Hey, exciting news to share! MACLT has a new resale formula for homeowners. Those with the older formula in their ground lease will have the choice between the new and old formulas when they sell, and all new sales will be under the new formula only. The new formula is meant to be easier for homeowners and staff to use, but have very similar outcomes to the old formula.
The old formula required homesellers to commission an appraisal before selling their home, which added time to the sales process and cost the seller sometimes as much as $600! Historical MACLT resale data shows the appraisal-based formula on average has performed below a 1% effective simple interest rate. Using a 1% simple interest rate may yield lower or higher returns on any given house compared to the old appraisal based method. On average, it will yield slightly higher returns for MACLT home-sellers.
MACLT working with a CLT specialist to come up with a formula that will keep homes affordable long-term while allowing for some equity gain. The membership was engaged in several informational sessions, the board recommended the formula to the members, and the membership finally voted to approve the new formula in July 2023 at the Annual Meeting.
The new formula is: Sale price = Initial purchase price + 1% simple interest per year home owned + Qualified Capital Improvements
This is in alignment with MACLT’s mission, as well as the bylaws, which state:
For the purpose of preserving affordability, the Corporation shall restrict the price that lessees may receive when they sell housing and other improvements located on the land leased to them by the Corporation. A policy establishing such restrictions in the form of a “resale formula” shall be adopted by the Board of Directors and the Regular Members of the Corporation, in accordance with the following principles:
(1) To the extent possible, the formula shall allow the seller to receive a price based on the value that the seller has actually invested in the property being sold.
(2) To the extent possible, the formula shall limit the price of the property to an amount that will be affordable for other low and moderate people at the time of the transfer of ownership.
Feel free to reach out to staff with any questions!