Labour should look to it’s cooperative values for the answer to the housing crisis

Building 1.5million new houses won’t address the UK’s affordability crisis and will make it even harder to meet our legally binding Net Zero Target by 2050. There are better ways to make our housing system work for people and planet.

For all the policy areas that Labour and the Conservatives differed during their election campaigns, housebuilding priorities were strikingly similar: the Tories proposed building 300,000 new homes a year by 2025 and Labour pledged a similar target of 1.5 million new homes by the end of their first term in government.

So central is this to Labour’s plans that the new government is “turbocharging” these housebuilding plans from “day one”, with local authorities instructed to “regularly review” green belt boundaries and hire 300 new planning officers.

According to Rachel Reeves, this is an urgent response to the intergenerational and class-based gap in home ownership: “We know that for [working-class] kids like us today, some of those opportunities [to own a home] don’t exist”.

Reeves is not wrong and the problem is vast: 7.9million people are currently experiencing unmet housing needs, caught between an impossible to enter home ownership market and a hyper competitive and overpriced rental market.

But, there are two massive problems with Labour’s emphasis on housebuilding.

Labour’s plans were way better than the Tories. They included more provision for urgently needed social housing, for example. But, they still centre on the premise that we can build our way out of the housing crisis. And this isn’t going to work.

First, housebuilding, even at the level of 300,000 a year, will not shift the dial on house affordability. The evidence shows that the growth of housing stock has a limited effect on housing affordability: every 1% increase in housing stock per household (currently about 300,000) is estimated to deliver just a 1–2% reduction in house prices (Auterson, 2014; Oxford Economics, 2016), which is negligible in the context of a 181% increase in mean English house prices from 2000 to 2020, from £84,620 to £253,561 (HMLR, 2022).

So if Labour does build 300,000 new houses in its first year, will this help those younger, working-class people onto the housing ladder? Its very unlikely. Not only is a 1–2% reduction a fraction of what is needed to make housing affordable, it will also be blown out of the water by the increase in prices that follows the reduction in interest rates this Autumn.

Secondly, construction of 300,000 new homes a year is estimated to consume England’s whole cumulative carbon budget by 2050.

Housebuilding itself is a high carbon intensive activity and, more widely, emissions from housing and construction (production, operation and maintenance) contribute a massive 27% of all annual global carbon emissions.

Furthermore, we have incredibly inefficient housing stock in the UK and, mindbogglingly, we’re not building at a high standard of efficiency even now. The proportion of new builds with an energy performance certificate (EPC) band ‘A’ is somewhere between 1–1.5% per year from 2014–2020 (MHCLG, 2021b). Its painful to conceive, but most of the houses being built now and by the new Labour government will have to be retrofitted in the future to be compliant with 2050’s net zero target.

In this, we’re just adding to an already gigantic retrofitting challenge: 54% of current homes in England have an EPC of D or worse and nearly all require retrofitting.

The scale of new housebuilding proposed will also likely have a devastating effect on biodiversity, which isn’t a nice to have, but absolutely essential to our capacity to feed ourselves and breath clean air.

There are legally binding targets and frameworks in place for both Net Zero by 2050 and reversing biodiversity loss. All developments, for example, must now achieve a ‘Biodiversity Net Gain’, but recent evidence does not suggest this is working effectively (yet).

Ultimately, even with significant improvements in supply-side sustainability, building loads of new houses comes at a high environmental cost. And given how long the UK has now been building low quality, highly inefficient housing, there is no reason to believe that we can both radically scale up production and transform carbon and biodiversity impacts simultaneously. Most likely, we will ‘lock-in’ more damage and pass on even further decarbonisation costs to future generations.

Wealth accumulation, under-occupation and inequality

Why doesn’t building more new houses reduce house prices?

This counterintuitive truth about England’s housing system points to its deepest dysfunctions: the relationship between supply and cost has been eroded as house ownership has become primarily established as a means of accruing wealth.

Since the Thatcher reforms of the 1980s, this principle has continued to accelerate and manifests in rampant overconsumption of housing by the wealthiest groups: via landlordism, with 2.82m landlords currently operating in the UK; through dramatic increases in living space inequality, with the wealthiest households growing their living space to five times that of the poorest between 1980 and 2011; and the through a 100% increase in the number surplus of dwellings relative to households, which has grown from 660,000–1.23 million homes from 1996 to 2019 and represent a mix of second homes, foreign-owned investment homes, and other classes of empty homes.

(If you want to understand more about the drivers of these trends and dysfunctions, this Ecological Economics article is brilliant.)

Shared ownership and co-living: a major potential contribution from housing co-operatives

So much needs to be done by the new Labour government, with energy and imagination, to reduce the hyper financialisation of the housing market and harness all this planned housebuidling to reduce the pain of housing unaffordability for millions. Regulation that creates real disincentives for second home ownership; policy that creates barriers to foreign ownership of UK homes; more council powers to bring empty homes back into use; incentivising downsizing; and, even more ambitiously, a ‘cap-and-trade’ system for floorspace.

As part of this, shared ownership and co-living represent both a traditional, well proven solution and, in the UK at least, an opportunity for radical shift in how we understand housing.

Machynlleth Housing Cooperative in Powys, Wales

It is a very basic concept: a group of people set up a shared vehicle — a cooperative — that purchases a property and then they control and manage it, setting rents, making decisions and meeting their own housing needs.

In relation to the dual crisis we face, of housing affordability and climate change, housing co-operatives are uniquely well placed to contribute.

1. Efficient use of capacity — housing co-operatives represent a highly efficient use of housing capacity, combining personal / family and shared living spaces productively and creatively to enable high occupancy while respecting the needs and comfort of community members. Housing co-operatives also have a track record in opening up new housing capacity, enabling conversion and retrofitting of disused non-residential buildings, such as former civic and industrial spaces.
2. Increased housing affordability — housing co-operatives provide greater potential for affordability than private ownership, setting their own rents and normally benchmarking at or below the level of Local Housing Allowance. This is due to highly efficient use of capacity, community ownership structures that eschew the accrual of wealth from property ownership and shared commitments that keep maintenance and running costs low. Over the long-term, this accumulates into a structural impact on the housing system, as more properties are taken into community ownership as permanent sources of affordable housing, rather than sold and resold for profit.
3. More sustainable living — as well as maximising the use of existing housing capacity in ways that reduce the need for further ecologically damaging housebuilding, housing co-operative communities share values and ways of living that tend to minimise their footprint, such as investment in retrofitting, shared food production, low carbon diets and carpooling.
4. Increased housing security — in the midst of a housing crisis that continues to exacerbate insecurity, particularly through rapidly rising rent and mortgage costs and malign landlord behaviour, housing cooperatives represent considerably greater housing security for low income and marginalised groups. Alongside this, co-operatives tend to provide greater mutual care and support, building greater shared resilience to personal or family shocks or shifts.

What is needed?

The barriers for those wanting to set-up housing co-ops are many.

We’re part of the Radical Routes network, which works towards taking control over our housing, education and work through setting up housing and worker co-ops, and co-operating as a network. The experience of both housed and un-housed co-ops within this network is that the journey is far more challenging than it needs to be.

For example, despite incredibly low default rates, loans to co-ops are available from a very small number of ethical lenders and the process can be very long and unwieldy and existing owners and agents tend to privilege private buyers. These combine to heavily disadvantage co-ops in the market.

But this isn’t that difficult to fix. It just needs attention, ambition and some creativity.

Here are 4 starting points for unlocking affordable, sustainable, community centred housing for millions more people:

1. Policy: loads of quick wins here, such as tax breaks for housing co-operatives, friendly regulation and simpler planning processes
2. Awareness: there are low levels of awareness of housing co-operatives as an option, including amongst those most affected by unaffordable housing, and Radical Routes gatherings are one of the very few places you can go to start your journey
3. New mechanisms and ways-in: design and innovation is needed to create more options for a much wider set of groups, such as co-operative housing integrated with social care services for the elderly, or co-operatives incorporating co-working spaces for residents, as Nadeem Chaudry suggests.
4. Funding: policy changes and other removal of barriers will provide better access to the capital that is already available, but more funding is also needed, including more forms of investment from more banks, as well as “early stage” grants to support housing co-operatives set-up, plan and secure properties

The new Labour government doesn’t have to look very far for these ideas: Labour and the Co-operative Party have had an electoral pact for almost 100 years and there are 25 Co-operative Party MPs sitting in parliament as part of the PLP. It’s time to learn from and lean on these partners for a radical overhaul of our toxic housing system.