Co-operative housing exempt from new legislation

With housing co-operatives exempt from cuts and legislative changes, the benefits of the sector are even more compelling says Carl Taylor

For many years co-operative housing has demonstrated that it outperforms other types of equivalent housing provision. The new legislative framework also means that co-operative housing offers housing institutions, local authorities and most importantly residents an offer that is too good to ignore.

A housing co-operative is a fully mutual organisation where the residents of the homes manage and/or own the properties they live in. Every resident is a member and only residents can be members. In this way the co-operative is designed to work in the best interests of the people who live in the homes it provides.

Residents of housing co-operatives get better services. Every piece of research on the subject conducted has come to the conclusion that housing co-operatives provide a better service with more satisfied tenants.

But co-operatives do more than just provide excellent services. Many members of co-operative and mutual housing organisations would not want to live in any other type of housing, not least because of the mutually supportive communities they have established, where they know that they have friends and neighbours who will look out for them – a sense of place and community ownership characterises co-operative housing.

‘With no rent reduction or right to buy there has never been

a better time for policymakers to look at co-operative housing’

Mutual support has helped members of co-operative housing organisations who started out with broken lives start to reshape themselves, get skills, get into work, move on in their lives. It also builds confidence and helps to make people job ready. Co-operatives change society for the better.

There is nothing new in the statement that co-operative housing is better housing. What is new is that co-operative housing has been treated significantly different from other forms of affordable housing in recent legislative changes. The new legislative framework makes a compelling case for co-operative housing.

Local housing allowance
Housing benefit for social housing tenants will be capped in line with the private sector. This will limit housing benefit for social renters taking up new tenancies to local housing allowance (LHA) rates.

It means that housing benefit for single people in social housing under 35 without children will be restricted to shared accommodation rates. It is also likely to have a big effect on over 60s receiving support as part of their tenancy.

The policy applies to tenancies signed after 1 April 2016, with the entitlement changing from 1 April 2019. This will leave a significant contribution that people on benefits will have to make up to remain in a property. In some cases the shortfall may be more than their total benefit entitlement.

However, housing co-operatives have an exemption from the LHA and therefore residents of housing co-operative’s can continue to get benefit paid in full for their rent..

Right to buy
Up until now, only council tenants had the right to buy the homes they had previously rented. Potential buyers must have been tenants for at least three years, but this right is being extended through a voluntary right to buy for housing association tenants.

Co-operative housing tenants also have an exemption from the right to buy legislation. This gives two significant advantages, firstly it maintains the sustainability of small neighbourhood based co-operative housing providers, and secondly it means that housing developed for housing co-operative’s can remain affordable in perpetuity.

Rent reduction
The government also introduced an obligation on social landlords to reduce rents by 1% per year from April 2016 for a four-year period. The rent cut will apply to almost all tenancies that are currently subject to the rent standard. Fully mutual co-operatives and community land trusts will also not be subject to the rent cut for the full four year period.

The extra resources this provides for co-operatives will enable schemes that would otherwise not be viable to be developed, and for co-operatives with additional resources to invest in additional new affordable homes.

With no rent reduction or right to buy but with residents having access to benefits which will cover their whole rent there has never been a better time for policymakers to look at how co-operative housing could contribute to the housing provision in their area.