Last month the Minister for Housing & Local Government, 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 of people 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.
Housing Associations 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.
This article looks at two interpretations of a two tier model designed to ensure that assets provided to the community are retained as affordable in perpetuity for future generations.
The two-tier model
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 housing cooperative.
The self-builders as a community land trust
The CLT would follow the statutory definition and the subscribing members and directors would be the pioneering self builders. In this scenario the CLT could either be a subsidiary of the housing association or be a separate legal entity.
If the latter the housing association may want the ability to protect the CLT’s constitution to ensure that its objects are not changed to defeat the assets being held for the community it was set up to serve (an asset lock). The CLT would be granted a leasehold interest from the housing association thereby creating the two tier structure.
The self-builders as a cooperative 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 costs 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 whilst ensuring community assets in perpetuity. The eventual costs passed back to the self builders could take into account the “sweat equity” thereby making the homes more affordable.