26th January 2017

Arfon Hughes – Rural Housing Enabler – hosted by Grŵp Cynefin

& Dave Palmer - Co-operative Housing Project Manager

029 2080 7132

Twitter @DaveCoHoP

david.palmer@wales.coop

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!