Alternatives: Housing co-ops
By Tom Anderson and Beth Lawrence | Corporate Watch Magazine # 50 | Autumn/Winter 2011
As the state cuts housing benefits, criminalises squatting, makes social housing more insecure and excludes homeless people from its duty of care; private developers, construction companies and estate agents are profiting from the lack of options available to the majority of people looking for a roof over their heads. There is more need now than ever for viable alternatives; one option is setting up a housing co-op. Tom Anderson and Beth Lawrence outline different types of co-op and look at some case studies.
“Cooperatively owned housing is a resource rather than a commodity. By setting up housing cooperatives we are empowering ourselves to take control over one of the most fundamental aspects of our lives.”
A housing co-operative is a group of people who collectively own and manage their own housing, essentially a housing association managed by its tenants. Co-op members own their home, set their rents and manage building maintenance and disputes. Co-ops allow people who would otherwise be at the mercy of private landlords, to regain some control over their lives and make their living environment a resource rather than a commodity.
This often means people can afford to buy a property, whereas by themselves or in a smaller family unit they would be unable to do so. However, it is not an alternative way for would-be first-time buyers to get a foot on the property ladder, as the fully mutual co-op model means none of the individuals owns the property, rather the co-op as an entity does. Fully-mutual cooperatives are housing co-ops where members are effectively both landlord and tenant, all tenants are co-op members, and all members are tenants or prospective tenants. Fully mutual co-ops provide autonomy and security of tenure, which is becoming a scarce resource at the moment due to the housing crisis.
Co-ops are an alternative to the private sector, not to the public sector. Housing cooperatives should not be posited as an alternative to forms of social housing that local councils have a duty to provide. However, in some areas co-op schemes have been offered as a sweetener to placate campaigners angry at proposed sell-offs of council stock. For example, in Brighton and Hove in 2007, the ‘Community Gateway’ model of cooperative housing, a housing model put forward by the Confederation of Cooperative Housing, has been presented by local councils as an alternative to council housing.
However, co-ops are well placed to provide an alternative to an increasingly bureaucratised private sector. Private tenants are asked for more and more documentation and sureties in the form of deposits, guarantors, references, proof of income or to show that they have a good credit rating. These processes present an, often impassable, obstacle, to low-waged people.
Co-operatives often do not require prospective members to jump through these hoops.
Housing cooperatives are set up for different reasons, to fulfil different needs and encompass many different ways of living. Cooperative living is often communal, but can also cater for self- contained accommodation and independent family units. Some co-ops are intentional communities with a clearly defined vision of how to operate collectively. Co-ops can be communities of resistance, whose members are committed to action for social change, or simply places for people to live free of exploitation by private landlords. Co-ops often enable people to live in a more environmentally sustainable way, because tenants share household goods and less energy is required to heat one home than lots of separate ones. Owning the property also gives the co-op the opportunity to make changes to the building itself to reduce environmental impact – improving insulation or installing solar panels for example – something most renting tenants cannot do. The benefits of co-ops can go beyond those living in the house, with co-ops reclaiming old community buildings, such as pubs and shops.
In 1974, the Labour government passed a Housing Act allowing state funding to be given to non-profit housing schemes, such as co-operatives. By the mid-1980s hundreds of co-ops had been set up. This went hand-in-hand with the emergence of housing action groups, tenants associations and neighbourhood and community councils as people attempted to gain more control over their housing.
However, obtaining state funding has now become almost impossible. In order to obtain funding, co-ops must register with the Tenant Services Authority (the TSA, previously the Housing Corporation). Co-ops which have managed to register with the TSA and obtain state funding often find themselves hamstrung by the levels of bureaucracy tied in with the grant.
Other co-ops are set up as management cooperatives. These co-ops pay rent to a body, such as a housing association, rather than owning property. This allows co-ops to obtain affordable rents, but limits autonomy. However, the fact that these co-ops are legally incorporated allows them to have a degree of control, managing the maintenance of buildings and setting the rent which members pay. Housing co-ops set up in this way are effectively housing association tenants and, as such, give up a lot of the autonomy that tenants of self managed co-ops have.
Increasingly, co-ops have opted to avoid state funding entirely. These independent, often fully mutual, co-ops are set up by groups of people coming together, registering as an Industrial & Provident Society and collectively applying for loans. They are owned, managed and controlled democratically by their members and tenants. This process has been aided by the formation of networks of solidarity supporting the setting up of co-operatives. In the late 1980s, several cooperatives grouped together to form a mutual aid network, Radical Routes. Radical Routes is a secondary cooperative, which lends money to its member co-ops and engages in skill- sharing, mediation and the registering of new co-ops.
Even though many smaller housing co-ops have demutualised and merged with larger housing associations, the co-op sector remains resilient. Yet, the sector has been largely forgotten by housing policy makers. It seems in today’s housing climate, housing co-ops can perform a key role in providing affordable housing, and the more co-ops that are set up, the more accessible they will become.
Co-op members have used the security provided by cooperative housing to run social centres, organic farms, workers co-operatives and provide accommodation to migrants. The formal and informal networks created by co-ops over the years have brought many benefits to wider communities, not just those living in co-ops. Being free from exploitation by landlords increases our capacity to work for social change.
Case Study: Phoenix Community Housing Co-op
Not all housing co-ops operate discretely as ownership or management co-ops. Phoenix Community Housing Co-op operates a mixed strategy incorporating both models and displays the contradictions that would be expected of this approach. It was formed in 1980 by the Friends of the Western Buddhist Order (FWBO) and Hackney council to provide accommodation for homeless young people, and many ex-squatters. Phoenix initially acted as a management co-op for Hackney Council and subsequently Poplar HARCA and The Peabody Trust, amongst others. In 1993, Phoenix purchased its first long term properties – ten properties from Hackney Council – and now maintains 16 properties offering long term secure accommodation to 57 members. Yet, it operates primarily as a stop gap housing solution whose aim is to ‘provide homes for single people on low incomes who are homeless or at risk of homelessness’.
The co-op has experimented with different models in order to finance longer term accommodation, such as its ‘Housing Plus’ scheme, which involves returning to use stock declared long term ‘management void’ by Poplar HARCA. This is cost effective for Phoenix as the labour for renovation comes from the those already involved in the co-op. In return for bringing these properties back into use, Poplar HARCA grants a seven year lease and a reduced licence fee. However, after the seven years are up, the properties will presumably return to HARCA’s own stock and there is no guarantee that they will remain as social housing and not be subject to future privatisation initiatives. This is one of the contradictions of operating a mixed strategy: in order to achieve the short term goal of acquiring relatively secure housing cheaply, Phoenix is likely to loose out in the longer term by effectively providing free labour to renovate what are essentially local authority properties, which may then end up being privatised with someone else pocketing the profits. This may not have a direct negative effect on Phoenix, but it may end up contributing to the transfer of what was once public housing into private ownership.
Despite being set up mainly by ex-squatters and housing a high proportion of ex-squatters, the management model employed by Phoenix is open to political manipulation and can act to increase precarious housing. The majority of accommodation provided by Phoenix, around 203 beds, is mediated through housing associations and local authorities. This means Phoenix pays a licence fee to an organisation to then rent out, on a short term basis, properties often earmarked for redevelopment. The consequence of this is that contracts are temporary, requiring just one months termination, and often in areas where gentrification through ‘mixed housing’ is being planned by local authorities. This is quite transparent on the Brownfield estate in Poplar where Balfron Tower is due to be renovated and sold off as private housing (in order to fund other mixed housing developments on the estate) and Phoenix tenants, with their flexible short term contracts, are replacing long term tenants as decanting begins. Phoenix notes on its website: ‘When the landlord wants the property back Phoenix will serve the member with a Notice to Quit (NTQ), ending our tenant’s tenancy, and make arrangements to give vacant possession to the landlord on an agreed date. The landlord has no responsibility for re-housing our members’.
As a Registered Provider of social housing, Phoenix is not allowed to charge deposits and lacks autonomy when dealing with the provision of short term units. For some people this lack of a deposit is extremely beneficial, housing those who otherwise would be left with squatting as their only option. However, Phoenix has acted to evict squatters from properties it has managed, paving the way for gentrification. One example of this is Ida street on the Brownfield estate where squatters were told a property they were legally occupying was needed to house a remand prisoner on his release. Acting on this information, the squatters vacated the building only for the whole road to be enclosed and demolition works to begin. This highlights more of the contradictions with this model, whereby the needs of local authorities may be in direct contrast with the needs of co-ops, like Phoenix, and their members.
Corporate Watch carried out a series of interviews with a previous Phoenix member, Laura, during October 2011, which helped to illustrate some of these issues. Laura lived with Phoenix for three years, all of it in short term accommodation, mostly on the Nagshead estate in Hackney, which is run by the Peabody Trust. In 2008, all the Phoenix tenants on the estate were forced to move out into substandard accommodation. They were given less than the required months notice. They were decanted in order to house others who had been evicted from their accommodation in Clay’s Lane housing co-op, because the Clay’s Lane tenants had been evicted due to the Olympics, yet a public promise had been made that no one would be made homeless due to the Olympics. The Phoenix tenants were moved on once more into properties on the Leopold estate on Bow Common Lane, which had been rejected as unfit by Poplar Families homeless unit, yet deemed acceptable by Phoenix and Poplar HARCA. Those Phoenix tenants who fought the forced removals were demonised as ‘undeserving short term residents on benefits’ as opposed to ‘good hard working council tenants’, meaning the former could be more easily isolated and dispersed from their previously stable community. For a co- op like Phoenix, ‘problem’ tenants can be kept on short term contracts as they have no obligation to re-house anyone.
While a co-op like Phoenix provides a valuable resource for those who are about to fall out of the net of housing provision altogether, the two models do not fit comfortably with each other. Local authorities use short term housing to meet their own political ends. This usually amounts to smoothing over the decanting of former council properties in order for them to be ‘redeveloped’ as ‘mixed housing’. The only secure housing solutions are long term, self owned and self managed ones which enable the needs of members to be met, rather than playing contradictory political games.
Cornerstone Housing Cooperative
Number of people housed: 16
Established: 1993. Purchased through a mortgage combined with loanstock. Government funding: No
Rent: one third of income
Type of accommodation: Single rooms in shared houses. Set up as a base for eco-activists and has an activist resource centre in the basement. Cornerstone also houses Footprint, an independent worker’s cooperative.
Quotes from members: “it’s hard work having the responsibility of managing a property and also maintaining a collective”
The Drive Housing Co-operative
Location: Walthamstow, north-east London Number of people housed: 10
Established: 2010, property purchase completed in July 2011. Purchased through a mortgage combined with loanstock.
Government funding: None
Rent: average £445 per month, depending on size of room
Type of accommodation: Ten-bedroom shared house with extensive communal spaces (e.g. library, conservatory, meeting/workshop space, guest bedroom) and an urban garden.
Quotes from members: “Living in a housing co-op is amazing, but it does require a lot of work – and setting up a new co-op even more so. Meetings are seen as a necessary evil, but building real consensus does take time. Also, especially in London, there’s a danger that people go off and do their own stuff and don’t see that much of one another, so it’s important to spend time with fellow co-op members outside of meetings too.”
“Often housing co-ops are started up by a group that are already friends, but the co-op needs to survive when original members move on, so building a community – not just a friends’ house-share – is required.”
Dryad Housing Cooperative
Number of people housed: 20 adults and 6 children in self contained houses.
Established: late 1990s. Dryad was originally a council funded self-build project for young men. However, the houses fell empty and were squatted. The council agreed to rent the properties to the squatters through a housing association.
Government funding: The original project was funded Rent: An affordable rent for the area
Type of accommodation: Families and single people. Sustainable community with a community orchard, water butts, compost bins etc.
Quotes from members: “Dryad is a fantastic place to live, you get the flavour of being in the country but near town and with a commitment to sustainability. There have been conflicts that have gone on over the years but things seem to get sorted out. Although we rent from the council we are still very much autonomous. We are a close community and organise community events together”
Out of Town Housing Cooperative
Number of people housed: 15 adults and 3 children in 3 properties
Established: Originally set up in 1996. The founders took over a squatted building and then came to an arrangement with the landlord. As part of the agreement Out Of Town (OOT) became a management cooperative renting from a housing association under a shortlife lease. In 2007 the housing association rehoused OOT in 2 other council properties. In 2009 OOT obtained loans and bought a house.
Government funding: No.
Rent: £303 per month
Type of accommodation: Shared flats .
Two Piers Housing Cooperative
Number of people housed: 68 people in 6 properties Established: 1978
Government funding: Yes
Rent: around £48 a week including council tax
Type of accommodation: Shared flats and houses combined with self contained accommodation for single parent families.
Quotes from members: “Two Piers provides low rents and a stable environment but, because of its size and bureaucracy its members can feel disempowered”.
Location: Castle Douglas, Scotland
Number of people housed: 23 members and 6 children
Established: 4 families from London sold their properties and bought the co-op outright. In 1987 the community became a co-op.
Government funding: The setting up of the co-op was not government funded. The co-op was registered with Scottish Homes (the Scottish counterpart of the Housing Corporation) in an attempt to obtain government funding for expansion but this attempt to obtain funding failed due to bureaucracy. One of Scottish Homes’ stipulations was that, in order to register, the rent would have to increase. The co-op refused. The co-op has received some government grants for Rural Stewardship.
Rent: £90 a week plus a requirement to undertake work for the co-op. The co-op has a policy of rent parity.
Type of accommodation: One large building plus several outbuildings, a hydroelectric project and a farm on 140 acres of land. The housing co-op supports a worker’s co-op, the Laurieston Hall People’s Centre.
From the co-op’s website: “Co-operation is our common ideology; under that umbrella we lean this way and that, are generally better at dealing with tomorrow than next year, are supportive of each other as individuals as well as co-op members… and we try to have a good time!” Many thanks to the various members of housing co-ops interviewed for this article
Radical Routes – www.radicalroutes.org.uk
Catalyst – catalystcollective.org – provides registration services to new co-ops
Diggers and Dreamers – www.diggersanddreamers.org.uk – Lists co-ops and opportunities for communal living in the UK
Confederation of Cooperative Housing – www.cch.coop
 Radical Routes, How to set up a housing cooperative, 1997, p.5.
 For more on the Community Gateway model see www.cch.coop/gateway/index.html.
 The Loan stock system is a system of ‘fixed-term’ loans. In other words, people lend money to the co-op for a set period. The co-op pays interest to the investor ‘loan stock holder’. Usually this is paid direct to the investor at the end of each year. At the end of the set period, the investor is paid back in full. The loan stock is not secured on the house but is financed by rental income instead.
 www.phoenixhousingcoop.org/index.html Business plan document available for download here.
 www.phoenixhousingcoop.org/index.html Sumner House document available for download here.
 www.coopfinance.coop/2011/08/self-help-co-op-provides-housing-and-training/  www.phoenixhousingcoop.org/aboutus.htm