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David Rodgers Executive Director President CDS Co-operatives ICA Housing

Challenges for housing co-operatives in the UK. David Rodgers Executive Director President CDS Co-operatives ICA Housing www.cds.coop www.icahousing.coop. National Retail Consumer Conference 2011. The plan for this presentation:. 4 sections:

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David Rodgers Executive Director President CDS Co-operatives ICA Housing

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  1. Challenges for housing co-operatives in the UK David Rodgers Executive Director President CDS Co-operatives ICA Housing www.cds.coop www.icahousing.coop National Retail Consumer Conference 2011

  2. The plan for this presentation: 4 sections: • An overview of co-operative housing in the UK – the report of the Commission on Co-operative and Mutual Housing. • A look at the new financial and political realities in which we are working, including a review of the impact of the financial crisis on housing markets in the UK and Europe. • The challenges for housing co-operatives in the context of spending cuts and Government policy. • The potential of consumer societies to help meet the housing needs of their communities.

  3. An overview of co-operative housing in the UK Main sponsors:

  4. An overview of co-operative housing in the UK • The co-operative housing sector is tiny – just 0.6% of total housing stock of 16 million homes • Commission identified: • 836 co-operative and mutual housing organisations • Managing over 169,000 homes • 92,000 (54%) owned by co-operative/mutuals • 77,000 (46%) managed by tenants • 62% registered with UK housing regulators • 91% in England, 5% in Scotland, 3% in Wales • 54% in London (71% of TMOs) – rest mainly in other urban areas

  5. Small but highly successful– the Commission’s findings • Co-op tenants are the most satisfied of all social housing tenants on every measure (Source Tenant Services Authority) • Provide a democratic, resident empowered model encouraging a greater stake and pride in residents’ homes and immediate community • Meets many of the factors behind home ownership aspirations e.g. providing a decent home, quality housing and support services and security of tenure and environment • Provides mutually supportive communities, helping members to skill up, get work and take control of their lives and neighbourhood • Encourages wider community involvement – adding value e.g. trustees and school governors • Retains homes for the intended stakeholders e.g. social rent, key workers, the elderly • Widens tenure choice e.g. within the intermediate market tenure where households are unable to sustain individual home ownership

  6. Some Comparative European Statistics: Housing co-operatives represent:  • In Turkey: 25% of the total housing stock with 1,408,603 units • In Sweden: 18% of the total housing stock with 750,000 units • In Norway: 15% of the total housing stock with 320,000 units • In Germany: 10% of the total rental housing stock with 2,200,000 units • In Austria: 8% of the total housing stock with 334,000 units • In Portugal: 1/3 of the social housing portfolio with 180,000 units • In Egypt: 25 million people live in housing co-operatives – approx 33% of population

  7. Norway Norway Brasil Canada Poland

  8. The new financial and political realities in which we are working, and a review of the impact of the financial crisis on housing markets in the UK and Europe

  9. The new financial reality: • Global financial crisis – loss £1,800 bn (£1,800,000,000,000) • UK Government debt = £952 bn • 64.6% of GDP • £15,867 for every man woman and child • Not as bad as Ireland – debt €93.4 bn = 94% of GDP, €20,989 pp • "To paraphrase a great wartime leader, never in the field of financial endeavour has so much money been owed by so few to so many. And, one might add, so far with little real reform." Mervyn King – Governor of the Bank of England

  10. The cost to the Government

  11. The impact on the housing markets in UK and Europe • Mortgages in short supply – and will remain so • House prices falling in real terms • Low rate of transactions in housing market • Higher deposits required for first time buyers • Housing construction down from 209k units completed in 2007 to projected 126k in 2011(last Government target 246k) • Age of first time buyers increasing • Fewer new households aspiring to home ownership – many now consider it unattainable

  12. 250 240 230 220 210 200 190 180 170 160 150 140 130 120 110 100 90 80 giu-00 dic-00 giu-01 dic-01 giu-02 dic-02 giu-03 dic-03 giu-04 dic-04 giu-05 dic-05 giu-06 dic-06 giu-07 dic-07 giu-08 dic-08 giu-09 dic-09 giu-10 Residential Property Prices in Countries of Europe (source CRESME, Italy) index 2000 = 100 Spain France (existing) Sweden UK Belgium (existing) Norway Italy Euroa area Vienna Ireland Austria ex. Vienna Portugal Germany (new) Germany (existing)

  13. 250 240 230 220 210 200 190 180 170 160 150 140 130 120 110 100 90 80 Residential property prices in UK, Ireland and Spain (source CRESME, Italy) index 2000 = 100 Spain UK Ireland

  14. The new political reality:

  15. Key government policies: • Housing benefit cuts - 50% to 30% of market rents • Other benefit cuts – including cut of 11.5% to Supporting People Budget • Cuts in capital housing budget of 63% (National Affordable Housing Programme £4.4 bn, of which only £1.9 bn for new schemes ) • “Affordable rents” – 80% of market • VAT increase • Abolition of TSA – new regulation regime • Loss of security of tenure for new tenants • Changes in planning law and abolition of RDA’s and regional planning targets • The Localism Bill and Localism Agenda

  16. Key government policies: The dawning of the Age of Austerity!

  17. Will the Coalition Government’s commitment to ‘Localism’ make it easier for communities to provide new affordable homes? • Building affordable housing is going to be very difficult in the new world of austerity in which the government axed the social housing capital budget by 63% over the next 4 years • Agree with David Orr that: “the Government's decision to slash the housing budget by 63%, and pay for new low cost homes through rent increases, will mean that no 'real new social homes' will be delivered during the next spending period, beyond those already in the pipeline, and lead to thousands more tenants being trapped on benefits” • The Coalition Government’s aim to “build up to 150,000 homes at affordable rents in the next 4 years”– defined as 80% of market rent/local housing allowance show an acute poverty of ambition

  18. The challenges for housing co-operatives in the context of spending cuts and Government policy

  19. The challenges for housing co-operatives: • But as Will Watkins famously said “Necessity is the mother of Co-operation” With challenge comes possible opportunities: • The “Big Society” • The Localism Bill and Community Right to Build • Positive welcome given to the CCMH report

  20. The Big Picture Story… The Big Society “Too much has been imposed from above, when experience shows that successdepends on communities themselves having the powerand taking the responsibility. It’s no good officials in Whitehall or even the Town Halltelling people what is needed in their street.” …. everyone has a stake based on equal rights and where they pay their dues by exercising responsibility in return, and where local communities shape their own futures.

  21. What does David Cameron mean by the Big Society? “The Big Society is about a huge culture change… …where people, in their everyday lives, in their homes, in their neighbourhoods, in their workplace… …don’t always turn to officials, local authorities or central government for answers to the problems they face … …but instead feel both free and powerful enough to help themselves and their own communities. It’s about people setting up great new schools. Businesses helping people getting trained for work. Charities working to rehabilitate offenders. It’s about liberation –the biggest, most dramatic redistribution of power from elites in Whitehall to the man and woman on the street”. Prime Minister David Cameron MP, 19 July 2010

  22. What is behind the ‘Big Society’ Agenda – 4 possible explanations? • “it is a fig-leaf for cuts’ (Caroline Flint MP – Shadow Secretary of State for Communities and Local Government) • it is a cynical attempt to move into a traditional areas of Labour politics as part of attempts to hold the political centre ground and gain/retain the support of swing voters • the Government’s enthusiasm is a rational and welcome step on the road to the further full privatisation of public services (Financial Times editorial, 16 February 2010) • it is a genuine interest in the social and economic potential of co-operatives and civil society organisations

  23. The challenges for housing co-operatives: • Our ability to use grant finance to develop co-ops has ended – that is the reality. • Can we rise to the challenge and find new and innovative ways providing affordable co-op housing in local communities, perhaps by adapting co-op housing systems in other countries? • Can we succeed in securing real political support for Community Land Trusts? • Can we develop new tenures, like Mutual Home Ownership and Mutual Retirement Housing? • Can we develop new sources of finance for co-op housing?

  24. Basic Idea „First Saving, then Building“ (Basic cooperative idea: Help for Self - Help) Business Model since 1885 (…„there was no housing subsidy“) Financing for Housing Co-operatives ICA Housing Symposium 07./08. Oktober 2010 Dipl. Kfm. Franz-Bernd Große-Wilde MRICS

  25. Basic Idea Apart from using the housing unit, members and their family have the possibility to invest their savings in a saving institution, which belongs to the housing cooperative (Sparbau: Cooperative Share = 1.278 € (Obligatory saving for persons, who are just saving= 150 €)) Dipl. Kfm. Franz-Bernd Große-Wilde MRICS

  26. Will housing co-operatives rise to these challenges? Sir Bob Kerslake In the future “success is only likely to come to those who are willing to innovate with new models for funding, land development and tenure”.

  27. The potential of consumer societies to help meet the housing needs of their communities

  28. The potential of consumer societies to support the development of housing • Adopt a strategic approach to disposal of property assets that puts social justice in creating new affordable homes at the heart of your property management strategies. • Use your assets to support the development of local Community Land Trusts. • Help us to achieve our desire to establish a new mutual Co-operative Housing Bank by: • investing equity capital in it and investing funds • Aiding it achieve FSA registration and a banking licence

  29. Challenges for housing co-operatives in the UK David Rodgers Executive Director President CDS Co-operatives ICA Housing www.cds.coop www.icahousing.coop National Retail Consumer Conference 2011

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