Co-ops from house shares – a new right to create community housing

Anyone who has shared a rented house will have sat down at some point and worked out how much they were paying in rent collectively, and how much extra profit their landlord must be making from them.

Right to Co-op report cover
Download the Right to Co-op report

My new report looks at a new way to help people who rent rooms in house-shares and flat-shares with a ‘right to co-op’. Under this new idea for national policy, people already renting together would get the legal right to set up a co-op that buys their home at a discount from their landlord, for them to rent more reasonably and have more control over their homes.

As a London Assembly Member, I’ve commissioned research to look at how this idea could work, and how the Mayor of London could get behind it and give practical support to people who want to buy out their landlords and set up a co-op, even under current laws.

The research report, A Right to Co-op for Private Renters, shows how, if people switch from renting from a landlord to a co-op they control, they would gain rights and protections rarely on offer in the private sector, including more affordable rents, controls on rent rises, and secure tenancies.

Read the report here

A right to co-op could fill a gap in current policies for community-led housing, which focus only on groups wanting to build new homes, looking instead at getting existing homes out of the extortionate private rented market and making them permanently affordable and community-owned instead.

The Mayor’s Housing Strategy puts a high priority on getting a fairer deal for private renters, and he is supporting community-led housing groups to build new homes, but he shouldn’t ignore the potential for co-ops to take over existing homes to create more truly affordable homes.

The research also looks at how a traditional ‘right to buy’ for private renters could work, but finds only the richest 20 per cent of renters could benefit from this, and these homes would not stay permanently affordable once owned in this way.

Focused on house-sharers, a right to co-op is more viable and would support more people to win more control over their homes. Co-ops already exist but they’re rare and places are in very high demand.

This idea could help a large number of long-term renters who want more security. The report shows 5,000 homes a year could become co-ops.

In a co-op you don’t have to worry about your whole life being tipped upside down because your landlord suddenly wants to sell, or doubles your rent. Co-ops focus on people not profit and the Mayor should be doing all he can to help them take over more homes in London.

Why did I look at this?

A centre right think tank has recently proposed a scheme to give a tax break to landlords who sell properties to sitting tenants if they split the gain with their renters, but due to London’s overinflated house prices this measure would help only a tiny fraction of higher earning renters, giving help towards deposits of less than £20,000.

A Right to Co-op for Private Renters, examines the benefits of a full ‘right to buy’ style discount of up to £103,000 and finds that even this would only be able to be used by the top 20 per cent of earners in privately renting households, and benefit only these individuals.

In contrast, a Right to Co-op with the same discount would help more of the worst-exploited tenants in houses of multiple occupation and would permanently remove homes from the private market and keep them affordable for good.

The report makes several recommendations for steps the Mayor could take under current legislation:

  • Promote his existing Community-Led Housing Hub to renters for support in setting up a co-operative and buying a suitable home, including advertising on the TfL network.
  • Provide low cost five-year loans to help co-ops buy properties. After those five years the co-op would have gained sufficient equity in the property, and have a financial track record, to be able to secure better deals from ethical and other lenders.
  • Offer capital grants to co-ops that are able to make a Living Rent or a Social Rent viable.
  • Work with existing housing co-operatives in London to leverage their considerable asset base (worth hundreds of millions of pounds) and their cash holdings to support new co-operatives.
  • Provide loan and grant funding through his Innovation Fund and the Community Housing Fund for property improvements and extensions.

The latest estimates of housing need in London show that, each year, at least 31,000 low-cost rent and 12,000 intermediate rented homes are needed over the next 25 years. Converting existing full market-price homes to affordable homes could contribute to fulfilling this need and help improve life for thousands more private renters.

The Kindling Housing Co-operative in Oxford is an example of a successful co-op of this kind, highlighted in the report, which has bought its first house recently.

Kindling told me: “Kindling Housing Co-Operative created a financially stable, accessible, and safe home for people in the most expensive housing market in England. We couldn’t have done it without other co-ops and the support networks they create.

“Co-operatives are an essential part of the solution to this country’s housing crisis. We need our representatives—on councils, in cities, and in Parliament to put their weight behind housing that supports people.”