Housing: Co-operative Housing

Lord Shipley Excerpts

Thursday 10th October 2013 Lords Chamber

[Lord Shipley (LD)]

My Lords, I, too, welcome the debate initiated by the noble Lord, Lord Kennedy of Southwark, which is a welcome opportunity to discuss what might be done by developing co-operative housing in the context of our overall housing policy. I also welcome the new Minister, the noble Baroness, Lady Stowell of Beeston; I am sure that she recognises the importance of housing and in particular affordable housing, and how important it is to social inclusion. I wish her every success in her new ministerial position. Since my noble friend Lady Hanham is sitting on the Benches, I thank her enormously for her contribution as a Minister of DCLG for a number of years. It has been hugely appreciated by all of us.

It is clear from opinion research that housing is moving up the list of concerns of the general public; in a recent poll I saw it had entered the top five. It is some years since that was the case. That reflects a growing realisation on the part of the general public that we do not have enough homes to meet need or demand; that owner occupation has been in decline in recent years; that house prices are very expensive; that it is very hard for young people to get on to the housing ladder right across the UK; and that building for social rent has been inadequate for many years, with a million social homes lost since 1977.

I am therefore grateful to the noble Lord, Lord Kennedy of Southwark, for reminding us of a number of things. One is the amount of co-operative housing in Scandinavia—some 18% of homes in Sweden and some 15% of homes in Norway—and the potential that might, therefore, exist in the United Kingdom, where the figure is below 1%. There are also the statutory issues that affect the expansion of the co-operative model here, together with the variations possible under a co-operative model, which I do not seek to repeat.

First, I will put this debate into its context. House prices are rising again and we seem to be at the start of yet another housing bubble. The underlying problem is lack of supply. Housebuilding is less than half of what it needs to be to match the rate of household formation and this imbalance now seems likely to continue for three years at least. Last year saw the lowest house completion rate since 1923. However, since 1990, annual housing completions have never exceeded 170,000 and have averaged 140,000, of which four out of five homes have been for owner-occupation. At present the Government expect to increase the rate of building to 170,000 new homes in 2015, but even if they achieve that, we need to go much further.

Important as Help to Buy is, unless supply is increased prices will rise, putting further pressure on young people and putting the potential of home ownership out of reach for even more of them. Demand will then continue to grow in the private rented sector, pushing up rents to unaffordable levels for many. Despite the 22% increase in private housing starts this year, and despite the many initiatives the Government have taken, which are certainly helping to increase demand, there remains an urgent need for more social housing for rent.

There are 1.8 million families on social housing waiting lists. In addition, many people who are on low incomes and subject to the new under-occupancy rules want to move to a smaller home but they cannot because the smaller homes do not exist. We simply must build more homes for social rent, and if part of the solution is the co-operative housing sector, that is a very good thing, as would be raising the borrowing cap on local authorities, which would also increase the pool of rented homes.

Around a third of households will need to rent for the foreseeable future despite Help to Buy, with its mortgage indemnity or shared equity requiring 75% of a property’s value to be in the form of a mortgage. Inevitably, Help to Buy will reach only those who can afford to pay a mortgage.

The shared ownership proposals recently published by Shelter should be commended, because they would help buyers to take out the maximum share that they could afford on a mortgage, with the remainder rented, so that their share of ownership might be as low as one-eighth, or 12.5%.

We should welcome last month’s announcement on self-build, under which more people who want to start a building project, including affordable home projects, will receive support. It will prove an important element of the Government’s drive to increase affordable housing, with new grants from a budget worth £65 million, and with redundant public sector land available for self-build projects. I understand that some 50 councils are already coming forward with sites. In the past year some 11,000 homes were self-built. This could double within a decade. Presumably many of these self-build homes could be constructed on the co-operative principle.

The Government have done a lot to promote localism, and co-operative housing should be seen as part of their localist agenda. Devolution comes in many forms. In housing, owner occupation is the purest form of devolution from the state because it empowers the individual. Being a tenant dependent on a landlord is not empowering, despite a variety of legal protections. Co-operative housing, too, should be seen as empowering for tenants, because those tenants would exercise control, not a landlord.

There are three reasons why I hope the Government will consider further support for this sector. First, it could increase housebuilding. Secondly, it would exist for the benefit of its members, not of somebody else. As we have heard, a fully mutual housing co-operative has all its tenants as members, and all its members as tenants. They decide equally and together how the co-op is to be run. The third reason is that the sector is a success. As we have also heard, it performs well in terms of member and tenant satisfaction.

However, I understand from the noble Lord, Lord Kennedy, and from some of my reading, that there is not full recognition of co-operative housing in law, because tenure is based on landlord and tenant law, which limits the ability of true co-operative principles to work. In law, repairs lie with landlords because members are legally defined as tenants. That does not seem right. A dedicated new form of tenure would help to create a truly co-operative environment, building on the successes of a wide variety of existing co-ops, tenant management schemes, trusts and mutuals.

There are currently some 200 housing co-operatives registered with the Homes and Communities Agency to provide affordable homes and, as we have heard from the noble Lord, Lord Kennedy, they are building around 25,000 a year. There are 200 housing co-operatives registered, but it strikes me that there could be many more. Just think what that might mean for the potential for an increased housebuilding programme. If there were many more housing co-operatives, think of the gain in terms of sustainable communities—because we would be building social capital, with all that that implies for the strength of our neighbourhoods.