subsidies far better than purchase-price indexing.
- At a 25% index with 4% annual appreciation, a 10-year owner builds real wealth — and the next buyer still gets in well below market.