ConsultCIH Briefing: Housing Co-operatives and other ‘mutual’ housing bodies

BriefingHousing Co-operatives and other ‘mutual’ housing bodies Dr Martin Field Research Associate Institute for Urban Affairs University of Northampton July 2011

PrefaceMartin Field (Ph.D) is a Research Associate with the Institute for UrbanAffairs at the University of Northampton. He has held senior positions inthe local authority sector covering housing strategy, management anddevelopment roles; development posts with regional RSLs and with thethird sector; plus regional positions with East Midlands DevelopmentAgency and on secondment to the Homes & Community Agency and theHousing Corporation. He has a long-term commitment to housing andneighbourhood development being led from the grassroots up - thesubject of his senior degree – with a range of practical experience fromwork with UK self-build, co-op and Cohousing groups and from living inan inner-city co-operative association.This Briefing paper looks at housing co-operatives and other ‘mutual’ housing bodies inEngland.In particular it focuses on the scope of different co-op and mutual bodies to plan, develop,acquire and manage local housing properties, alongside wider neighbourhood engagements.It is intended to provide guidance for local communities and community bodies consideringhow a ‘co-operative identity’ could assist them to carry forward their aspirations for localhousing and neighbourhood services.It will also be useful for professionals across housing and community-related disciplines whowould be engaged with the formation and operation of co-operative housing bodies.Key points:A range of ‘mutual’ bodies now exist in the UK, with a variety of legal identities, providing ahost of housing and neighbourhood functions. Some of these bodies are set up to own andcontrol their own stock, some are established to manage the stock from other stock-owningorganisations. There is clear government support for raising the profile of the mutual sectorand to increase its role in commissioning new house-building and take control of localservices. ______________________________________________________________________________________ Briefing: Housing Co-operatives and other ‘mutual’ housing bodies

Contents1. Current Interest in co-ops and mutual bodies................................................... 12. An overview of housing co-ups and other ‘mutual’ bodies ............................... 13. Co-operative and collaborative ownership of dwellings.................................... 24. Co-operative and collaborative management of dwellings............................... 35. Mutually-based ‘social enterprises’ .................................................................. 46. Conclusions...................................................................................................... 5Appendix One ......................................................................................................... 6Appendix Two......................................................................................................... 7 ______________________________________________________________________________________ Briefing: Housing Co-operatives and other ‘mutual’ housing bodies

1. Current Interest in co-ops and mutual bodies Supporters of ‘mutually-based’ housing provision have felt it has occupied something of a Cinderella role within the housing sector for some considerable time. It is therefore encouraging that both the previous and the current government administrations have looked at how the mutual sector might increase housing construction and deliver cost- effective services. A new role for ‘mutual’ housing provision is clearly underpinning support around the country for ‘Community Land Trusts’ as a focus for new affordable housing, and the range of new ‘community rights’’ in the Coalition government’s ‘localism’ agenda and a Government-Industry Working Group to promote ‘self build’ / ‘community’ schemes all point towards an invigorated consideration for how all kinds mutual housing services might be promoted within mainstream housing solutions. This Briefing summarises the different kinds of ‘mutual’ housing and neighbourhood provisions that can now be found within the English housing sector, namely: • details of the different kinds of co-operative and mutual bodies that are providing housing and neighbourhood services; and • descriptions of the format of bodies that are used for ownership and/or management of housing stock, and for other kinds of mutually-based social enterprise.2. An overview of housing co-ups and other ‘mutual’ bodies The classical portrayal of mutually-based housing bodies are ‘co-operatives’, defined1 as “an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly-owned and democratically controlled enterprise.” (See the internationally agreed Co-operative Principles summarised in Appendix One.) It is recognised, however, that there now exist a range of ‘mutual’ housing bodies in the UK. In 2009 the “Commission on Co- operative and Mutual Housing” 2 quantified for the Labour government the nature of the modern ‘mutual’ sector – housing bodies, building societies, friendly societies and mutual insurers – and the extent to which this was felt ‘to contribute to the national economy’. It identified almost 1,000 co-operative and mutual organisations owning or managing 100,000 homes, summarising these as: • Housing Co-operatives, which own and democratically manage affordable homes (the largest part of the ‘mutual’ sector). • Tenant Management Organisations (TMOs), managing homes owned by other landlords. • Community Gateways, tenant and membership owned housing organisations bringing democratic accountability into existing larger-scale housing provision. • Cohousing schemes, building ‘intentional neighbourhoods’ based upon a combination of private and shared spaces and other facilities. • Community Land Trusts (CLTs), local property trusts aiming to provide the long- term availability of affordable housing. • Other mutual ownership schemes, allowing opportunities for individual asset- holding within ‘a collective safety net’. All these bodies can demonstrate similar democratic and legally owned accountability to service users, although practical requirements have seen a variety of legal identities1 Resolution of the Centennial Congress of the International Co-operative Alliance, 23 September19952 “Bringing Democracy Home”, report of Commission on Co-operative and Mutual Housing, 2009. Briefing: Housing Co-operatives and other ‘mutual’ housing bodies 1

developed to govern various housing functions and community values. The choice of which identity to take may depend upon how familiar key agents (like finance bodies) are with that kind of body. [Detailed advice on this is available from the Confederation of Co-operative Housing, and from Radical Routes – see Appendix Two.]3. Co-operative and collaborative ownership of dwellings The kinds of formal identities that have been used for a ‘mutual ownership’ of housing stock are: • Fully Mutual Housing Co-operatives These are either (a) groups of separate households with a well-defined collective local identity where each has a self-contained dwelling; (b) a communal group sharing a single property, without self-contained accommodation for everyone, but with a mixture of other shared facilities. ‘Fully mutual’ 3 (par value) housing co-operative simply means that it is owned and managed by a legal entity of which its members (almost exclusively tenants) are the sole directors. Such ’co-ops’ are usually registered under the Industrial and Provident Societies Act 1965, which carefully define their egalitarian qualities and frameworks through their use of ‘model rules’. • Community Interest Company (CICs) CICs are limited companies but with additional features that are appropriate for the use of people who want to conduct a business or other activity for common or community benefit, and not purely for private advantage. There is a usually a "community interest test" and "asset lock" which will ensure its operations are for community purposes and the assets and profits are dedicated to these purposes. • Company limited by guarantee This legal identity is used primarily for non-profit making organisations, and does not have an initial share ‘capital’ but instead has members who act as guarantors and give an undertaking to contribute a nominal amount (typically very small) in the event of the winding up of the company. It is sometimes believed that it cannot distribute benefit to its members but it can so long as this is included within the provisions of the company’s Articles of Association.3 Also termed ‘par value’ co-operatives, where this is the nominal share price value of the formallegal stock document when the organisation was founded – it is commonly £1. Briefing: Housing Co-operatives and other ‘mutual’ housing bodies 2

• Community Land Trust (CLT) The legal definition of a CLT is set out in the Housing and Regeneration Act 2008, as a property trust “established for the express purpose of furthering the social, economic and environmental interests of a local community by acquiring and managing land and other assets [......] designed to ensure that any profits from its activities will be used to benefit the local community”. Housing-based CLTs restrict use of land and housing through not-for-profit ownership of land with leases to the land users, often used to protect low-income housing from subsequent speculation. • Other ‘mutual home ownership’ bodies Cohousing and other co-ownership bodies (where two or more co-owners share property ownership) have to date used company formats noted above for where members collectively own property freehold, whilst issuing rental or ownership residential ‘leases’ to individual households. A form of ‘Mutual Home Ownership’ has been developed4 to increase the supply of affordable intermediate market housing, designed to remain permanently affordable and not move onto the open market.4. Co-operative and collaborative management of dwellings The kinds of identities that have been used as for ‘mutual management’ of housing stock are: • Tenant Management Organisations (TMOs) A TMO is a means by which council or housing association tenants and leaseholders can collectively take on the democratic responsibility for managing the homes they live in. Resident members of the TMO create an independent legal body and usually elect a tenant-led management committee to run the organisation. The TMO can then enter into a legal management agreement (contract) with the landlord. The majority of TMOs manage local authority stock, however there are a few TMOs managing housing association stock. • Community Gateways The ‘Community Gateway’ model is a form of housing organisation set up to provide a range of tenant and community empowerment opportunities, developed to enable small scale community and co-operative activity within large scale housing organisations.5.4 See ‘CDS Co-operative’ in Appendix Two.5 The theoretical background to setting up a Community Gateway Association was set out in 2002 inthe Empowering Communities report, published by the Confederation of Co-operative Housing, CIH,and Co-operatives UK Briefing: Housing Co-operatives and other ‘mutual’ housing bodies 3

• Arms Length Management Organisations (ALMOs) ALMO Boards are made up of tenants, councillors and independent members (often local authority councillors) who reflect the local community. Central to the ALMO ethos and crucial to their success is the direct involvement of tenants in stock and service management - one third, or more, of an ALMO Board will be tenants of the stock. • Short-life co-operatives / ‘Self-help’ housing ‘Short-life’ co-operatives take over properties for a fixed period of time, usually where these have become previously unlettable. The co-op does not own the properties, but has a lease with the landlord. ‘Self help’ housing groups 6 are similar bodies in that they negotiate with the owners of empty properties for their use and then go on to organise whatever repairs are necessary to make them habitable, using groups of local people to bring the empty properties back into use. (This differs from ‘self-build’ housing organisations, where residents are involved in the building of new properties - labour that they put into building the properties may provide them with a sweat equity and they pay rent to cover other building costs.)5. Mutually-based ‘social enterprises’ In addition to the housing functions noted in the two sections above, co-operatives and other mutual bodies are used as the basis for community-based ‘social enterprise’ – i.e. “a business or service with primarily social objectives whose surpluses are principally reinvested for that purpose in the community” – usually through forms of Community Development Trusts or through ‘worker co-operatives’. Bodies like ‘Radical Routes’ and ‘Locality’ (the new charity formed through the merger of community organisations Bassac and the Development Trusts Association), have social enterprise members covering range of activities and local services, and offer advice on many aspects of establishing social enterprises and accessing what forms of ‘mutual aid’ (like loans) might be available. Particularly business activities closely allied with residential services are enterprises providing: • Property maintenance services: providing local ‘handyman’ services, or projects working with volunteers and homeless people to renovate disused and derelict properties. • Landscape and garden services: providing estate and area-based maintenance of open spaces and other landscaped provisions. • Care provision: providing local support and assistance to reduce social exclusion and sustain community integration of vulnerable residents. • Community pubs: protecting the future of local public house provision through moving it into community ownership – already with members registered with the CLT Network.6 “Self-help housing : Supporting locally driven housing solutions”, Building and Social HousingFoundation, 2011 Briefing: Housing Co-operatives and other ‘mutual’ housing bodies 4

• Credit Unions: mutual Industrial and Provident Societies regulated by the Financial Services Authority to take deposits provided by the savings of their members, using this to provide participating members with loan products at affordable rates. [See Appendix Two for contact bodies and examples]6. Conclusions A cross-sector body of representatives from across the ‘mutual’ sector has been consolidating itself from under the banner of the Mutual Housing Commission’s 2009 report to promote the common benefits of different forms of ‘mutual’ housing, and now includes reps on behalf of different constituent ‘elements’ of the mutual sector : housing co-ops, land trusts, tenant management co-ops, cohousing groups, local authority housing management organisations, self-help groups and others. An encouragement to engage with this cross-sector approach has gone out to all local members of the representative interests. Key to the formation of this group has been the Confederation of Co-operative Housing, which in partnership with the National Housing Federation and the Chartered Institute of Housing has published a recent report that examines financing options for new co- operative and mutual housing, identifying routes and models for future schemes including potential volume development through partnerships with local authorities and developer housing associations 7. The Tenant Services Authority (TSA) has also funded the Confederation to develop an ‘accreditation’ programme to strengthen standards in housing co-ops and ensure excellence in service provision, particularly in relation to meeting the TSAs new regulatory standards, (notwithstanding that mutual services are routinely at the top of service audit performance assessments, and of service users satisfaction surveys). Lord Best noted at the time of the Commission’s 2009 report “... ‘mutual’ housing values are receiving renewed recognition for their potential to increase housing and community provision in ways that will engender less overall risk for the communities concerned.” At a time when new partnerships between the development sector and local credit unions is establishing innovative ways to provide first-time buyers with a helping hand onto the house ownership ladder8, the scope for ‘mutual’ housing provision to challenge the principles of the ‘mainstream’ housing sector looks set to continue.7 “Financing Co-operative and Mutual Housing”,2011: CCH, CIH and NHF8 A new venture in May 2011 between Cruden Homes , one of Scotland’s largest housingdevelopment and construction groups, Glasgow City Council, Glasgow Credit Union and NHS CreditUnion. Briefing: Housing Co-operatives and other ‘mutual’ housing bodies 5

Appendix OneThe Co-operative Principles are international guidelines agreed by which co-operativeorganisations put their values into practice. The seven ‘principles’ include:1. Voluntary and open membership [....open to all persons able to use their services andwilling to accept the responsibilities of membership...]2. Democratic member control [... Co-op members have equal voting rights (one member,one vote)].3. Member economic participation [....Members contribute equitably to, anddemocratically control, the capital of their Co-op....]4. Autonomy and independence [....Co-ops are autonomous, self-help organisationscontrolled by their members...].5. Education, training and information [...Co-operatives provide education and trainingfor their members, elected representatives, managers, and employees ...and...the generalpublic]6. Co-operation amongst Co-ops [...strengthen the co-operative movement by workingtogether through local, national, regional, and international structures].7. Concern for community [...Co-operatives work for the sustainable development of theircommunities...] Briefing: Housing Co-operatives and other ‘mutual’ housing bodies 6

Appendix Two(a) Summary of key organisations supporting ‘mutual’ housing provision :Birmingham Co-operative Housing Services [See http://www.bchs.org.uk]Building and Social Housing Foundation [See http://www.bshf.org]CDS Co-operatives [See http://www.cds.coop]Community Gateway Association [See http://www.communitygateway.co.uk]Confederation of Co-operative Housing [See http://www.cch.coop]London Federation of Housing Co-ops [191 High Street, Brentford, TW8 8LB, Tel 0208 5609729]National Community Land Trust Networks [See http://www.cltnetwork.org]National Federation of Tenant Management Organisations [See http://www.nftmo.com]National Federation of Arms Length Management Organisations [Seehttp://www.almos.org.uk]National Housing Federation [See http://www.housing.org.uk]Radical Routes [See http://www.radicalroutes.org.uk]:Self Help Housing [See http://self-help-housing.org - in particular Latch and Canopy, inLeeds, and Phoenix Housing Co-op, in London]UK Cohousing Network [See http://www.cohousing.org.uk]Radical Routes have published an informative booklet called "How to set up a housing co-operative", available from Radical Routes, c/o Cornerstone Housing Co-op, 16 SholebrokeAvenue, Chapeltown, Leeds LS7 3HB.(b) Summary of organisations supporting ‘social enterprises’ quoted:For ‘care co-ops’ [See www.careco-ops.org.uk]Community Pubs Foundation [See http://www.communitypubs.org]Co-operatives UK [See http://www.uk.coop]For ‘credit unions’ [See http://www.abcul.org/home]Locality (merger of the Development Trusts Association & BASSAC) [Seehttp://www.dta.org.uk ]Radical Routes [as above] Briefing: Housing Co-operatives and other ‘mutual’ housing bodies 7

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ConsultCIH Briefing: Housing Co-operatives and other ‘mutual’ housing bodies

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