Setting Up A Co-Op
Many housing co-ops are state funded; the Housing Corporation
puts up much of the funding, and therefore can, on the whole,
call the tune. However; it is possible to set up a housing co-op
which is totally independent.
Essentially, a registered housing co-op is a legal entity which
is separate from its members, and it allows those members to co-operate
to raise loans, even if, individually, they have limited access
to money or credit. With these loans they can purchase secure
housing which they themselves control. The members of an independent
housing co-op are tenants paying rent, (and so are eligible for
housing benefit), but are also their own landlord.
The 'housing' for a co-op could be chosen to exactly suit the
needs of the members. It could include extra resources - space,
land, workshops, gardens, extra children's spaces. It could be
a large or small shared house, flats, a small terrace, a residential
mobile home park, a smallholding. It could be established just
to provide housing, and an alternative to the low standards and
constant insecurity of private rented accommodation. Or it could
be set up with the intention of promoting wider aims, such as
providing space for self-employment, supporting home education,
giving a secure base for a group of people who are encouraged
on a shared project, and it allows the members to tailor the property,
once chosen, to exactly suit their special needs.
It may take some patience and determination to set up a housing
co-op and see it through to fruition, but then the members can
reap the reward of relative autonomy in an important area of life,
and rents which can decrease over the years as loans are repaid,
rather than constantly increase as all other rents do. Housing
benefit acts as a conduit to channel public funds into the pockets
of private landlords, and although it passes through the hands
of tenants, it leaves them with no long-term improvement, and
no control. A family on housing benefit could, over only five
or six years, claim enough housing benefit to have BOUGHT a small
house outright, but of course that benefit is actually accruing
to the landlord, not the family in need. They can still be made
homeless at four weeks notice, with all the knock-on problems
that has for work, education and social networks, whilst the landlord
has enlarged his asset base with public money and virtually no
- Get up of people who will commit themselves ~ working together
to make their common idea become reality. Unless you come as
a ready-made group, establishing that common idea is perhaps
the hardest part. Contact existing co-ops, especially if there
are any in your area. Gather information, ask for help from
the co-op network. Send for the invaluable booklet 'How To Set
Up A Housing Co-op' from Radical Routes, and contact the Catalyst
Collective (both addresses at the end).
- Register as an Industrial and Provident Society. This is done
through the Registrar of Friendly Societies, and gives a group
the legal structure that is required. The co-op needs to be
defined as 'Not-for-profit' - members cannot make any financial
gain out of it as individuals.
'Limited Company' - members do not carry personal liability
for the debts of the co-op, (although of course they will lose
their home if they don't pay the mortgage).
'Fully Mutual' - all tenants must be members and all
members must be either present or prospective tenants.
'Common Ownership' - the property is owned by the housing
co-op. The members may loan money to the co-op (and receive
interest) but they do not own an individual share of the property
if the property is sold, members cannot divide any 'profit'
up amongst themselves -it must be used to buy another co-op
property or passed to another not-for-profit organisation. Co-ops
are about developing housing as a resource, not about treating
it as a commodity with which to make money.
- Work out how to raise the money. This is usually done by getting
a 70% or 80% mortgage and raising the rest by issuing
Loanstock (see below), and possibly getting a loan from some
other group such as Radical Routes (see below). Many co-ops
have got mortgages either from Triodos Bank or the Ecology Building
Society: before presenting your idea to a bank or other funding
source, ask around other independent co-ops to find out what
the banks' loan criteria are, as they vary from one bank to
another. Again, two major sources of advice and help are the
Catalyst Collective and the Radical Routes network.
- Find a property. Start looking at properties which will suit
your aims and will be able to generate enough rent (at local
Housing Benefit levels) to repay the mortgage and loans, and
cover the running costs (maintenance etc.). Houses are more
expensive in some parts of the country than others, but then
Housing Benefit levels are generally higher in those areas.
Even if most or all members are working, the bank will probably
still want to see that the co-op could continue to meet the
mortgage repayments if at a later date most tenants were having
to claim housing benefit.
It is the co-op as a legal entity that gets the mortgage, not
the individual members, so a sound cash-flow forecast is more
important than whether all or any of the members are employed.
As a registered Industrial and Provident Society the co-op
is allowed to raise money by issuing loanstock to both members
and non-members. This is a way of borrowing money from sympathisers
without relinquishing any control over the co-op to them. If members
themselves lend to the co-op in this way, it ensures that the
member who has £5000 to put in does not have any more stake or
power in the co-op than the member who invested £50.
Radical Routes is a mutual aid self-help network which has been
responsible for much of the spade-work involved in establishing
the route to independent tenant-controlled co-ops described here.
Membership of Radical Routes is restricted to housing and worker
co-ops actively working towards a shared social and political
vision. The network has a solid knowledge of both the legalities
and practicalities of setting up co-ops.
Radical Routes also operates an ethical investment scheme through
which it can make loans to member co-ops, and it publishes various
useful booklets, especially the vital 'How To Set Up A Housing
Another source of help is the Catalyst Collective, who will give
advice and also offer a registration service to see you through
the process. They produce a pre-registration pack which includes
a huge amount of useful information, from setting up a co-op to
producing a cash-flow forecast and doing the accounts.
HOUSING CO-OPS USEFUL ADDRESSES
Radical Routes Email: email@example.com
Catalyst Collective firstname.lastname@example.org
also our postal address is: highbury farm, redbrook, monmouthshire,
np25 4lx phone: 01600 775414 www.catalystcollective.co.uk
Registrar of Friendly Societies Victory House, 30-34 Kingsway,
London WC2B 6ES, Tel .020 7437 9992
Triodos Bank Brunel House, 11 The Promenade, Bristol BS8
Ecology Building Society, 18 Station Road, Cross Hills,
Keighley, W Yorkshire BD2O 7EH