NEW REPORT HAS ANSWER TO CURRENT HOUSING CRISIS

Britain urgently needs a new mutual home ownership model to solve the dire lack of low-cost key worker housing, says a new report released today .

As house prices continue to rise, even career professionals are finding it more difficult to get their foot on the property ladder. Those worst affected are workers on average incomes, earning between £15,000 and £25,000, who are neither poor enough to rent from a social landlord nor affluent enough to rent or buy in the open market.

Recent schemes such as the Starter Home Initiative, Shared Ownership and Homebuy have not succeeded in increasing the supply of permanently affordable housing for key workers in high cost housing areas.

David Rodgers, Executive Director of CDS Co-operatives, co-funders of the report, Common Ground - for Mutual Home Ownership, said: "Previous measures put in place to solve the key worker issue, whilst welcome, have had a marginal impact on the problems key workers face in securing a decent home they can afford in over half of the country, where housing costs are high in relation to average incomes.

“Crisis point has been reached. Public services and local businesses are suffering because they are unable to recruit and retain suitable staff.  We need to address this issue now if the Government is to achieve its objectives of improving public services.  The report proposes a radical and innovative way of creating a permanent supply of affordable housing at a price key workers can afford."

The report, “Common Ground - for Mutual Home Ownership”, funded by CDS Co-operatives and the Housing Corporation and researched by the New Economics Foundation, recommends a co-operative model of home ownership in which residents have an equity stake in the property they live in, but which remains affordable to others on low to moderate incomes when residents leave. This gives the mutual homeowners the opportunity to invest in their home and the incentive to look after and improve it, while at the same time the land on which their home is built is held in trust for the benefit of future generations.

Policy Manager at the Housing Corporation, Adrian Moran said: "We have supported this initiative which provides housing which is affordable in both the short and the long term.  It gives key workers equity shares in their housing which allows them to benefit from any increases in their equity shares, while at the same time giving them control over their housing."

The recommended mutual homeownership model is based on two core elements: a Community Land Trust to hold land for "community benefit" outside the market and a fully mutual housing co-operative.  

This proposed structure gives the co-op members access to lower mortgage rates and monthly payments are flexible and based on an affordable percentage of a key worker's income when they buy into the co-operative. It means that the housing concerned stays affordable and any public subsidy is locked in and preserved for future generations.

Another important element is the residents have a real interest in the ownership of the property, which meets the aspirations of key workers who participated in the research. They will be responsible for maintenance and repair of the interior of the property and have the ability to alter or improve it if they so wish.

The fact that the scheme is flexible is key to the entire proposal. The equity paid out to departing residents is proportionate to the amount paid and its growth in value.  During the time in the property, residents will be able to increase their equity stake, or if their circumstances change, decrease it. 

“We are, in effect, creating a mutually owned property unit trust which is highly flexible in meeting the housing needs of key workers.  The report’s recommendations are a positive response to the call made in the Greater London Authority’s report on key worker housing for innovative, permanent, sub market solutions to this acute problem” says Rodgers.

The remit of the brief to the New Economics Foundation was to research the housing conditions, needs and aspirations of workers on average earnings in both the public and private sectors. It focused on two contrasting areas, London and the South West, both of which have been dramatically affected by a huge rise in the cost of housing. In-depth interviews were conducted with workers and housing providers, as well as with major employers, including hospitals and schools.

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	Publications Common Ground - For Mutual Home Ownership