3 Oct 2014
Paul Chatterton on Lilac Leeds Co-housing
Paul Chatterton is one of the founders of the Lilac Cohousing project in Leeds. BY day he works as a geographer at Leeds University. Lilac is a fascinating model for a new, more equitable and ecological approach to providing affordable housing. When we met Paul to learn more, we started by asking him what, in his opinion, is wrong with the current development model?
“Well I suppose if we take a focus from the view of Lilac there would be three things. The first is that it doesn’t seem to be able to develop or deliver low-impact housing that represents the kind of step change in carbon reduction that we need. The second thing is that it doesn’t really allow us to lock in affordability and perpetuity for future generations, which is a big issue given the drastic disjuncture between house prices and wages. The third thing is, it doesn’t seem to have an ability to build the meaningful sorts of relationships which communities are based on.
It just perpetuates this really corrosive individualism around being an individual owner-occupier, or indeed being at the mercy of private rented landlords or being stigmatised as a social housing renter. So put those things together and you’ve got an incredible dysfunctionality. The whole thing’s shot to pieces. We really need some quite hot-footed experimentation to respond to that.
Surely if we want the economy to grow again we need to build houses?
Where we live in Leeds for example, Leeds has got its own targets of 77,000 new houses needed in the next few decades. So therefore, if we look at what we already deliver, the big volume builders deliver most of this stuff. The growth areas which really need to be promoted around community and co-operative housing which is a tiny segment of the market can really grow, can really flourish in this context.
Co-operative housing in the UK is 0.5% of the market. So it has a huge opportunity to grow. As we build these really big, ambitious targets, some of which are actually questionable because we could talk about how we live as well, and the fact that people are under-occupying housing. But as we build houses, we’ve really got to rebalance delivery models.
The push at the moment for building absolutely everywhere – as communities now it feels like with a presumption in favour of development, planning authorities now getting a housing bonus for every new house that’s approved, it’s harder and harder for communities to resist unwanted inappropriate development. What are your thoughts on what communities can actually do to resist this stuff at this stage?
There are certainly lots of things. One interesting aspect which is possibly undervalued in the debate is the need to retrofit what we’ve actually got. We’ve got vast amounts of housing stock and basically how they retrofit it, so the millions of homes in the UK, how we take the terraces in the cities, the semis in the suburbs, and start to think how we can retrofit low-carbon infrastructure, affordability, different tenure models, and how we start to build in community infrastructure.
Take a terrace, create shared ownership across them; start knocking down back gardens and sharing gardens, take the middle home and make it into a common house where there’s a shared laundry, dining facilities, office space, meeting space. So you build in that conviviality infrastructure in the already existing streets. You can do this across every neighbourhood and street across the UK, it would be a really exciting proposition, retrofitting the stuff into what we’ve already got. We’re stuck with it, right? We’re not going to start mass clearances again like we did in the 60s.
How did Lilac come about?
It’s an interesting 6 year story of perseverance. There was a small group of us about 6 years ago who started to think about how we could live differently in the future. We started to throw around ideas, can we live co-operatively, can we build places where we genuinely would want to bring up a family, where we’re not going to feel isolated, that we can afford. So a lot of this stuff really necessitated ripping up the rule book and starting again. How do we work within and also beyond the current planning system, what are the co-operative affordable models we can use, shared ownership, and how do you really build an affordable low-impact house? We were always committed to straw bale building.
Lilac as an entity, as it emerged, we were really committed to building with straw, to being a co-operative and to building a strong community. So these different ideas came together in this lovely word Lilac, which stands for low impact living affordable community. It was a 6 year story of perseverance with loads of twists and turns, making deals, negotiating hard, sticking to our values, building our membership, so much the group has to do to get from idea to delivery.
And what is it?
In a nutshell, Lilac is a co-operative co-housing project. It’s comprised of 20 homes of different sizes, so there are some one bed, some two bed flats and three and four bed houses, so different sizes. There’s a big common house in the middle. If I was to describe Lilac, it’s a big 0.7 acre site. It’s an old Victorian school which was demolished and we bought it after the demolition. The houses are based around a big horseshoe shape with the common house in the middle. There’s a big pond and shared landscaping. We’ve pushed the car parks to the edge so the kids – and everyone – have got loads of car free space to play in. It’s like a blueprint of housing in the future that we can achieve right now.
It feels very different. When contractors and visitors walk into the site, they say – what is this place! Eco-Butlins? A retirement community? We have no reference points in Britain for doing things so radically differently. It becomes an aesthetic shock. People are just so overwhelmed when they arrive – and we can certainly link some photos to this interview so you can see what we’re talking about.
Why straw bale? What did that make possible that concrete blocks don’t?
There’s a number of reasons why we used straw. One is that it’s abundantly available in the UK and in the North, so we could really look at a very quick, affordable build. IT’s a really cheap build method, it offers great insulation values, so it’s a wonderful high-insulating product to use for building low carbon buildings. It’s got a wonderful feel. You coat it with lime render. We hooked up with a guy who’s running a firm called Modsel, who creates a pre-fabricated panel. So the homes go up very quickly. So that’s the low carbon side of it.
Straw and timber and lime are the three products which the house I live in now is built from. Three naturally carbon sequestering products. So in its use, tonnes and tonnes of carbon is locked up into the home, rather than bricks and blocks of cement which takes tonnes and tonnes of energy and CO2, pumps that CO2 into the atmosphere to create. So we’re on the carbon negative side rather than carbon positive.
On the community side, straw’s great because it really allows that hands on building with your community. It can be used for community building, that process of building a community. People would come down, we had a day in an off-site factory building the straw bale panels. Throwing straw bales around, putting the lime on. So it really gave people a connection with building their homes. So on those two levels it’s really great.
So the straw bale panels were tensioned and plastered before they came onto the site?
That’s right. They were made offsite in what we call a “flying factory”. The timber is high precision cut in Austria. It’s a shame that we haven’t got a supply chain in the UK. I think the North of Scotland is the nearest we’ve got and they’re working on that. So high precision cut, glue laminated timber arrives, so do the straw bales from the neighbouring fields, and so does the lime render, which is sprayed on.
All three products get put together relatively quickly into these straw bale panels. A tractor brings them to the site and they go up like Lego bricks. Basically, they come in the back of a tractor, you get a crane and they just get put together. So you can see your home go up in a matter of days. It’s very exciting.
What’s the economic model? These aren’t open market housing. You’ve developed quite a different, unique model for this.
That’s right. That’s what really gets people’s interest in this. It’s called a Mutual Home Ownership Society (MHOS), and we really want to see this replicated beyond Lilac. The basics of an MHOS is that because we’re a membership co-operative, everyone owns equity in their home. You buy equity by paying 35% of your net income to the society. So every month, every member pays 35% of their net income. All these 35%s go into a central pot which pays one mortgage we’ve got with the bank (Triodos Bank). That pays the corporate mortgage. So there’s no individual mortgages.
The interesting thing is you can take that equity away when you leave Lilac. So you buy equity which you can sell when you leave. The interesting thing here, this is, I think, the real wow factor behind it, is that the value of equity is linked to wages and not local house prices. So the value of your equity really flatlines or just dribbles up at just 1.5% a year as it is now calibrated to. What this means is we’ve taken the speculation and the commodification out of housing. So you can’t speculate on houses in Lilac. If you jump out of the housing market into Lilac, it might be difficult to get back into the housing market, but we really see what we’re doing as making a stand against rampant speculation. It’s got to start somewhere and we’re part of that.
So it’s quite a big deal. We’re a financial co-operative first and foremost and that’s a real stand against this corrosive individualism we’ve seen through the housing market and the housing bubbles over the last few years, especially since 2008.
The 35% of your income that you pay every month, that builds up as an amount. So you’re saying that when you leave you can take that in its entirety when you go?
Not in its entirety. And that’s where actually it does feel quite conventional. This mutual home ownership is not too dissimilar to home ownership. Every month, your monthly payments go towards buying your equity. When you leave, we apply some appreciation, the increase in average earnings, and we also apply some depreciation by which we take a bit of equity from people to pay for their use of capital items. If you take a roof on a house, for example, it might last 40 years. If you’ve lived in Lilac for 10 years, we deduct the value of 10/40ths of a roof from you when you leave. So in year 40 there’s a surplus to pay for those new roofs. It’s a little bit different to conventional home ownership in that sense.
We’ve got quite a fancy model which runs all this. We’ve got together with some great software engineers and created a piece of software called Dwell which runs all this. There are a lot of complex algorithms which run all this. Rather than it being a bedroom operation with people scratching their heads and trying to run it from their bedrooms, we professionalised it all and paid for some nice software. We’re trying to lay down bits of infrastructure that other co-ops and community housing projects can use in our wake. Without these bits of the jigsaw, it’s actually quite difficult for people to get this stuff off the ground themselves.
But presumably in order for that to work, you need to make sure you have a mixture of incomes in there. If everybody’s signing on or on very low incomes, it’s not going to generate enough money, surely?
That’s right, and we need to be clear that Lilac is what we call intermediate housing. This is that bit in the middle which is not very well served in the UK. This is defined as housing which is of greater value that would serve those lowest income centiles and it’s more affordable housing than those who could afford to buy their own home. So it’s the bit in the middle which currently is not being provided for in terms of the builders. OK, so we need more social housing, so we need to make an important argument that this should not take away from social housing.
So what we need in a mutual home ownership society is people with minimum net incomes. What we do for each house type is place a minimum net income which generates enough money to pay for the debt associated with that house. They can be quite modest. For example, we’ve got a two bed on the site and the couple who live there have a combined income of about £15,000 a year. Between them, that can be £7,500 each a year. So they’re quite modest incomes. But between those incomes they can pay their 35%, that’s enough to allow them to live in that 2 bed flat. So it’s within reach of people on fairly modest incomes. But you’re right, it doesn’t service those on benefits because at the moment you can’t accrue equity on housing benefit.
So you’re just purely going off income, because you might have one couple who earn £25,000 a year and that’s all they have, and you might have another with £200,000 worth of savings. Does that get taken into account or is it purely taken off income?
Actually we use both savings and income to define wealth. That’s a good point, and we do use both. So the amount of equity we allocate to a particular household is calibrated according to their income and savings. We can therefore allocate you down to 90% of the value of your home or up to 110% according to your income and savings profile. As we get more equity involved in the scheme we might widen that to let in people on lower incomes and higher incomes.
The point of doing that is that there’s an element of cross subsidy. People on higher incomes are taking on more equity shares and therefore indirectly cross subsidising those people on lower incomes. So there’s an important cross subsidy going on there.
Presumably if somebody is made redundant or something, rather than the current model where within a few months they’re kicked out, there’s some flexibility designed into this?
We’ve got this thing called the Lilac Equity Fund, and this thing called the High Earners Policy. This top slices money from moderately high earners whose incomes are more than what’s needed for the debt associated with their house. Now that goes into this Lilac Equity Fund which is a little war chest which Lilac owns. This is to deal with short term balance of payment and difficulties amongst households. If one household got into difficulties, it could be used for that.
We’ve got three or four different options we support members with, because we are a member-led entity that’s meant to support its members. So we’ve got three or four things we can do before we need to terminate someone’s contract. Now that’s wonderful given that housing associations will go straight to termination of contract, whereas here there are lots of intermediate steps. So the security of tenure which is afforded in housing co-ops, especially this MHOS model is really good, and it’s something that all our members have really vocalised. They’re prepared to pay 35% of their net income to give them that extra surety, because it’s worth more money at the end of the day, the wellbeing effects you get from that security.
As someone living there yourself with a young family, and 35% of your income going, and obviously there’s the numerous benefits of living in that way but financially does it work out as a better deal for you than going into the housing market?
It certainly does, given I haven’t had a mortgage up to now, so haven’t gained any equity in the housing market in my life. What it also does, is because 35% is the upper limit of affordability so we wouldn’t want to go beyond that, and many people might be paying less than 35%, they might have paid mortgages off or might be living in very cheap rental accommodation.
We appreciate it’s not the most affordable situation. I suppose what people make a decision on is everything else they’re getting for that. The shared common house, the shared spaces, there’s allotments on site, there’s a pocket park. What you’re also getting in the homes, because we’re towards Passivhaus code 4 – I’ll give you an example. Our house, a 4 bed house, we’ve lived here for a year and our annual gas bill was about £200, and electricity was £400. So we had combined gas and electricity of £400. For a 4 bed, that’s fantastic, given the average might be £1000 plus. So what you have to factor in is the whole life cycle, whole house living costs, and once you do that it becomes very affordable.
Is the developer-led private housing model completely broken or can it be reformed do you think, and how might we do that?
Well there’s a few things we’d have to work on. One is land banking. I think land banking really needs some national legislation to prohibit it. I think there’s a whole tier of middle size regional house builders who are really prepared to take this stuff on. Especially, they’re more responsive to community client groups. What you’ve got with co-housing and community led housing and community land trusts is a really particular client base.
If you’re a community client, you’re a bunch of residents procuring and custom building your housing. That puts you in a really specific position as a client buying your house. They will not know how to deal with you, won’t understand your needs, and won’t understand how your internal structures work. They’re used to dealing with highly individualised, professionalised project managers from housing associations working to template and delivering at best cost values, whereas the agenda is completely different for community led housing.
There’s some simple stuff that all builders could do to understand the specific needs of community led housing clients – what we’re actually after as a product. If you’re procuring your house as a resident, it’s very different to procuring it on behalf of an agency.
What happens to a society without sufficient affordable housing? What impacts does that have on that society?
There’s a number of knock on effects. You get a dysfunctional labour market because people can’t live and work where they want to. As a geographer I’m interested in this kind of stuff. You get people whose travel to work patterns are really messed up. You get overheating in central cities and core cities and London in particular, where people are having to travel 20 miles and more because they can’t afford to live anywhere near where they work.
You get distorted travel to work patterns. Therefore you get more mobility, you get more carbon from travel, you get greater stress and anxiety based on people spending longer in their cars, people spending less time with their families because they’re travelling more, people more stressed at work, people working longer hours. The list goes on.
So really this is about a relocalisation agenda. About how do we not just create a functional housing market but how do we create functional communities with all the different skills bases and local assets and communities, energy infrastructure. Housing’s just one part of it, right? So this is just one part of the bigger picture. This is a story of community ownership which needs to be not just part of a housing story but part of a work culture and energy culture as well.
You’ve just written a book about capturing the experience of Lilac from start to finish. Hopefully the book answers the question, but how replicable is what you’ve done there?
In the book I try to lay out some lessons for different sectors like the development industry and community groups and professionals. It’s replicable if we can, in the next 10 years, lay down key bits of the infrastructure which will allow this unmet demand to flourish. There’s a huge amount of demand out there, people wanting to do this for themselves, as we’ve all been highlighting over the last few years and decades.
Putting the right sort of infrastructure in place will allow this to flourish. Aspects of that infrastructure include grants from central government which we’re seeing elements of. Land availability and land gifting, or peppercorn rents from local authorities or those who have land to the community land trust and community housing sectors. We need capacity building, so when groups get into this stuff they can handle moderately complex finance and especially community governance, so they know how to manage their own relationships. And we need the developers and architects to find a common language with community groups.
In the long term, I’d really like to see some Scandinavian model development industry emerge in the UK. What we really lack is a community owned development sector. We see this in Sweden, in Germany, in Denmark whereby you’ve got developers that are community owned. So the profits from one development are seeded to the next. Now imagine we had that in the UK. This kind of firm could not only understand intuitively community needs because they are from the community, but they start to recycle the profits and working on bulk discounts and sales and really being able to meet demand. This is a multi-billion pound market in the UK and I think it’s right for us to get together and service it. We’re such a small part of the story now, we could be a moderate part of the story.
Any last thoughts for people who might be sitting there in their Transition group thinking – yeah, we could do that?
The last thought is you can do it. There’s a little bit of a perseverance test. The journey is a little bit long. All this kind of stuff we’re doing, the book and the learning that we’ve got at Lilac, is trying to shorten that development journey. It took us 6 years. I think reasonably it should take 2 or 3. If we get all these pieces of the jigsaw in place people could really start to realise those desires in those timescales as people get organised and start to do this across the country.