Sarah Lines, director, and Ian Moran, partner, Cobbetts
Do it yourself housing
The government wants to help people build their own home and housing associations can help
On 3 May, housing minister Grant Shapps announced that the government will ‘put its money where its mouth is to help more people to realise their dream of building their own home’. He also called on local authorities and housing associations to show their support. Other than gifting or selling land on preferential terms, what support can local authorities and housing associations offer? What mechanism can be put in place to preserve the basis of such terms?
What is self-build?
Self-build can range from an individual or a group carrying out all of the design and build of their homes themselves, to ‘part build’ by a contractor where the structure is made wind and watertight and internal works are carried out by the self-builders.
Landlords as enabler and catalyst
The government’s vision will depend on people working together as a community. This is where a housing association can act as a catalyst and enabler.
Furthermore, there is a two-tier model that was designed to ensure that assets provided to the community are retained as affordable in perpetuity for future generations.
There are two main scenarios but in each case the community group would need to set up as a separate legal entity. This could be in the form of either a community land trust or a housing co-operative.
The self-builders as a community land trust
The CLT would follow the statutory definition and the subscribing members and directors would be the self-builders. In this scenario, the CLT could either be a subsidiary of the housing association or a separate legal entity. If it is the latter, the housing association may want the ability to protect the CLT’s constitution so as to ensure that its objects are not changed to defeat the assets being held for the community it was created to serve (this is called an ‘asset lock’). The CLT would be granted a leasehold interest from the housing association, thereby creating the two-tier structure.
Self-builders as a co-operative society
In this instance, the self-builders would be the co-op members and acquire a leasehold interest from the housing association. The development costs would be paid by the co-op, which, in turn, recoups funds from its members through occupancy charges. The development costs and associated risks can be apportioned between the entities in various ways.
In each model, the housing association helps to create an entity based on democratic and self-help principles while ensuring community assets remain for the benefit of the community. The self-builders labour time could have a ‘sweat equity’ value which could count as a deposit, thereby making these homes more affordable.