Property ownership is stretching our finances to breaking point. Is it time to look again at the age old system of co-operatives? asks LAURA LATHAM
OWNING a home is a rather British obsession. Houses are no longer simply places we live, they are investments and pension plans too. However, with prices now more than five times the average income, the young are largely excluded.
Those who have owned their homes for 20 years have benefited from rampant price inflation; the new generation isn’t so lucky. Even the recession has failed to force prices to a sustainable level.
“The traditional model of private ownership is not working, ” says Nic Bliss of the Confederation of Co-operative Housing, which represents the interests of 250 not-for-profit UK housing co-ops including Milton Keynes, Guildford, Manchester, Glasgow and Newcastle.
Yet, despite these examples, Mr Bliss agrees that few other cultures have quite the same attachment to private ownership as the British.
Tenants in Germany, Sweden and Austria, for example, benefit from government-controlled rents. This makes letting a viable, long-term option which is now coming to Britain. According to recent research by lettingsearch.co.uk the sector is moving towards a European model that sees tenants rent over the long term as part of a lifestyle choice.
A recent poll conducted by the portal suggests the inability of many youngsters to raise a deposit or secure a mortgage will see an increasing number decide to turn away from home ownership.
While the private lettings market in the UK is thriving, it does not foster a close-knit community spirit. An alternative model – found abroad but originally founded in the UK 150 years ago – is the housing co-operative.
In housing co-ops, individual communities collectively own and run their own residential estates and the services on them. They are popular in Austria, America, Italy Scandinavia and Germany, where people buy shares in the community, rather than in individual property. These secure full ownership rights and entitle you to live in a particular property forever. If you decide to move, the shares can be sold on or back to the community.
You can also rent until you are in a position to buy or “staircase”; buying shares by stages.
The model is not dissimilar to local authority and housing association schemes but there is a crucial difference. Because co-ops and community land trusts (CLTs) are community, not authority owned, there is direct involvement from residents in their surroundings, closer community ties and less interest in making a profit or cutting corners.
This, advocates say, means fewer social problems and a better social mix. “You find a greater cross-section of society in co-op housing, from people on low incomes to professionals, the young and old. In the UK everything is geared towards private ownership or sticking people into social housing, ” says Mr Bliss.
“Co-ops allow everyone the opportunity to own and be involved in their community without ghettoising one sector.”
In Germany, the system is government controlled so that co-ops generally can’t profit from selling shares and this keeps prices at a sustainable level. Similar structures exist in Canada, Italy, Turkey and Austria.
Scandinavia, once a beacon of social housing success, has adopted a market system. In Norway and Sweden, co-op shares can be sold on the open market, allowing owners to profit in a way they couldn’t before. Because co-ops are popular, it means prices are outside the reach of low-income families.
“It’s a big problem, ” admits Kent-Olof Stigh, director of HSB, one of Sweden’s biggest co-operative organisations but he says the system remains popular because residents enjoy close-knit and self-governing communities.
With the successful and proven track record of co-operatives in housing people, perhaps it’s time governments stopped favouring the short-term gains offered by a system that relies wholly on private ownership. With a general election pending, the UK Co-operative movement wants more focus on the force of community movements in addressing fairness and economic renewal, with housing issues being at the forefront of the agenda.
The website www.uk.coop gives all the housing co-ops by region.