Written evidence submitted by the Confederation of Co-Operative Housing [RTB 084]
1 The Confederation of Co-operative Housing |
1.1 With a membership of 160 co-operative and mutual housing organisations, the Confederation of Co-operative Housing has been the representative body for co-operative and mutual housing in England and Wales since 1994. Most of our members are Registered Provider housing co-operatives in England, but our membership also includes several large mutual housing associations and some tenant management organisations.
1.2 The CCH works in partnership with other National Tenant Organisations to produce guidance and information on tenant involvement activities. In particular, earlier in 2015, we produced the An Investment not a Cost report for the NTOs and the DCLG, examining the business benefits of involving tenants.
1.3 We are also working with partner organisations – the National CLT Network, the Cohousing Network, the Building and Social Housing Foundation and others on a project funded by the Nationwide Foundation to examine how to scale up community-led housing to be able to make a much more significant contribution to housing needs across a range of tenures. We are also working closely with the Welsh Government and the Wales Co-operative Centre to deliver their national co-operative housing programme.
1.4 To enable us to contribute to this inquiry, since the beginning of August, we have been running a survey of our membership. So far we have received 89 responses – 85% from tenant members of co‑ops (the rest from staff or others who support our sector). We refer to issues raised by our members in this survey in our response.
2 Our key summary points about the future of associations inquiry |
2.1 Many respondents to our survey expressed considerable concern about the direction of travel of recent Government changes – concern about the social housing sector generally, about changes to welfare benefits, about the introduction of the Right to Buy, about rent reductions, and about the introduction of Pay to Stay. Our response however focuses on issues that specifically relate to the co‑operative housing sector. The co-operative housing sector is substantially different from the housing association sector in that the organisations in our sector are democratically owned and controlled by members who in most cases are the tenants and residents living in the homes.
2.2 Right to Buy – our members clearly consider the potential introduction of Right to Buy in Registered Providers as a very significant threat to the co-operative housing sector, most particularly highlighting the damage that could be done to the community fabric and business plans of housing co-ops if a Right to Buy is introduced for housing co-op members.
2.3 Because housing co-operatives are different to housing associations, it is not clear whether Ministers are intending to specifically repeal the specific housing co-operative exemption to the Right to Buy. The CCH has written to the DCLG to request clarification about Ministerial intentions and to formally request that housing co-ops remain exempt.
2.4 If Ministers are intending that a Right to Buy be extended to housing co-operative members, we have also asked the DCLG to clarify a number of complex legal issues relating to our distinct tenancy agreements.
2.5 The CCH is also participating in a joint initiative with other national community-led housing organisations to request an exemption for the whole community-led housing sector and to draft a legal definition of the sector to enable this to happen.
2.6 Rent reductions – many of our members have expressed concerns about Government directives to reduce rents. Several consider that they have effectively maintained low rents for many years through their co-operative endeavours, and should not be required to reduce rents further. Many of our members have advised us that they are able to manage the rent reductions, although those who have kept particularly low rents are expressing concern about their ongoing viability and reducing services.
2.7 Our mutual housing association members have expressed concern about rent reductions, because as transfer housing associations, their business plans were predicated on planned rent increases. However, those we have had dialogue with have indicated that they will be able to manage the rent reductions.
2.8 Pay to Stay – many of our members have also expressed concern about Pay to Stay, suggesting that it will be divisive within the community orientated nature of co-ops (particularly in London where graduation to market rent levels could be dramatic). Some suggested the voluntary contribution of co-op members should also be taken into account. Concern was also expressed about potential additional administrative costs for Pay to Stay. However, some co-op members have expressed the view that it is right to charge some reasonable graduation in rents dependent on income levels. It is difficult to draw conclusions on Pay to Stay until details on the scheme are provided.
2.9 Welfare reform – considerable broad concern has been expressed by our members about welfare reform, particularly with regards the introduction of Universal Credit and the ability of young people to claim housing benefit. Our perceptions are that co-operative housing organisations managed welfare reform changes under the previous Government well.
2.10 We explore each of the above areas in more detail below.
3 Right to Buy |
3.1 Three quarters of respondents to our survey (primarily tenant members of housing co-ops) considered that the Right to Buy should not be extended to housing co-op members. Only 19% considered it should apply in our sector (one respondent suggesting it should only apply to members who had been housed for 20 years and another suggesting that those that had bought should not be allowed to sell homes for a minimum of 5 years).
3.2 81% considered that the Right to Buy would damage co-op business plans, whilst 79% considered it would damage co-op communities. A typical quote received was “the Right to Buy would result in conflict between co-op members and ex-members. The co-op would be doomed and all the good work done over the years would be lost”. Some respondents noted that co-ops are already a form of home ownership that the Government should be exploring as a wider housing option.
3.3 The CCH is not currently clear where the Government’s Right to Buy manifesto commitment was intended to extend to housing co‑operatives because our members are not housing associations. Housing co‑ops operate in substantially different ways to housing associations and are separately exempt from the Right to Buy through Schedule 5 of the Housing Act 1985 Paragraph 2.
3.4 The CCH has formally requested the DCLG to clarify Ministerial views on this matter and that the housing co-op exemption is maintained. Removing particular co-op homes would weaken the community fabric of co-ops and, with most co-ops operating in inner city locations where there is very limited land availability, it would not be possible for co-ops to replace homes lost.
3.5 We outlined to the DCLG that housing co-operatives can:
3.6 We also asked the DCLG to clarify legal points relating to the unique nature of tenancy agreements if Ministers are minded to repeal our sector’s Right to Buy exemption. In particular, we have asked for legal clarification on the following:
1) fully mutual housing co-ops have contractual tenancies with their members that have recently been defined legally as contractual licences. We asked for clarification as to how it would be legally possible to attach a Right to Buy to such a contractual licence.
2) we noted that there are many forms of contractual tenancy in our sector, and asked for clarification as to whether the DCLG intend to prescribe the wording of tenancy agreements in our sector in order to introduce a Right to Buy, and whether to do so would effectively make co‑ops public bodies.
3) we asked for clarification regarding the status of co-op members who are now treated as having a 90 year lease due to complex legal issues that have arisen in our sector and how a Right to Buy would operate in such circumstances
4) we also asked for clarification about the shared housing co-ops that exist in our sector and how a Right to Buy may affect them.
4 A Right to Buy exemption for community-led housing |
4.1 The CCH is also participating in a community-led housing sector initiative to seek an exemption from the proposed Right to Buy for the whole community-led housing sector. We have developed a legal definition for community-led housing, working with Anthony Collins Solicitors, designed to enable community-led housing to be clearly identifiable in law and exempted within the housing bill.
4.2 A small but flourishing community-led housing sector exists in the UK. It is characterised by its local and often small scale community dynamism. Building on waves of community activity, recent years have seen it start to develop new homes, meeting local housing need in a variety of imaginative and innovative ways across a range of tenures. This development is often in places where traditional forms of housing would not win local support, and usually results in housing that requires limited public resources.
4.3 The national community-led housing organisations have recently come together in an alliance with the Building and Social Housing Foundation, funded by the Nationwide Foundation, to explore how the contribution that the sector could make to meeting housing needs can be scaled up. It is estimated that the hundreds of community-led homes being developed now can be escalated significantly.
4.4 This potential development is threatened by a potential Right to Buy. A Right to Buy for community-led housing organisations would both fracture the local community identity that characterises and drives sector organisations as well as potentially threatening the viability of business plans and reducing borrowing potential needed to build new homes.
4.5 Most community-led housing organisations exist where it would not be possible to develop more homes, both in urban and rural areas. It would not be possible to replace homes lost through Right to Buy. Already this has led to communities considering shelving potential new housing schemes because they do not want to risk devoting their voluntary time unless they can guarantee that homes built will remain affordable in perpetuity. Much needed affordable homes may never be built.
5 Rent reductions |
5.1 68% of our survey respondents did not agree that the Government should be requiring Registered Provider co-ops to reduce their rents, but only 33% considered that their co-ops, or co-ops they know, would not be able to manage once rent reductions are introduced.
5.2 The quote “we work hard to keep our rents as low as possible. We don’t need the Government to make us artificially lower them” was typical of several comments received. Some particularly referred to co-op members participating voluntarily in order to keep their rents low. Some respondents expressed the view that they had behaved responsibly over several years by keeping their rents low, and felt it to be unfair that the Government is now interfering with rent levels. One respondent suggested that “the Government should allow co‑ops to introduce such changes but not impose them. Co-ops are democratic organisations and they let their members decide what is best for their business”.
6 Pay to stay |
6.1 Only 15% of our survey respondents agreed that households who earn more than £30,000 (£40,000 in London) should pay a higher rent. 73% considered that it would lead to higher rent arrears. 85% considered that it will change the relationship between housing co‑ops and their members if co-ops are required to ask for details of members’ income. One respondent suggested that Pay to Stay would make co-ops government departments.
6.2 Respondents referred specifically to potential division in co-ops as a result of Pay to Stay. Some referred to concerns that members with experience and knowledge may move out of their co-op, whilst others referred to co-op members already making contributions through their voluntary activity in the co-op specifically in order to keep rents low. One respondent suggested that having to pay more rent would result in higher earners not being able to save to buy or rent in the private market and would trap them in their co-op property. Several respondents expressed concern about the potential administrative workload (and therefore potential additional costs) associated with Pay to Stay.
6.3 At the current time, it is not known how Pay to Stay might work. Amongst our survey respondents 48% considered that Pay to Stay should be brought in gradually so that members can adjust to higher rent levels.
7 Welfare reform |
7.1 Only 16% of our survey respondents agreed with the introduction of Universal Credit or that housing benefit should not be automatically available to 18 to 21 year olds (more than 60% did not agree with either reform). A higher percentage (22%) agreed that benefit should be capped (although 55% disagreed), and 29% agreed that tax credits and universal credit should be restricted to the maximum of two children (48% did not agree).
7.2 The CCH is aware of some tenant management organisations where tenants have left their communities as a result of the introduction of the bedroom tax. Our general experience is that the community nature of co-ops has enabled them to communicate well with their members regarding welfare reform changes.
7.3 However, 84% of our survey respondents considered that rent arrears will rise as a result of forthcoming welfare reform changes.
8 Conclusions |
8.1 There is some but very limited support within the housing co‑op sector for any of the current Government changes to our sector.
8.2 However, the CCH considers that possible introduction of a Right to Buy for co-op members to be the most significant threat to the existence of our sector. We do not consider that any potential advantages of the Right to Buy in the housing co-op sector could possibly justify what could well result in the loss of the multiple social and community benefits of our sector.