Imagine ..
Imagine if there was a housing co-op that could offer ordinary sellers a good deal - a good price, and a cash buy.
Imagine that housing co-op had access to funds to support such offers, without incurring debt or paying interest.
Imagine that housing co-op's tenants being able to pay their rent with easily available vouchers that cost a little less than the cash rent - and qualifying, over time, for significant rent rebates at the end of each uear.
Imagine that housing co-op, being debt and interest free, having all of that income to use to manage and develop the co-op.
The Commons Housing Society model makes all that possible, in a safe and steady way.
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A traditional housing co-op borrows money to buy its stock. It promises to give the loan company about twice what it borrowed, over 25 years, and rents have to cover that cost, plus maintenance, management and development costs, too.
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A Commons Housing Society (CHS) sells rent vouchers - 25 years’ worth of them - to investors, at a discount on the market rent, in order to buy houses - which will never be sold again. It promises to provide decent housing to tenants, on good terms, for the next 25 years, accepting those vouchers as rent payments.
A rent voucher pays no dividend or interest to holders, and gives the holder no power, except the right, as an existing tenant, to use it to pay rent.
Three months after being submitted in lieu of rent, the CHS is free to sell them again, to provide income for maintenance, management and development. Without loans to repay, the CHS has more cash than a traditional co-op.
Since land and houses, starting in reasonable condition, can be assumed to be still there 25 years into the future (this is the basis on which mortgages are given), and there will be robust legal conditions in place (including an asset lock with a requirement on successor owners to honour the rent vouchers), the 25 year horizon will be credible to investors (as it is to mortgage companies).
And since vouchers are for a square metre of housing, rather than for a specific £ value, they are inflation proof in respect of market rents - a rare quality in an investment.
As market rents tend to rise over time (with significantly more stability than house prices), and because they have to cover mortgage repayments, they add up, over 25 years, to much more than the original sale price of a property.
This makes rent vouchers an attractive proposition for investors, who provide up-front cash in return for discounted vouchers - which they can hold, as secure savings, or sell to tenants (any tenant can use any voucher as rent for any CHS property).
The overall outcome is alignment of interests between sellers, tenants, and investors, all of whom will have varying types of Commoner status in the CHS (like a multi-stakeholder co-op).
We hope that you will join us in exploring how, on this basis, housing can be brought into the Commons without extraction, speculation, or exclusion.
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If you are excited by this vision, you will probably have questions about details that you can see are important.
So do we.
We know that there is much work to be done to make this into a practical proposition. We have tried to address a great many details, but we are economy designers, not experts on housing or law, or estate management, or finance …
So the most important work at the moment is to build a group of people who want to work together to develop the model in detail.
You can see the work that we have already done in a few other documents: