When the incredible is seen as credible

Tonight I listened to an inspiring group of Brixton residents who are taking the housing crisis into their own hands: setting up a Community Land Trust to build 300 homes for rent, owned by the community and let at rents linked to local incomes. Their challenge, as one board member put it, is to be seen as credible by the powers that be.

To the local residents in the room the group, Brixton Green, seem eminently credible. Their board is stuffed with highly qualified professionals and respected local residents. They have planning permission, a solid business plan, and interest from large investors.

But with rare exceptions, such as today’s new manifesto from Shelter, community-led housing is politely filed into a niche and ignored.

It’s clear that community-led housing needs to gain more credibility with a lot of politicians and policy makers, particularly in local councils. But why is this necessary?

Co-operatives already manage around 170,000 homes, and have a long and distinguished history. In recent years Community Land Trusts have helped to double house-building rates in rural areas often pigeonholed as being riddled with NIMBYs. City councils like Bristol and Leeds are now giving serious backing to community-led approaches, seeing them as part of mainstream housing development.

But in places like London, they often struggle to be seen as credible. At best they are an interesting niche that will never amount to much.

It’s not just because land is so expensive and competitive in London. Groups like London CLT, RUSS, Brixton Green, Naked House, Phases and Older Women’s Cohousing are bringing forward exciting and financially viable housing developments. All will build far better developments than the mainstream norm, with generally higher percentages of affordable housing, high environmental standards and strong, engaged communities. They are the sort of new housing developments you’d hope councils would be falling over themselves to support.

What is the alternative that is seen as credible? At the Brixton debate the speaker from the Resolution Foundation repeated the mainstream mantra that “we need a bit of everything”, with some tweaks to encourage good behaviour. The implication being that this will be the bigger part of the solution to the housing crisis.

The problem with this mantra is that it fails to face up to the reality that the current approach is fundamentally broken.

Here’s why.

Private developers eye up some land and work out how many homes they can build, how high a price they can fetch, and how little genuinely affordable housing they can get away with building. They work out how much sales income they’ll get, deduct the build cost and at least 20% profit, and buy the land for whatever is left over. Anybody aiming to build something better will struggle to pay so much for the land. From the point they pay an inflated price for the land they can complain that they couldn’t possibly build more than 5% or 15% affordable housing, because it would eat too much into their profit and make the scheme un-viable.

Flaw number 1 – unless you control the land, you’re forever fighting a rearguard action through the planning system to get anything close to 35% or 50% affordable housing, let alone high environmental standards, good public space, and so on. Boris Johnson’s daft scheme to give Londoners first dibs on new homes ran up against this reality – developers just sold to British investors before foreign ones.

When looking at sales, they assume that over half the homes will be bought by investor landlords, mostly British buy-to-letters or big time investment funds, and mostly to be bought before the thing is built. These sales give the bank confidence to lend, so the whole thing can go ahead.

Flaw number 2 – no policies that make a serious dent in rent levels or landlord profits will be acceptable, because they will break this sales model and so stop the housebuilders dead in their tracks.

Big housing associations do a little better. But faced with cuts to the grant they get for each home they build, and having the Right to Buy imposed upon them, the bigger housing associations are increasingly acting like private developers. They finance their schemes with private sales to landlords, just like any other developer.

The most councils, mayors and the Government could hope to achieve with their policy tweaks is to ensure that perhaps 35% of new homes are affordable, rather than 25%, and that slightly more already-reasonable landlords sign up to a voluntary ‘good behaviour’ scheme, and that more new homes are built by big institutional landlords that increase rents faster than wages but by by predictable amounts.

The result is that local communities in London look at towers of luxury flats rising above them and complain. In places like Brixton, with a history of racial discrimination, the effect of pricing out young people of Afro-Caribbean heritage is especially charged.

So given all of this, I turned the credibility question on its head. I asked the panel: why do community-led groups have to fight for credibility, and why do councils think the current mainstream approach has any credibility at all?

It’s not delivering for the common good. It’s a system that enriches landowners and transfers control of land to wealthy investors, while delivering precious little benefit to existing residents on low or average incomes.

We need deep, radical reform to achieve a functional housing market. That will require a major shift in thinking from politicians and policy makers, including think tanks like the Resolution Foundation.

In the meantime, community-led groups like Brixton Green show that you can break the mould and produce something credible in that fuller sense – financially viable, and providing for the common good of the local community. What’s more, it can be done within the current system.

Shouldn’t that sort of thing be the only credible game in town?

One Comment

  1. Alexander Baines-Buffery said:

    Where can you find information about how councils are structured?

    there seems to be a democratic failure. Would they be able to do this if they thought they would be voted out at the next election?

    We are trying to get a local road slowed here. It would be really useful to be able to get a chart of who sits on the decision making board. When they are up for election and who they are each answerable to.

    In this case as well it seems knowing who to pressure would help a lot.

    8th March 2017

Comments are closed.