26th January 2017
Arfon Hughes – Rural Housing Enabler – hosted by Grŵp Cynefin
& Dave Palmer - Co-operative Housing Project Manager
029 2080 7132
Twitter @DaveCoHoP
Financing development and
co-operative housing
Agenda
• This session will look at alternative affordable
development models that can be delivered
without grant, including cooperative housing
schemes.
Programme of Work – WG support Social Enterprises and Mutuals and seek to provide 20,000 affordable homes and Co-operative Housing is well placed to provide a share of this target
Housing Pact – support for co-operative housing is
noted in CIH/WLGA’s Housing Pact.
Welsh Gov. Context
Key enablers Key outcomes
Support housing development across all geographies;
continuation of funding for Rural Housing Enablers
and support for Co-operative housing
Work together to support the innovative development
and delivery of new models of affordable housing that
meet current demands and future need
• Bringing Democracy Home 2009 -“The UK needs to
bring co-operative housing options into our
national housing policies”
• Co-operative housing - a broad spectrum – housing
where a democratic community membership has
control over some aspect of homes
• developing local community support networks and
resilience
• high satisfaction rates – as good as if not better on
service provision
What and Why?
Benefits of Co-op Housing
• Strong community cohesion
• Ability to be flexible to meet peoples needs
• A democratic and safe community
• Adhere to the 7 principles of co-operatives
• Volunteering – Mental and Physical activity
• Involvement increase transferrable skills
• Training and employment.
Co-operative Principles 1.Voluntary and Open Membership
2. Democratic Member Control
3. Members' Economic Participation
4. Autonomy and Independence
5. Education, Training and Information
6. Co-operation among Co-operatives
7. Concern for Community
Question/Break/Workshop!
• What is the main reason why you would be
interested in a Co-operative or Co-operative
Housing?
Housing Co-operatives -
comparative statistics:• In Turkey: 25% of the total housing stock with 1,408,603 units
• In Sweden: 18% of the total housing stock with 750,000 units
• In Norway: 15% of the total housing stock with 320,000 units
• In Germany: 10% of the total rental housing stock with 2,200,000 units
• In Austria: 8% of the total housing stock with 334,000 units
• In Portugal: 1/3 of the social housing portfolio with 180,000 units
• On average 10% of Europeans - 27 million people - live in housing
co-operatives
• In UK: less than 1% (0.6%) live in co-operatives
In the USA housing co-operatives provide homes for approximately 1.5
million American families. (1% - 1.2m homes)
Some of the schemes LA Partner HA Partner Type
Home Farm Village
Housing Co-op *
Cardiff Cadwyn
Housing
Affordable rent
Old Oak Housing Co-op* Carmarthen Grŵp Gwalia Intermediate rent
Loftus Gardens Co-op * Newport Seren Shared Ownership
Gwynedd Community
Land Trust #
Gwynedd Grŵp Cynefin Affordable homes
for sale
Ty Cyfle ** Torfaen Bron Afon
Housing
Young people
shared housing
West Rhyl Community
Land Trust **
Denbighshire North Wales
Housing
Rented housing in
regeneration
Taf Fechan Housing
Co-op, Gellideg **
Merthyr
Tydfil CBC
MV Homes 90% local
market rental
… and there’s more
bubbling under
LA Partner HA Partner Type
L’Arche - Cohousing in
Mold
Flintshire SHARP Learning difficulties
Shakespeare Gardens,
Pontypridd. **
Rhondda Cynon
Taff CBC
Newydd
Housing
Single people
rented
St Davids Community
Land Trust #
Pembrokeshire Pembs Housing
Asss’n
Large mixed tenure
Wrexham Self Build Self Build
Bronllys Well Being Park Powys Health
and Well Being
Action Group
tbc Large health &
housing scheme
Key - *Pioneer Schemes, ** Pilot Schemes
# ‘Shovel Ready’ – Advanced Projects
Gwynedd’s Community Land Trust
is based on Cornwall’s CLT –
To date.
• Gwynedd LA Cabinet and members have approved the
setting up of a Countywide CLT
• Gwynedd Council has set up a revolving loan fund
• Grŵp Cynefin has bought 3 sites with WG ‘Land for
Housing’ funding for schemes on land within village
boundaries at affordable prices with one in the National
Park (land bought from Gwynedd LA, a Community
Council, and one private owner)– total number of units
possible = 31
In hand
• Grŵp Cynefin to submit a business plan to draw down
funding following needs assessment and viability
• Grŵp Cynefin and Gwynedd Council to convene first
countywide Project Group
• Rural Housing Enabler to complete housing need
survey (1 completed) and further consultations with
interested parties and to help to set up and support
local autonomous CLTs at local level with other
partners possible.
Key Stages
• The initial members come together with an idea; ora local authority / enabling developer decides theywant to do something – who develops the vision?
• Building the group• Getting the right advice – where do we go?• Visiting existing schemes• Building the development partnership• Scoping the development proposal• Agreeing the legal structure• Getting the finance in place• Drawing up the plans and getting planning
permission• Building the scheme and moving in (sales & lettings)• The long term sustainability
Key Issues
• Why are you looking to do this?• What are you looking to develop?• New build or refurbishment• Rent, sales or shared ownership / equity share• Only housing or not• Have you got a site?• Is there a community group leading this?• Is the local authority supportive?• Self-build, community or enabling developer• Are there any assets involved, or is it all debt / grant
driven?• What will be the tenure and land ownership model?• How will the scheme pay for itself – on completion or
over a longer term?• What are the long term community aspirations?
Financing a Scheme
Private Finance Commercial loans Bond financing Loanstock Private equity Long term institutional investment
Enabling Developers Private developer to take development & sales
risk with units released to co-operative onturnkey basis
Local authority borrowing headroom (accessto Public Sector Loans Board)
Housing association or co-operative leveringin funds or guaranteeing scheme
Housing co-operatives investing in schemes
Development Modelling
Land or buildings purchase
Site preparation – clearance, contamination, utilities &
access – surveyor?
Architect to draw up plans – site area, number & size of
homes, tenure split
Planning process, s106 & Community Infrastructure Levy
Build / refurbishment costs
Non residential development – common house, communal
areas / facilities, garages & parking, roads & pathways,
green & play areas
Mixed development – retail, office, community & leisure
Development Modelling
Meterage build costs Community & governance development cost Professional fees at both pre development &
development phases Development financing requirement – net borrowing
requirement Financing interest rate Sources of income – personal equity, existing assets,
grants, loanstock, private finance, sales & rents Local housing market data Rent levels & sales prices (uplift rates) by unit /
bedspace type Sales costs Legal status & tax considerations
Long Term Modelling
Rent inflation rates Cost inflation rates Void and bad debt levels Annual financing cost Leverage & gearing Management & maintenance costs Common parts maintenance & servicing costs 25 year asset management plan with component life
cycle, cost & inflation assumptions A costed 25 year financial plan for the scheme &
debt balance modelling
Key Learning Points
• Everything takes longer than expected! Planning Permissions, time to
complete Sales even where there are ready buyers. Factor in Interest
Costs for delays and how this will be funded.
• Keep your first development as simple as possible: Self-build / Self-
finish may help people without deposits get onto the housing ladder,
but a nightmare for lenders. Ideally Fixed Price JCT Design & Build
Contract with financially strong construction company.
• Planning Permission / Section 106 Agreement: Ensure lender-friendly
for both development funding and subsequent mortgage providers
for buyers.
• Contingency: While we all want to deliver properties at lowest possible
cost, you must factor in Contingency.
• its not a one size fits all solution – bespoke
arrangements for different requirements
• local people have responded enthusiastically
when given opportunity
• strong partnerships between communities, local
authorities and housing associations – housing
staff are learning new skills – and are becoming
as enthusiastic as the communities
So what have we learnt?
• the strategic role – helping us to
identify sites, possibilities and
partnerships
• imaginative and innovative uses of
the HRA and General Fund
• talk to us one to one – tell us what
you want and we will help you to
deliver it
• visit some of the schemes….?
How can you help?
Closing Remarks
• Any Questions please? Thank you!