A co-operative answer to the UK’s housing crisis?

‘There are a number of areas that the government can focus on to help stimulate the co-operative housing sector’

Shelter is a basic human need, but decent and affordable homes are not available for everyone. Something has to change. 

In September, the National Housing Federation blamed the crisis on the lack of a long-term housing plan. And it warned that, if no such plan is made, by 2045 the number of UK children in temporary accommodation will rise from 131,000 to 310,000; social housing waiting lists will more than double; and 5.7 million households will be paying a third of their income on housing costs.

In the UK there are three main forms of home occupation: home ownership, private rental and social housing. But co-operative housing– an increasingly popular fourth option outside the UK – could be a solution, according to a report from the Social Market Foundation (SMF).

In their report – Affordable living: Alternatives to the traditional homeownership model – SMF researchers Jamie Gollings and Niamh O Regan call on policy makers to emulate the success of co-op housing in other countries.

Niamh O Regan and Jamie Gollings

“The expectations and reality of renting and home ownership are vastly different now, as renting is becoming a more long-term endeavour, with fewer people able to get on the property ladder,” said O Regan.

“This should prompt policymakers to provide people with worthy alternatives, such as reviving the UK’s social housing sector and supporting the growth of co-operative housing. Co-op housing, in particular, is far underutilised in the UK compared to Canada and Scandinavia. They bring with them a host of benefits for government, residents and wider society – but there are numerous barriers.”

Related: Blase Lambert of the Confederation of Co-op Housing on regulation and finance

While social housing’s development is funded by the state, provided below market rate, and allocated to specific needs, co-op housing is more complex – and far less common in the English-speaking world than elsewhere in the West. Co-ops make up only 0.2% of the UK’s housing stock. It’s 0.6% in Canada, 0.3% in Ireland, 0.2% in New Zealand and 0.1% in Australia. Sweden has the largest co-op sector in Europe, at 23% of the housing stock. On average, 14.5% of the housing stock is co-operative in Scandinavia, with 8.7% in central Europe and 2.8% in southern Europe. 

“After working in co-operative housing in different capacities for most of my career I have seen the transformative impact housing co-ops have had on people’s lives,” writes Julie LaPalme, secretary-general of Cooperative Housing International (CHI), in her introduction to the report. “Housing co-operatives give a voice to residents through a democratic governance model, allowing residents to vote on policy, financial and governance matters at annual general meetings. By serving on the board of directors and committees, residents have a say in their housing and learn new skills. Having security of tenure also provides peace of mind and alleviates the stress many people experience with precarious housing.”

Housing co-ops are also “remarkably adaptable and versatile”, she adds, and “consistently exhibit a lively and cohesive community where neighbours are familiar with one another and offer one another support during difficult times”. 

Co-ops can offer greater security of tenure and lower rents than the private sector, the report adds, alongside the chance for  skills and leadership development. From the government’s perspective, they can be cheaper to maintain than social housing and address wider social goals: a number of studies find a positive link between cohousing and better health.

But co-operative living is not for everybody, the report warns. The model “can place demands on residents to be involved in the running of the co-op which may not be suitable for every family”; they are also typically mixed-income and not financially accessible to all. Transparent governance also matters, to prevent the risk of co-op board members abusing their power.

These caveats aside, housing co-ops have a potential that is going unrealised. Governments can support the sector through legal reform, finance, education and help with finding land, but not all the current frameworks are helpful. 

Help may be as simple as changing the number of people needed to set up a co-op; in Ireland, the Co-operative Societies Bill 2022 cut this from seven to three, removing a barrier to development.

As with other co-op sectors, accessing finance is a major problem, although grants, tax treatment and favourable loans can help. 

Knowledge is another vital factor. The report describes how the Canadian government combined funding with education to trigger a co-op housing boom. “The 1970s were a good time for the housing co-op movement in Canada,” it says. “The government provided start-up funding and financing through mortgages that were insured by an agency of the federal government. They also helped to set up development resource groups who would market the properties to potential residents and help them to understand what a co-op is.”

HSB housing co-op’s Living Lab building in Sweden – the country with Europe’s biggest housing co-op sector

There are some positive steps being taken in the UK, the report says. In Wales, the devolved government is funding a body which advises and trains co-op housing groups. It also pledged “a much greater emphasis on co-operative housing, which fits well with Wales’ strong social history” when it launched its housing white paper in 2012, with a target of building 500 co-operative homes. These efforts are being led by co-op development agency Cwmpas and have received state revenue funding.

But more is needed to tackle the UK’s housing crisis, where “the social housing supply is dwindling, and both local authorities and housing associations are facing difficulties in growing the housing stock.” 

Gollings and O Regan recommend a number of policy changes to support social and co-op housing, including putting in place long-term funding plans and ensuring local authorities review their planning processes to facilitate and encourage social housing development. 

Right to buy should be scrapped, they add. Instead, social and private tenants should be given a ‘collective right to buy’, and access to land and property should be made easier.

To tackle the finance issue, the report calls for the launch of a co-operative housing lender, backed with a state guarantee, and the revival of the Community Housing Fund, which was discontinued in 2022.

Crucially, the authors highlight the need to improve the understanding of co-ops by regulators and local authorities.

“There are a number of areas that the government can focus on to help stimulate the co-operative housing sector,” they add. “While co-op housing is not likely to make a big impact on supply in the UK, it has very real potential.”

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