Movement needs to look at co-operative housing

Last year saw a long, involved debate on governance in the retail co-operative sector, but co-operative housing is still in need of discussion.

Housing is one of the most regulated sectors in the movement – alongside agriculture and finance – and housing co-ops developed with the aid of public funding face strict regulatory requirements.

The current regulator, the Homes and Communities Agency, expects housing co-ops to meet published standards for governance, financial viability, value for money and rent.

Serious breaches will result in sanctions, which could include statutory board appointments –seen recently with the Quadrant Brownswood Tenant Co-operative. The regulator can even go as far as transferring engagements to another registered provider.

In general, smaller providers (fewer than 1,000 homes) should expect to have little regulatory engagement. The normal arrangements for smaller providers include a review of annual accounts and a shortened regulatory return.

A number of co-ops have also sadly given up their independence over the years, mainly as a result of poor governance. Common reasons for governance failure in housing co-operatives are not keeping up to date with regulation; poor financial management, which can also include the lack of an asset management strategy; and setting unsustainably low rents.

Housing co-ops also need to remember their co-operative difference. A lack of member engagement and poor investment in education and training for members can lead to failure. This is as serious as it gets.

Through North West Housing Services – one of the largest providers of services to housing co-operatives in England – we have learned these lessons and helped create many areas of best practice that would be useful to housing co-ops – and to co-ops in general.

At NWHS we have 32 experienced staff dealing with these issues day in, day out, and have supported over 30 housing co-ops. Robust financial regulations are an obvious necessity, as well as the adequate management of assets. There is also a need for general housework, such as an up-to-date operational policy and measures to ensure procurement procedures bring value for money.

Some of the best areas of focus for co-op governance are true community empowerment through the co-operative model, which leads to more settled communities and lower levels of anti-social behaviour, compared to other providers.

This can be achieved through the offer of genuine affordable social rents (some other providers are moving towards “market rents”) and strong and meaningful engagement with members.

Another significant advantage of being a co-operative is that brought by NWHS – created by our members as a secondary service co-op, which they jointly own and control. This means they enjoy the economies of scale and bargaining power of a larger organisation while maintaining their independence.

This gives them access to mutually beneficial resources, including education and training for their committee members, alongside professional expertise and advice on all aspects of managing and maintaining a small housing co-op. More importantly, this enables them to achieve excellence in governance and meet regulatory standards while remaining financially sustainable.

Most of our housing co-op members have been in existence for over 30 years, which demonstrates the sustainability of the model. The quality and affordability of the housing provision offered is exceptional compared to alternative affordable providers.

Recently, the co-operative difference even won the backing of government research, which found that the average resident satisfaction levels in co-operatives are significantly higher than other types of social housing. But, despite this evidence, the sector is still largely forgotten by UK housing policy makers. The sector also represents less than 0.6 % of total social housing provision in the UK, compared with 18% in Sweden, 15% in Norway, and 8% in Austria.

In efforts to turn this around, we are working with other like-minded organisations nationally, including our sector trade body, the Confederation of Co-operative Housing, to increase the profile of the sector. Together, we hope to provide the required infrastructure and support to enable co-ops to flourish in the current environment, while ensuring they can meet the regulatory standards required of a registered provider.

We do this work because we know that housing co-ops offer a more equitable solution for people in housing need by putting democracy and community ownership at the heart of affordable housing.