Towards a Housing Position Paper

[Version 3 - 13th July 2008 - Striked out two sections which should be in proposed strategy paper instead]
[Version 4 - 29th July 2008 - Added gap for short term perspectives]

Short Term Perspectives Section

The policy of the organisation is first and foremost the position papers as drawn up and amended by conference.

Position papers are divided into a general section and a short term perspectives section. The general section contains the theoretical position of the organisation on the question and should be framed in a way that will not allow it to become quickly dated. The short term perspectives section outlines the organisations policy on immediate questions and the tactics we intend to implement.

General Secion

Our Program

Housing Co-Ops

We believe the fairest and most democratic way to deliver rented housing is through fully mutual housing co-operatives. In that structure, the tenants double as the collective owners of the houses themselves. That marks an end to patronising tenants or treating them as second class citizens, as happens elsewhere in the social rented sector. The housing co-operative members decide amongst themselves their rent levels and their investment and maintenance spending, and collectively appoint any professional housing staff or contractors that they decide they need. That structure places the tenants completely in charge of their own homes. It takes power away from private entities and professional organisations and gives it back to the ordinary people, to run their own homes the way they want.

The rich and powerful interests in current society do not like to see direct power being given to ordinary people, and so place obstacles in the way of new housing co-operatives forming, and put pressure on existing housing co-operatives to convert to some less democratic structure. Those are in no way insurmountable barriers, provided you are determined enough, but there would be far more housing co-operatives in existence if we had a favourable climate from banks and governments.

Case Study

Castlemilk East Housing Co-Operative was a successful fully mutual housing co-operative in a deprived area of Glasgow formed in 1984. But in 2004 it agreed to dissolve and become instead a housing association, Cassiltoun Housing Association, as the behest of the government agency Communities Scotland. That was the price the co-op had to pay to receive new government grants, to be given charitable status (tax breaks), and to be permitted for bidding for ownership of badly managed council houses in the area. It is not surprising that that housing co-operative made the decision it did, but note that was all a result of a stacked deck from the government. There was no reason, other than government determination, not to give the co-op all those tempting offers and still keep it as a co-op.

Cassiltoun Housing Association still retains a lot of its housing co-operative ethos, but the history of similar organisations shows that there is great risk of that dissipating over time, especially if it grows to the proposed much larger size by taking over hundreds of ex-council houses. It may eventually turn into just another large and undemocratic housing association, one where tenant involvement is more symbolic than real.

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Bank Finance

During the 2000’s housing bubble banks were happy to extend buy-to-let loans to private individuals planning to rent out houses at profit, even though those loans were highly risky. Many banks are close to bankruptcy today (late 2000’s) because of this. Substantial numbers of ordinary workers went and turned themselves into part-time private landlords with the help of this easy credit. But at no time was it anything other than very difficult to persuade a bank to extend loans to a new housing co-operative. New co-operatives in Britain had to scrabble around for small scale financing away from the mainstream banking system, through dedicated organisations such as the Radical Routes network. Now I don’t want to over-emphasise the difficulties of financing a housing co-op: it is possible and many succeed in doing so. But there is a double standard in place for financing.

Our aim is not just to end the double standard, but to go further and change the rules so that finance flows mostly to housing co-ops, rather than the alternatives, and that loans to private landlords cease altogether.

Government Grants

Social rented housing receives subsidies from government, especially for new build housing where most of the costs are met by grants. In Britain, this is through the Housing Assistance Grant, which is provided by central government, but administered and allocated out by local authority. Together those two government entities tend to favour housing associations as the main recipients. Council housing tends to excluded in most circumstances, and housing co-operatives tend to be most excluded of all. These are intentional policies of government which can and should be reversed, to make co-operatives the primary or even sole recipient of grants.

Finally, council housing is exempt from paying Value Added Tax, while co-operatives are not. And housing associations are allowed charitable status, with associated tax breaks, while co-ops are not. Again these are intentional government policies, that could and should be reversed.

Housing Associations

Housing Associations vary widely in quality, democracy and accountability. At best, they come close to the ideal of housing co-ops. At worst, they are secretive unaccountable landlords treating tenants with contempt. As general rule, the smaller the housing association the better (more democratic and responsive) it is, and the larger the housing association, the worse it is. Unfortunately, the trend is for housing associations to merge into ever greater sizes, eventually creating monster housing associations spread over huge geographical areas. That takeover and merger mania is being driven by government policy – the rich and powerful no more wanting to see tenants in power through housing associations than through housing co-ops. But government policies on that can and should be reversed, and the large housing associations be broken up into more natural local units.

So called ‘community controlled housing associations’ are often nothing of the sort. In some, especially the larger ones, senior management exercises power over tenants on their own behalf. The association management committee may form itself into a secret clique, failing to publicise notices of annual general meetings, or of methods of standing for election to the committee. Some committees are tame lackeys of the housing association director. Other management committees are dominated by people who are not tenants of the housing association, and whose main interest is to protect the value of their houses by excluding and evicting working class tenants and trying to wind down the housing association as a whole. It is perverse that housing association management committees are open to residents of the area as well as tenants. But that situation is allowed and encouraged by the government’s housing regulator, who could, and should, insist that housing association management committees exclude people who are not tenants. Or at least, where a housing association acts as a factor for owner occupiers, membership be restricted to tenants and factored owner occupiers only, with an inbuilt requirement for tenants to form the overwhelming majority of members.

But some housing associations are genuinely democratic and work for their tenants. Those tendencies should be defended and encouraged. Sadly, government policy is to encourage the exact opposite, and drive tenant and community control into the history books. They will succeed in that aim if we all sit back and let them do so.

Housing Associations were originally a vast improvement on council housing – they were more local, more democratic, more accountable, and provided better quality housing and repairs to tenants. But that is more and more often ceasing to be the case.

It is important to insist that Housing Associations be fully democratic, with regular elections to their management committee, that elections be open to all tenants, and that tenants comprise the whole or the overwhelming majority of their management committee. It is also important to insist that housing associations be kept at human scale. In effect, this means housing associations which are alike to housing co-operatives.

Glasgow Housing Association is a special case. Despite the name, it is not actually a housing association as such at all. It is instead a quasi non governmental organisation (quango) of the Scottish Government, with a few token hand picked tenants comprising an ignored minority within its board of management.

Council Housing

Municipal housing was originally a great success, with substantial numbers good quality front door houses being built. The post first-world-war idea of ‘homes fit for heroes’ was that working families should be taken from the private landlord slums and given quality rented housing outwith the private sector. Most of those houses have now been privately bought though the right to buy scheme of Margaret Thatcher.

But from the 1950’s it all started to go wrong. Quick concrete flats were built instead of houses. They were often cheap brutal imitations of the architecture of Le Corbusier. In many cases in Glasgow, good stone tenements were unnecessarily demolished to be replaced with poorer modern flats. New ghettos were created and the tenants within them came to be treated as subhuman by the state authorities who controlled them.

Artificial scarcity and politically controlled housing allocations are very useful for the purposes of control for those in power. MPs, Councillors and senior officials exerted huge influence over who was placed where in the housing allocation list, and that power of patronage left many in their debt and under their control. When the state is the only social landlord in existence, civil liberty is reduced. The situation was worse in Eastern Europe, where the state was the only provider of urban housing in existence, and families were made to share houses unless and until they became properly loyal to the regime, but a smaller imitation of that was carried over to the West.

But like housing associations, councils do not have to be corrupt entities of state power.

Small scale local councils will also tend to make more democratic and accountable housing providers. The worst council housing has been from the biggest monolithic authorities – Glasgow City Council, Chicago Housing Authority, Leningrad Council Housing Department. In contrast, community and neighbourhood councils tend naturally to be more democratic and accountable and open, and more responsive to tenants needs.

Council housing does not have to be monolithic and undemocratic. It is possible to devolve power to tenants at local level. Tenant management co-operatives were very successful in Glasgow. They are a halfway house to full housing co-ops: the management of the stock (repairs and maintenance) is done by the co-operative, while ownership, including the power to set and collect rents, remains with the council.

Tenant management co-ops were especially useful where they were combined with a ‘local letting initiative’. That gave tenants the power to decide who would be allowed to move into vacant houses in their area. That is vital in excluding anti socials – who are sometimes deliberately used by housing officials to run down an area prior to gentrification, like some sort of anti-tenant heavy artillery kept in reserve by a social landlord. At times local letting initiative committees could attract ‘nosy neighbour’ types who were too quick to judge and exclude, but that is a danger of genuine participatory local democracy everywhere. It was still a huge improvement on allocation of houses by mysterious point based waiting list systems, or on the basis of political or official patronage.

So tenant management co-ops, when they included local letting initiatives, came close to having the power and structure of the small community based housing associations.

However it should not be pretended that it was easy to have tenant management co-operatives or local letting initiatives empowered. Ruling politicians do not like giving away their power. Tenant management co-ops in Glasgow have now all been reduced in power and renamed to be local housing organisations. And those in turn are rumoured to be forced to merge into large scale entities which will make local democracy and accountability difficult.

Which is best – Council Housing or Housing Association?

Our preference is for fully mutual housing co-operatives. Failing that, that which comes closest to that ideal should be preferred.

In some circumstances that means council housing would be preferred – especially where there is a tenant management co-op, or a local letting initiative, or where the council itself is small and democratically run.

In some circumstances that means a housing association would be preferred – especially where the housing association is small in size, and is open and democratic and accountable to its tenants.

Housing Co-operatives

Co-ops in Britain (mostly England) are often tiny outfits, and are few and far between. That is a result of deliberate state and financial policy. Those policies can be changed. And in some countries, changes have already been affected:
Case Study - The Norwegian Federation of Co-Operative Housing Association (NBBL)

At the end of the second world war, when Scotland went down the council housing route for its housing, Norway instead concentrated almost exclusively on co-operatives for housing low and middle income groups, including the disadvantaged. The Norwegian strategy achieved a relatively equal social distribution of adequate housing standards with relatively low public expenditures. There can be little argument now as to which country made the best decision.

Today, 40% of the houses in Oslo are owned by housing co-ops. Norway as a whole has 4,500 different housing co-ops, each with an average of 50 houses.

Because of their small size, these co-ops often affiliate to secondary co-operatives called 'co-operative housing associations', which provide administration and property management services to their member housing co-operatives. And there is then historically close co-operation between those organisations and the local government in which they reside. Norway has especially small local government units, which helps such co-operation further.

Crucially, the Norwegian government established a state housing bank specifically in order to channel affordable finance to housing co-ops.

NBBL's value statement is worth quoting: "Firmly grounded in co-operative values of self-help, self-responsibility, democracy, equality, equity and solidarity, NBBL believes in the ethical values of honesty, openness, social responsibility and caring for others, adhering to the international co-operative principles as stated in the International Co-operative Alliance Statement on the Co-operative Identity."

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Case Study - The Union of Housing Cooperatives in Batikent, Ankara, Turkey (Kent-Koop)

In the western suburbs of Ankara lies the world's largest co-operative housing estate, Batikent, with a 1/4 million population living in 50,000 houses. The houses are owned by several distinct primary housing co-ops, which are then federated together into the Kent-Koop union. Much of the Batikent planning, and its residents, came from Ankara trade unions and individual workplaces.

One possible caveat with Turkey though is that the Kemalist elite and military have a habit of interfering in civilian life, and there may be a risk of undemocratic influence being exerted on large housing co-operative federations such as Batikent.

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Why Housing Co-operatives?

In the future, we hope that local government will be genuinely small and local, at neighbourhood community level, and run by the direct democracy of its citizens. Why would we favour housing co-ops over council housing when we get genuine small local community councils empowered?

To some extent the difference is semantics: neighbourhood community council housing, tenant led community based housing associations, and mutual housing co-ops all merge into one another.

"What’s in a name? that which we call a rose
By any other name would smell as sweet;
So Romeo would, were he not Romeo call’d,
Retain that dear perfection which he owes
Without that title. Romeo, doff thy name;
And for that name, which is no part of thee,
Take all myself."
And there is no reason for disagreement over institutions which are similar in practical effect if not in name. Provided the institutions we devise fulfil the ideals of tenant control, community control, democracy, accountability, and openness, then the name or exact form of the institutions matters little.

But the difference is not entirely semantics: there remain some substantive differences, even if they are minor when viewed from within the present system. Even in the most ideal situations of neighbourhood community councils practising direct democracy, there would still be reasons to prefer housing co-op over council housing. Two reasons:

1) Size

Local government units will often be larger in size than a housing co-op needs to be, and that will likely continue to be the case even with the smallest possible size of community council government being adopted in libertarian reforms. A local government would typically need to be big enough to support its own primary school, and possibly also its own general practitioner family medical centre. Housing co-ops just need to be a block or so of flats in size. So you may have more than one housing co-op in a single local government area. To be sure, you could force local governments and housing co-ops into the exact same size, but that might be a bit unnatural at certain times and places - you would maybe have smaller local government than was desirable, or with bigger housing co-ops than was desirable.

If there were secondary housing co-ops (they provide the professional staff, rent collection, concierges), they could more likely be co-terminus with the local governments. But the second reason below would argue against even that.

Community Land Trusts would be the same as small local government community councils, so that if and when the second were ever established and empowered, they would then assume the role of the community land trust as one of their functions.

2) Participation in Decision Making

We are proposing that there be a lot of owner occupied housing (under community land trust restrictions). The owner occupiers participate in their local government. But they should not participate in running the rented housing in the area. that's up to tenants alone. A housing co-op makes clear the distinction. One of our problems with community based housing associations is that they are often run by owner occupiers rather than tenants.

Here is a fundamental principle of governance: you should participate in decisions that affect you and yours, but not in decisions that affect other people only. The ideal of an absence of rulers requires that men limit themselves to exercising power only over that which is their business. Tenants issues are a matter for tenants alone.

The name 'housing co-operative' makes clear where authority and ownership lies.

Private Landlords

All the differences between different social rented structures – co-ops, council houses, housing associations – fade into insignificance when compared to the horror of the private rented sector.

We believe profit making corporations and private individuals should not be allowed to rent out houses. We believe that landlords should be abolish altogether.

The recent (2000’s) trend against social rented housing to a resurgence of private landlords is something that should be opposed and reversed. Fortunately the financial collapse of the housing bubble makes this a much easier battle to win. With the private housing market likely to be non-functioning for several years, a switch back to social rented housing is obvious common sense. But even when the private housing market does function, we still believe as a matter of principal that private landlordism is an evil that has no place in a fair and democratic society. As the huge landed estates were broken up in mainland Europe by a process of land reform, and given over to their former tenants, so the private landlords should similarly be subjected to a process of housing reform, where their rental property would be taken from them and given to their former tenants in the form of housing co-operatives.

Absentee landlordism is no more acceptable in housing than it is in agriculture.

In the end, we believe tenants should have no legal duty to pay rent to private landlords, and that private landlords should have no legally enforceable right to evict. Contracts for private tenancy agreements would simply be disregarded by law courts.

Compensation for Private Landlords

Some private landlords are small scale operations who see much of their rental profits lost in bank interest payments. Some are themselves waged workers, who rent houses in their spare time and use their property ownership as an alternative pension for their old age. As a matter of principle, such landlords should be fully compensated for their loss of property when it is given over to the former tenants and the community.

Also, there are the interests of social peace to consider. For reasons of politic, compensation should be paid even to the giant landlords who loose out by the change. That compensation may be capped or partial for the wealthiest landlords, but it is important that no one feels they have nothing to loose, and so in despair lets loose political violence to defend their former position. Civil wars and violent revolutions tend to be of benefit to those who want to establish dictatorial rule, and not so much to the ordinary people as a whole. The historical land reforms undertaken against absentee landowners of agricultural land were often gradual, legal, and included compensation – but they achieved the desired result. So it should be with housing reform.

Owner Occupied Housing

Private ownership is only unacceptable where property is rented to tenants. People owning the homes they live in (as opposed to owning the homes other people live in) is a good thing.

Indeed, owner occupied housing is just a special case of small housing co-operative – one where the co-operative membership consists of a single household, and where the co-operatively owned property is a single house.

It would make sense for detached houses to be owner-occupied, and for blocks of flats with shared areas and communal facilities to be housing co-operatives. In some circumstances there may even be a mixture of the two – with the individual unit parts being owner-occupied and the communal parts being co-operatively owned and managed by the members. In Scotland, that would be a co-operative equivalent to factoring.

Rural and suburban areas would have mostly owner-occupied housing. Urban areas would have more housing co-ops. Families would mostly own their own homes. Young single people, childless couples, and the elderly would be more likely to rent from a housing co-op.

Community Land Trusts

There is one downside to private ownership of houses. It comes not from the ownership of houses per se, but from the ownership of the land on which the house is built. Currently the land ownership normally comes along with the house ownership itself. But we believe the two should be separated, and that the land itself be entirely under community control.

Ownership of land, where the ownership rights include the right to alienate (sell at profit) the land, should be retained by society, by the local community of residents as a whole. It should never be extend to individuals, or to restrictive membership groups including even co-operatives.

Ownership of land that does not include the right of alienation – sometimes called use or usufruct – should be granted out to private individuals and co-ops. They would have full security of tenure on that land, and right of heritability so they may pass it on to their children, forever. But they would not have the right to sell up to a third party and pocket the profit from the rise in land values. The profit from rise in land values does not belong to private individuals, but to society as a whole.

If they decided to move on, the land would revert back to the ownership of the local community. A surveyor would determine a fair price for the buildings standing on that land (but not for the land itself), and the departing owner would receive that payment from the local community as it assumed ownership. Owners would have an incentive to maintain their buildings in good condition, since that would affect the price they would receive. And they would undertake improvements and repairs safe in the knowledge that they will be reimbursed for them if and when they move on. There would therefore be no private market in land, and no possibility for private gain from rise in land prices. That would be a shame for those people, including some ordinary workers but disproportionally benefiting the wealthy, who benefited from the housing price boom during the mid-2000’s. But it would be good for the many people, especially younger people, who today cannot afford a house because of booming land prices. And after all the point of land use policy ought to be to provide affordable housing for everyone who needs it, not to benefit a lucky few from speculative price booms.

There may be an arrangement where ground rent or land value tax is collected from the owner occupiers by the community land trust. That is based on the value of the land they occupy, not on the buildings (if any) constructed thereon. It is normally set at a very low level, and pays for the administration costs of the community land trust. But it could, following the ideas of Henry George and green economics, be set at a higher level, closer to what the market value of rental the land might be. Funds generated in that way would then be used for the common good.

There are growing numbers of community land trusts in the United States, where they have acted as islands of affordable housing during house price booms. Members of Praxis’ fellow organisation, the Workers Solidarity Alliance, are involved with the community land trust movement in the United States, and have written on the subject in more detail. Typically community land trusts have an associated housing association within them, and so there is a mixture of tenure types amongst the houses built on the community owned land: some owner occupied, and some rented.

Note that community land trust restrictions would apply to housing co-ops as well as individual owner-occupiers. The entire membership of a housing co-op would no more be allowed to alienate the land on which their houses sold for the profit of their members, than would a private individual.

Our Vision

In the future:

Everyone who wants to, will own their own home individually

Everyone else, will not rent from a private landlord or from a bureaucratic institution, but will be a joint owner of their home through a housing co-operative. In those organisations, tenants will be in charge. They will be joint owners with full rights

Private landlords will not profit from the poverty and lack of access to credit suffered by their tenants. They will no longer evict tenants at their pleasure. They will instead, cease to exist.

Rent to private individuals will cease to exist as a concept.

Private landlords will lose title to their land and buildings. That will be transferred to the former tenants, who will be the new owners, and so will be emancipated.

Land will all be owned by the local community as a whole.

Windfall profits from rise in land values will accrue to the community as a whole, rather than to private individuals

Community Land Trusts (initially), or neighbourhood level community councils (eventually), will manage the land for the local community.

They will see to it that land is affordable to those who need a home.

They will allocate parcels of land to individuals and to co-operative groups for their own use, with terms of lease including full security of tenure and the right of heritability.

A ground rent or land value tax may be levied by the community upon the leaseholders of its land, especially upon those who lease large or valuable areas of land.

Individuals will build their own houses upon the land they lease. And they will own those houses and have the right to sell the buildings (but not the land) to successors to the lease.

Others, according to their desires, will instead allow a housing co-operative to build houses on their behalf, and will then join that housing co-operative and in effect rent their part of the buildings from the co-operative as a joint owner. Housing co-operatives will particularly serve the elderly and those others who are in no position or have no desire to carry out building and maintenance work on their own behalf.

People will no longer be flung out of their homes at the whim of a private landlord. Nor will they be dictated to by undemocratic state housing bodies. Nor will working families be left unable to afford to buy their own home.

Instead, people will have security of tenure and ownership rights in their homes. And housing will be available to all, and at fair and affordable prices.

If you will it, it is not a dream

Such a position is not beyond our wit to achieve. It will require enough of a will from society as a whole, especially in determination to face down those few, but influential, private interests who will loose from the establishment of a just society.

Our task, according to Noam Chomsky, is to develop institutional arrangements that maximize worker and community control and other aspects of freedom and justice. We hope this paper goes some way to advancing that goal.