How to develop a co-housing scheme

COMMENT: Community-led housing development is gaining traction, driven by local and national government seeking to speed up housing provision on small sites, while also offering a solution to the epidemic of loneliness, says Pointe Michel’s Michaela Bygrave. In 2018, Homes England announced £163m of finance available to community-based groups until the end of 2019. Groups bidding for finance are invited to outline their plans by the end of this month, as part of the Homes England call for information. Community-led housing can take many forms, including management entities such as cooperatives, community land trusts and co-housing groups, which are built around the idea of creating intentional communities with a focus on connectivity and shared spaces. Step 1: Land The first challenge faced by most community-led housing groups is access to land. Development budgets are often very small and most groups will be looking to access either free or cheap land. Cheap land is not necessarily less than the market value, but may be an awkward-sized plot or have a high requirement for affordable housing suppressing the value of the land. The trick for land agents is to be creative and to remember that sometimes “free” actually just means a deferred land payment. This so-called “free” land is not likely to be openly marketed. Look for land in lists of council-owned sites, Historic England’s National Heritage List or by conducting Land Registry searches of local derelict or underused sites and directly contacting their owners. Step 2: Planning and design Architects or planning consultants must bear in mind that many community-led housing schemes emphasise shared indoor and outdoor space, multi-generational communities and sustainable energy solutions. Community-led housing groups may prioritise additional play space, energy efficiency standards, lifetime homes standard and  affordable housing. At the same time, car parking and private gardens tend to be less important. For example, K1 Cohousing’s 42-home Marmalade Lane scheme in Cambridgeshire (pictured) includes extensive shared gardens, with areas for growing vegetables, a workshop and a large dining hall for shared meals and parties. It also incorporates a pedestrianised street and cuts back on parking spaces. Step 3: Valuation Valuation of a community-led housing scheme needs to consider communal spaces and the various tenures of the homes. Are there affordable rent units with unique income criteria? Or shared ownership units which can never be fully owned outright? Buyers of open-market sale units typically must be members of the group. This can restrict the market for the units, especially if a large service charge is required for the upkeep of all the common areas. Step 4: Finance Many community groups will raise a proportion of the equity needed to secure a loan by selling any members’ existing homes and crowdfunding. Where there is still a shortfall in finances, Homes England and the GLA can provide grant finding. Applicants must be able to prove that the scheme would not be able to go ahead without the funding. The HE Community Housing Fund grant requires that co-housing schemes ensure “meaningful community engagement”. They should deliver benefits for the local area and this will influence design, for example providing common spaces available to residents as well as the wider community. To be eligible for GLA funding, the development must also be 100% affordable. Under some circumstances, where a scheme generates a surplus, the GLA grant funding will be repayable upon scheme completion and the funds are then made available to new applicants. Step 5: Development Some community-led housing groups want to do much of the build themselves with help from contractors, others prefer to hire a developer. Many will opt for development via a joint partnership, where the community-led housing group can offer their land as equity while the developer funds the majority of the build and draws the standard profit from the scheme. This approach makes the scheme viable and the government is pushing for greater co-housing uptake from smaller housebuilders that can also benefit from this community-led model. Michaela Bygrave is a real estate development consultant and managing director at Pointe Michel