Canada’s co-op sector is three times bigger than the UK’s, and co-ops account for almost a quarter of Swedish homes – emulating them could help ease the housing crisis.

In a paper out today, the Social Market Foundation – a cross-party think tank – highlights the fact that the UK lags behind other English-speaking countries and Scandinavia when it comes to its share of co-operative housing.

A housing co-operative is a non-profit and democratic organisation, that is controlled by its residents. They take multiple forms, like having differing levels of resident control and ownership, and some may charge an upfront fee, but in general they combine security of tenure with rents that are more affordable than the private rental sector.

Housing in the UK generally falls into three tenures: owner-occupation, social housing and private renting. Yet all three face challenges: home ownership rates have fallen and many people who want to buy a house are likely to miss out. Social housing waiting lists are oversubscribed, and private renters lack security and control over their housing. That means we should look at alternative models, including co-ops, according to the SMF.

Co-ops make up just 0.2% of the UK’s housing stock, compared with 0.6% in Canada, 0.3% in Ireland, 0.2% in New Zealand and 0.1% in Australia – but 14.5% of the housing stock is co-operative in Scandinavia (23% in Sweden).

Co-operative housing brings a range of benefits – such as more affordable rents, higher resident satisfaction and achieving wider social goals.

There are numerous barriers to the growth of co-ops that the government needs to address – legal challenges, financing, building – to first catch the likes of Canada and eventually Scandinavia.

For instance, the Co-operative Societies Bill 2022 in Ireland will make it much easier to start a co-op, by cutting the number of people needed to set up a co-op (from 7 to 3). The Canadian government offered start-up funding and mortgage financing, insured by a federal agency, alongside ‘development resource groups’ who would market the properties to potential residents and help them to understand the benefits and expectations of cooperative living. This resulted in a Canadian co-op boom in the 1970s.

Financing is one challenge. Lenders are unfamiliar with cooperatives in the UK, and this can make them reticent to extend loans as they would to households or businesses. State subsidised social rental loans have been used in France to fund cooperative housing projects, and a similar approach should be taken in the UK, the SMF said.

The difficulty of acquiring funding has a knock-on effect when trying to purchase properties or land. It can take time to pull together different grants and lending streams. When cooperatives are competing for properties or land against private developers, this can mean they miss out to cash buyers. Where large properties are being offloaded by the state or private bodies, co-ops should be given first refusal, and the time to pull together finance if needed.

The SMF paper is part of a series on international housing policy lessons for the UK, looking at policies being adopted across the Anglosphere (English-speaking countries) and, in this paper in particular, Scandinavia. This paper explores how the UK government can revive the social housing sector and support the growth of the co-op housing sector. The project is funded by the Nuffield Foundation, and covers homeownership, renter support and (in a forthcoming paper) planning reform.

In the paper out today, the SMF provide recommendations for reviving and growing two key avenues of housing – co-operatives and social housing – which can help ease the housing crisis and better address changing tenure patterns:

For reviving the social housing sector the Government they say needs to put in place long term funding plans, and end the ‘Right to Buy’ scheme while for  supporting co-ops it  should ensure improved legal status and rights, improve access to land for building, set up a lender to distribute loans to cooperative housing projects.

 Niamh O Regan, Researcher at Social Market Foundation, said:

“The expectations and reality of renting and homeownership are vastly different now, as renting is becoming a more long-term endeavour, with fewer people able to get on the property ladder.

This should prompt policymakers to provide people with worthy alternatives, such as reviving the UK’s social housing sector and supporting the growth of co-operative housing. Co-op housing in particular, is far underutilised in the UK compared to Canada and Scandinavia. They bring with them a host of benefits for government, residents and wider society – but there are numerous barriers in the way.”

Dr Catherine Dennison, Programme Head at Nuffield Foundation, said:

“The next UK government will face a long list of challenges on housing, and co-ops provide one possible solution. The SMF’s analysis shows that co-ops can be cost-effective and are a model that could be worth scaling up in the UK.  The Foundation is funding this project ahead of the general election, to supply analytical context to contribute to the development of policies and pledges by political parties and inform voters.”



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