Coop takeover: Creating a new co-operative housing sector for Wales

By Huw Lewis AM

With nine Labour and Co-operative Assembly Members elected in May, including two cabinet ministers, a deputy minister and a committee chair – never has the co-operative movement been better represented at the heart of decision making in Wales.

But while that success is remarkable, too often in the past the Co-operative Party have brought forward well developed, well received, radical yet practicable policies, only for them to be kicked into the long grass, or simply left to gather dust on a shelf in Whitehall or Cathays Park.

Ideas of co-operation and mutuality have always shaped me politically, and I want to seize this moment, and forge a radical new direction for housing policy in Wales that draws on that co- operative spirit.

I want to create a new housing sector in Wales, no less, and make us the first of the home nations to pilot and develop housing based on the Co-operative Party’s New Foundations model.

It works by separating the value of land from the purchase price of properties built on it through the means of a Community Land Trust (CLT). Unlike traditional home ownership, homes built on the CLT are financed by a corporate loan borrowed by a co-operative. Residents make monthly payments, based on an affordable percentage of their monthly income – with the flexibility to increase or decrease according to their current circumstances; so that payments could be reduced if a resident became unemployed, for example.

Unlike in the private rental sector, if a resident decided they wished to leave the co-operative, they would be entitled to take the equity share they had with them, with a ‘fair valuation formula’ ensuring that homes remain affordable in perpetuity and that any public subsidy is locked in and not lost.

By offering investors safe, guaranteed yield investments, an added advantage of New Foundations is its potential to attract institutional investors, pension funds for example, to invest cash back into the Welsh economy.

Of course this will also require a deeper societal change: the ready availability of cheap mortgage finance during the boom years made it seem almost old fashioned to view a home primarily as a place to live, rather than as a financial investment.

And we’ll also need to a change the law. As anyone in the housing sector will tell you, legal definitions of tenure are complex and usually medieval in origin, and while it may seem an arcane point, we will have to work hard to establish a watertight legal definition of co-operative tenure, when final proposals are brought forward as part of the Housing Bill.

This isn’t about trying to replace any of the existing models of home ownership or tenancy, or ceasing to do any of the good things we’ve been doing in Wales since devolution. In fact I want to see partners from across the housing sector engaged: banks and building societies, the construction industry and registered social landlords will all have an important role to play in making this work.

I believe we have to provide a genuine alternative to people who are simply not being served by the status quo. We must offer hope to the many thousands of people in Wales who today find themselves locked out of the housing market at both ends – stuck in a limbo between the social rented sector and individual home ownership.

We need to face up to the fact that the credit crunch broke a system which was already failing.

This represents only a beginning, but we might just be witnessing the early stages of a co- operative housing revolution here in Wales.