Historically, communities have been conceptualised as proponents of NIMBYism (not-in-my-backyard) in the housing sector. Yet, increasingly these attitudes are reversing. In the last decade, a new significant component of third sector housing has emerged: community-led housing. Dissatisfaction with the unaffordability of housing has spurred a desire in communities to change housing conditions that has been catalysed by political discourses, like Cameron’s Big Society and the Coalition’s Localism agenda. What was once a niche portion of housing delivery has become a national movement. There are 15,000 community-led homes in the pipeline and 87,000 people are members of community housing organisations.
Of almost 290 CLTs in England, 78 of these were formed in 2018/19. CLTs are organisations that create and manage property for their surrounding community. CLTs remove land from private property markets, award the community indivisible ownership rights and secure a land use in perpetuity for community benefit. CLTs achieve this through establishing an “asset lock”, a legal protection meaning the use cannot be sold on the open market and must remain in community use, so ensuring long-lasting affordability. CLTs are not-for-private profit, so all financial surpluses must be reinvested into the community.
The model suffers a number of challenges. Given the high cost of land, funding and finance are a significant obstacle for CLTs. This is compounded by a lack of awareness of the model’s troubling efforts to pursue mortgages or other private finance routes. Spatial inequalities have thus threatened to become principal determinates in the geography of CLTs usage. In addition, CLTs often suffer from skills shortages, particularly given the breadth and depth of skills needed for housing development and management. If the model is going to be successfully grown and scaled-up, this limit must be tackled. Strong organisation and management are subsequently an imperative for CLTs. One solution that has been utilised is partnerships. CLTs have partnered with developers, local authorities and housing associations to bypass their skill shortages.
CLTs also are in danger of losing their properties through Right to Buy (RtB) or leasehold enfranchisement. These threaten the ability of CLTs to exist in perpetuity and override the asset lock protection. Any partnerships with RPs or use of funding that requires a CLT to become a RP contains the threat of RtB.
To overcome these challenges and encourage growth in the sector, there has been significant provision of government funds in support of CLTs. The GLA created the London Community Housing Fund: a £38 million fund that aims to create a pipeline of 1,000 community homes by 2021, with 500 of these delivered by 2023. The fund remains open till funding is either fully committed or the scheme’s end date, March 2023, is reached.
For the rest of England, the central government created the Community Housing Fund: a £163 million fund for delivering 10,000 homes through community-led housing projects and aiming to make the community-led housing sector self-sustaining, in terms of skills and finance. This funding is split into two separate funds revenue funding, supporting the development of community-led housing proposals, and capital funding, supporting the cost of building. However, last week Inside Housing revealed the revenue funding had been fully spent resulting in many CLTs, that had been promised funding for schemes, being placed into unexpected hiatus. Unfortunately, as is the practice with Homes England funding, these CLTs carried out work and incurred costs before the funding was received, so now they need to pay creditors but do not have the monies to do so .Uncertain when these debts will be paid, many projects have stalled and there could be potential significant reputational damage to the sector and the CLT model. Capital funding is though yet to be spent.
Homes England do say they are hoping that within the Spring Budget there will be more money for community housing, however there is no assurance of this. The National CLT Network is campaigning for a five-year extension of this fund, given the government’s commitments in its manifesto, as a matter of urgency.
The CLT model offers an attractive and effective mode of housing delivery that needs to become a firm component of third sector housing. Yet, there are significant resources, skills and funding challenges, particularly given the current problems with government funding. Therefore, it is imperative that CLTs are well-organised and aware of these obstacles so their potential can be fully realised, and unaffordability tackled.
Altair have worked with a range of CLTs on multiple different issues, including governance advice and financial appraisals. If you would like to hear more about the services we can offer CLTs, please contact Gilly Tobin, email@example.com.