Got net-zero news, project updates, or product launches to share? Think tank urges UK to adopt co-operative housing model from Canada and Scandinavia.
Emulating the co-operative housing sectors in Canada and Scandinavia could hold the key to alleviating the housing crisis in the UK, a new paper released today suggests.
Canada’s co-op sector dwarfs that of the UK, with co-ops accounting for nearly a quarter of all Swedish homes. In a recent paper published by the cross-party think tank, the Social Market Foundation (SMF), the disparity between the UK and other English-speaking nations, as well as Scandinavia, is brought to light.
A housing co-operative functions as a non-profit and democratic organisation controlled by its residents. These co-ops offer a variety of forms with different levels of resident control and ownership, often charging an initial fee. In general, they combine secure tenure with more affordable rents compared to the private rental sector.
In the UK, housing typically falls into three categories: owner-occupation, social housing, and private renting. However, each faces its own challenges – declining home ownership, oversubscribed social housing waiting lists, and lack of security for private renters. Therefore, exploring alternative models, including co-ops, is crucial, according to the SMF.
Currently, co-ops make up just 0.2% of the UK’s housing stock, falling behind Canada (0.6%), Ireland (0.3%), New Zealand (0.2%), and Australia (0.1%). In stark contrast, 14.5% of housing in Scandinavia is co-operative, with Sweden leading at 23%.
Co-operative housing presents a myriad of advantages, such as more affordable rents, higher resident satisfaction, and broader social accomplishments.
- In Canada, co-op rents are two-thirds of private sector rents and have experienced slower increases.
- Research from Canada indicates that co-ops have lower operating costs, up to 14% less than other non-profit housing forms.
- In the UK, 88% of co-op tenants expressed satisfaction compared to 77% of housing association or council residents.
- Despite the demands on residents to participate, co-ops present opportunities for skills and leadership development, as highlighted by the SMF.
The growth of co-ops faces numerous hurdles that the government must address, such as legal obstacles, financing challenges, and construction issues. To catch up with Canada and later Scandinavia, these barriers need to be tackled. For example, the Co-operative Societies Bill 2022 in Ireland aims to simplify the process of starting a co-op by reducing the required number of people from 7 to 3.
Financing emerges as a major challenge, with UK lenders often unfamiliar with cooperative models, leading to reluctance in providing loans. To counter this, the SMF suggests implementing state-subsidized social rental loans, a strategy successfully employed in France for funding cooperative housing projects.
One of the key challenges faced by co-ops is acquiring funding for property purchases. The lengthy process of assembling different grants and lending streams can result in missed opportunities when competing against cash buyers. To mitigate this, co-ops should be granted first refusal on properties or land being divested by the state or private entities.
Today’s paper by the SMF is part of a series focusing on international housing policy lessons for the UK. In particular, this publication looks at policies adopted in English-speaking countries and Scandinavia. The project, funded by the Nuffield Foundation, delves into homeownership, renter support, and forthcoming planning reform.
The SMF offers recommendations in the paper for rejuvenating and expanding two key housing avenues – social housing and co-operatives – to address the evolving tenure landscape and alleviate the housing crisis:
- Reviving the social housing sector requires long-term funding plans and the discontinuation of the ‘Right to Buy’ scheme.
- Supporting co-ops entails enhancing legal status and rights, facilitating land access for construction, and establishing a lending entity to distribute loans to cooperative housing projects.
Niamh O Regan, a researcher at the Social Market Foundation, emphasised the necessity of providing viable alternatives to renting and homeownership. With renting becoming a more enduring choice and fewer individuals able to enter the property market, policymakers must consider bolstering social housing and fostering co-operative housing growth.
Dr. Catherine Dennison, programme head at the Nuffield Foundation, pointed out that co-ops present a potential solution to the housing challenges awaiting the next UK government. The SMF’s analysis illustrates that co-ops can be cost-effective and merit scaling up in the UK. The Foundation’s backing of this project ahead of the general election aims to furnish analytical context for formulating housing policies and pledges by political parties, aiding voters in making informed decisions.
