What Is an Improvement Trust?

An improvement trust is an entity formed for the purpose of holding funds designated for the improvement of a certain building structure or an entire geographic area. While such trusts are typically intended to acquire or rehabilitate real estate, these entities are also useful for redesigning entire communities, including urban roads and infrastructure. An improvement trust is formed in accordance with all applicable laws in the area where the trust’s funds will be applied.

Similar to real estate investment trusts, an improvement trust may be used for acquiring new real estate. This type of trust differs, however, in that it is further designated to generally improve the overall living conditions of residents of a certain area. Such improvements include the establishment or repair of highways, the restoration or building of new residential housing, and other improvements intended to protect the health and welfare of local residents.

While these types of trusts, in theory, can be designated for any dwelling or geographic area, most are intended for urban improvement. Historically, such trusts have been used to redesign overpopulated areas in an effort to prevent the overcrowding of residential spaces. In particular, improvement trusts have been very helpful in addressing the spread of communicable diseases, which are often a result of overcrowded, substandard living conditions.

Two historical examples of how such trusts work can be found in the Bombay City Improvement Trust and the Singapore Improvement Trust. Each of these trusts was established due to severe health hazards caused by an overcrowding of communal living spaces. In each of these areas, sanitation issues presented a real threat to residents. The establishment of these trusts, however, helped reduce these threats and created more desirable living conditions for local inhabitants.

Formed in the late 1800s, the Bombay City Improvement Trust was established in response to the bubonic plague, which not only killed thousands of residents in Mumbai, India, but also posed a serious threat to the local economy due to the sudden intense loss of local workers. The improvement trust was established to create better public housing, which addressed the problem of multiple workers being crammed into small living quarters and, thus, contributing to the plague’s spread. Similarly, the Singapore Improvement Trust, which was formed in 1936, sought to address problems of overcrowded slum dwellings by building new back-to-back ventilated housing structures with a lane running in the back of homes to separate dwellings and to improve the amount of open space available to residents.