Living together 5: commonhold for cohousing projects – interview with Peter Burke of A Fairer Society

This week we’re talking with Peter Burke of A Fairer Society, a consultancy for people thinking about setting up some sort of cohousing project, from housing co-ops to community land trusts. A group of us in London want to gather information to help us start our own project. More on that here.

What do you do?

I’ve been involved in the finance sector for a long time, and more recently, finance for commercial properties – funding housebuilders and property developers. The profit-driven nature of the businesses I was working with wasn’t satisfying me, and I wanted to do something that would have more of a positive impact on the world. I started to research, and to find relatively new ideas around cohousing and community-led housing, which led to me to collective ways to own housing, including housing co-ops. I then met Nathaniel, who is now my business partner. He has expertise in sociocracy, and governance structures for businesses, including co-ops. We both had a belief in self-organised groups, especially around housing. We set up an ‘accelerator programme’ I guess you’d call it, to help groups and individuals to come together to see what’s feasible, what they can afford, to see if it’s fundable, and to hand-hold them through the process – or we can be more hands-off, and just coach and support people, to the point where professionals get involved – architects, developers etc. We take a step back at that point. So, to summarise, we help people come together to start collective, affordable housing projects of various descriptions.

A group of us are looking to start a cohousing project, and it occurs to me that I’m going to pick your brains in this interview about what you do for a living. I apologise that it seems like a sneaky way of getting a free consultation.

That’s fine – don’t worry. Our model starts with your group’s ‘blueprint’ – how you want to live as a group, and as individual households. Only then will we start to talk about buildings, legal structures, finances etc. First we want to know if everyone has a similar vision, so we talk to householders about how they see the project developing, and when we started the programme, we hoped that the community vision would fall out of all the individual households’ visions. But the first few community vision days we did, some people dropped out because they couldn’t agree on some things that were crucial to them. Pet policy was a big one, surprisingly. And also ownership, and what can be passed on to children. Those two, in our experience, have caused the biggest problems. So we’ve found that it’s easier to first have short Zoom meetings with small, core groups of people, to work out if they’re on the same page with these and other important issues, before moving forward with longer meetings and bigger groups. Once we have clarity around core principles, other people can then be found, who have the same principles, to expand the group. It saves a lot of time and heartache.

I used to live at Redfield Community in Buckinghamshire – fully mutual housing co-op with 20 acres, around 15 adults and 8-10 kids, evening meals eaten together, very cheap rent, but 2 days per week work as part of the rent. It was (and still is) like a big family, and I lived there for 13 years, and I loved it. But now, that’s not what I want, and neither do the other people in our group. So when we found out about cohousing, where there are shared facilities, but everyone has their own front door, we were very interested. But there are lots of different models for cohousing, which seems to be an umbrella term for this kind of living. I just want to find out what the pros and cons are of the different models. For example, we want to vet new members, because we’ll be living so closely with each other – so we don’t want to work with a housing association or the local authority, which may mean taking people from the housing waiting list. This might sound a bit selfish, but it’s not, because putting people together who don’t necessarily get on well will probably mean the collapse of the project. And the other thing is that we don’t want the founder members to end up out of pocket, because we want to blog about it and to inspire others to do it – and that’s not going to work if it impoverishes the founders. And finally, we don’t want to move to a place to help put prices up and push locals out. We want to create something affordable, and that will survive after we’ve gone.

I think that people’s motivation is really important. If you’re doing it for the right reasons, you don’t want to do anything to cause difficulties for the locals in the place you move to – quite the opposite. Most people now see housing as an investment, rather than, or at least as well as a home. Of course there are people who aren’t on the housing ladder at all, and there are some retired people who don’t want to own a property, and they’ve calculated that if they sell their current property to move to a cohousing property, they’ll easily have enough savings to pay their rent for the rest of their life. We’ve looked into it and found that developers often abuse the leasehold model, and that ‘commonhold’ is a good mixed-use model which allows some people to own and some to rent. But whatever set-up you choose, your ownership model will dictate how it’s financed. That has to be worked out before you can move forward.

What do you mean by developers abusing the leasehold model?

Generally, if a big housebuilder sells a leasehold property, they keep the freehold themselves to charge you a ground rent, but they don’t actually do anything for that ground rent, so it’s a bit of a money-making scheme really. And generally, they don’t even manage it – they sell it on to new companies that have been set up to manage the ground rents. This is especially the case in blocks of flats, and especially in London, where people own the leasehold, and the company that owns the building doesn’t do much in terms of its upkeep.

Commonhold was introduced around 2002, which basically means that you own the freehold of your property and you pay for the upkeep of the shared facilities. It was intended for blocks of flats, but I think it works perfectly for cohousing projects.

The options we’ve looked at are housing co-op, company limited by guarantee and limited company with shares. The community land trust model we think is for bigger projects than ours, and we haven’t looked into mutual home ownership yet, or things like community benefit society / community interest company etc. The options and the combinations of models are all a bit bewildering.

Yes, I think you’re right that community land trust is for bigger projects, and also, with community benefit socieites / community interest companies, you have to show how your projects will benefit the wider community. It’s a better model for raising finance, and you can issue community shares, but it’s difficult to achieve.

But it’s the early stages that are important. People see the enormity of the project, especially if it’s a new build project, and feel like it’s too much (and if they’ve seen any ‘Grand Designs’ programmes, it’s worse still). What we want to do is to say ‘don’t worry about all that stuff, because it may never happen. Let’s just talk about you, what you want from this co-operative / sharing way of living, and what you can afford. Once you’ve got those three elements in place – only then do you start to think about the practicalities. It’s no good thinking about details until you have a basic plan.

Once you have that, the legal structure can often fall out of that quite easily – depending on whether you want to choose the people you want to live with carefully, in which case you’ll be looking at a housing co-op / limited company structure or something similar; or if you want to be open to the wider community, in which case it will be a community land trust or something similar. But generally, cohousing usually involves people who have a house to sell, and want something that’s a little bit unusual, and therefore more difficult to achieve, because it involves rolling your sleeves up and creating something that you can’t just buy off the shelf. A desire to share aspects of their lives that isn’t easily availiable with the more usual housing models is in the DNA of anyone interested in cohousing I think. Most people don’t even know about the various cohousing options, but when they hear about it, something lights up, when people realise that there’s an alternative to big housebuilders, that has community baked into it. We provide the opportunity for people to create their own housing project, with as much or as little personal input as people want; but ultimately, the project will be owned by its members, not a local authority, or a developer or a private landlord.

People want choice when it comes to their housing, and there’s just not enough choice in the UK.

If people buy the leasehold on their unit / property within a cohousing project, to maintain affordability, would the resale value have to be capped, or would the value have to be linked to an index other than the house price index?

That’s a very difficult question. It’s a constant road block with the groups we’ve been talking with. Some people won’t want to own property at all, and others have money to put in, but realise that if they put it somewhere else – e.g. if they bought a conventional house, and they wanted to move in ten years’ time, they’d have greater spending power than when they bought it. But if it’s capped, or if it’s tied to a different index, they probably won’t have the same spending power, and might fall down the housing ladder.

This is the paradox going on in many people’s heads – they want community, they want to live with like-minded people and offer each other mutual support, in a nice environment, and able to share facilities for environmental or financial reasons – but, they don’t want to be out of pocket, or to slip down the housing ladder.

I guess this is why cohousing is so popular amongst older people, who may see any move to a cohousing project as a move for life, and they won’t really want to be back on the housing ladder at all. And also, a lot of people think that they’d like to leave something for their kids, but understand that they’ve already done the best for their kids – fed them, clothed them, taught them to be responsible adults, made sure they’ve had a good education, and so on, so that they’re in a position to provide for themselves. They’ll always have a place to come and stay if they hit hard times, but they don’t necessarily need to be left a house. Millions of children don’t inherit anything at all, but no harm comes to them.

It’s refreshing to hear that. There are many different mindsets about what’s right and what’s wrong, and what we should be doing. It can cause fledgling groups to go around in circles for a long time.

I’m guessing that your services might turn out quite cheap in the long-run, as they could avoid lots of wasted time.

Possibly, yes. I mean, we did toy with the idea of doing more developer-led work, where we get to a certain point, then bring the communityin to finish it off; but we really want to help people go through the whole process, so that people can get exactly what they want, without wasting a lot of time trying to work things out themselves.

What we’ve also heard from groups is that you have to make sure that any increase in the value of the property accrues to the community rather than to individuals, otherwise there’s a risk that housing will be used for speculation, rather than as a home; and as long as your project ensures that, it doesn’t really matter what your legal structure is.

Yes, it’s the people who are involved in the project that’s important – how those people think and act rather than the legal structure, as long as the structure does the job. We get people together in a room, and keep asking the important questions, until legal structures, governance and financing fall out of those discussions. That’s much more effective than suggesting models for people. It’s about discarding what’s not right for you, until what’s left is the path that you’re going to take. For a lot of our groups, they end up launching a community share offer, so that members can buy shares if they have money, and so can outside people, but the number of shares bought doesn’t give any more decision-making power – it’s still one person, one vote. For your group, we could have a free zoom chat for an hour or so, to understand where you’re all coming from, then we could come and sit down with you for a day and thrash everything out about how individual properties will be owned and what might work for your group.

That sounds like a plan.

It sounds as though your group knows enough about what you want, but you just need that bit of extra help to work out exactly how to do it.

Yes. We don’t want to go down a path that locks us into something that turns out not to be right for us. We want to see all our options clearly, and work out which is the best one.

This is the kind of thing I find most interesting – working out ways that people with slightly different motivations can come together to share their lives.

You mentioned commonhold earlier – could you tell me a bit more about that?

Whereas a leasehold decreases in value over time, as there will be less time left, and it will have to be renewed, and you’ll never be the owner of the freehold of the building or the plot, a commonhold doesn’t have those issues, in that when you buy a commonhold property, you own that property, and it doesn’t depreciate in the same way as a lease. So in that respect, it’s like freehold, but with commonhold, you have to contribute to the upkeep of shared spaces and the building overall (say if you were buying a flat in a block). So there would probably be a residents’ panel to oversee this – which means that you’re not paying for this to an external company that doesn’t do very much, or anything at all. The residents would set something up themselves to oversee this.

There’s not much in the way of information about commonhold out there. As I said, it was introduced in 2002, then it was reformed and was enacted a couple of years later, but there are only around 32 of them in the UK. It’s because the leasehold model is much more lucrative for housebuilders. But the more I read about commonhold, the more I think that it’s ideal for small, collective housing groups where people have their own front doors and share facilities, rather than being full-on communal housing projects.

I’ll send you a link with more information about commonhold.

Thanks Peter. Look forward to it, and also look forward to working with you at some point on our project.