Making the case: 5. Backing up your arguments

This chapter is part of our guide to making the case for community-led housing on public land.

Making the case
1. The context: legislation and regulations
2. Addressing the ​‘best consideration’ requirement – and winning
3. Case studies
4. Building an evidence base
5. Backing up your arguments

This section provides a helpful summary of the existing research and studies that can be used to provide evidence and support for your case for community-led housing on public land.

The benefits of community-led housing are most clear when the housing plays an obvious role in solving the housing crisis, meaning it is genuinely affordable and provides for people in housing need. There is much research establishing the benefits of social housing, which we will not review here. The research here is focused on establishing the economic and social benefits of community-led housing as a form of non-market, not-for profit housing that puts the voice and power of its residents and the wider community at its core.

The benefits are divided into two types: individual and collective benefits. These group benefits by whether they apply to individual people and households, or to society or communities in general. Each small section includes a brief overview of the area of evidence, a list of key studies, followed by more detail.

Individual benefits

Individual benefits from the evidence we reviewed fall into four categories:

1. Housing affordability and accessibility;
2. individual wealth building;
3. stability of ownership/​occupancy;
4. and liveability.

All these are classed as individual benefits here, but they also feed into the development of collective benefits – or at least can form part of correcting the dysfunctional housing system that we currently have.

Increased affordability and accessibility

Two of the main problems associated with our current housing system are the low affordability of housing in many areas due to land and housing price inflation and, as a result, low accessibility to housing especially for lower income groups. At individual level, this means that many cannot ​’get onto the housing ladder’ and this means that these individuals are locked into a life of precarity. At collective level, high rents and debt-overhang act as a mechanism to redistribute wealth from poor to rich, and from debtor to creditor – leading to inequality, undermining effective demand, and by extension, economic recovery.

Research has strongly shown that community-housing is much better than market housing in ensuring long term affordability and accessibility to housing for low income groups. This is mainly because the ownership structures, and the limits and stipulations on the resale price in community-led models keep price inflation in check. There is longitudinal evidence (1984 to 2009) and comparative evidence across seven sites that community-led developments can offer housing that is affordable to those priced out of market housing, and that these houses can become more affordable over time (up to four re-sales).

Key studies: Conaty and Lewis 2011; DEMOS 2015; Heywood 2015; Jakobus and Davies 2010; Patterson and Davidson 2011; Temkin et al 2011; Davies and Stokes 2009; Emeus and Stokes 2010

It will be helpful to highlight various studies of a shared equity ownership (SEO) project called Champlain Housing Trust in Burlington, USA. The project was successful in locking in affordability. This study is especially important because its data ranges from 1984 to 2008 making it the longest-term study included here.

First, despite all of CHT’s homebuyers having been priced out of the housing market, they were able to access housing through the project. Second, these studies found that homes not only remained affordable across one, two, or three resales, but became more affordable over time, suggesting that the model was successful in suppressing property prices (three studies demonstrating this can be found here: Davies and Stokes 2009; Emeus and Stokes 2010; Jakobus and Davies 2010). This is because the programme required owners to pass that affordability benefit along to future lower income buyers by reselling at an affordable price. As a result, it preserved affordability for lower income families by limiting the rate at which the prices of homes increase.

These findings on community-led housing are backed up by a broader comparative study which includes six other projects in the USA, which finds that all seven programmes under study were able ​“not only to help families on low incomes buy new homes, but also preserve affordability after resale”. Regarding new home purchases, all programmes sold homes to families earning well below the local median family income – ranging from between 37% to 75% below. Regarding future affordability, the researchers estimated average annual income increases across the seven areas and compared this to resale prices, finding that housing units remained affordable across the seven projects.

Community-led housing in the UK can ensure affordability in perpetuity by, in the case of community land trusts, keeping ownership and control of land separate from the ownership of the buildings. Land is held in a trust that is legally bound to keep prices affordable for future buyers, and homeowners are bound by a re-sale formula that allows them to make modest gains, but not windfall profits.

Wealth building

There is considerable evidence that, as well as securing affordability in perpetuity, community-led developments also lead to owners building wealth by allowing these to make a modest return on the sales of the homes. For example, one study found that homeowners made an average return of $14,000 upon sale of community homes.

Key studies: Jakobus and Davis (2010); Temkin et al (2011)

The popular expression ​’getting on the housing ladder’ speaks directly to the idea that housing, apart from providing accommodation, is also an asset for individuals and a means of storing wealth – the higher up the ladder one goes, the more secure one is. Individual incentives to follow this path are strong – given the ongoing shift towards asset-based welfare, younger generations are especially insecure regarding their future material wellbeing. However, we think this culture is problematic because it generates incentives to oppose a more accessible housing system: if your future material wellbeing depends on rising house prices you have a direct incentive to perpetuate inflation. This creates bubbles, and continued volatility, underwritten by debtors. Government policy, however, continues to directly prop up this model.

Nevertheless, there is good reason to think that community-led housing can be part of the solution here. Projects can contribute to individual wealth building, and thus to ensuring future material security, whilst also keeping prices affordable into the future. One study found that ​“the average CHT homeowner resold after 5.4 years and received $7,889 as a return on the appreciation of the property”, representing a return of 25% on their initial investment. In addition to this, ​“the average CHT homeowner also earned $4,294 at resale because of the pay-down on her mortgage, plus $1,348 as a credit for capital improvements made to the home after purchase”. Thus, ​“the average homeowner who left CHT still walked away nearly $14,000 richer”. This might seem a modest return, but it is especially impressive given the low level of risk involved in ownership of community-led housing homes (another benefit covered below) and the ability of CHT to maintain property affordability. The findings of the CHT evaluation are again corroborated by a broader comparative study of seven USA projects, which found that all succeeded in generating a return for homeowners upon sale – although these ranged wildly given the very different conditions of the housing market in different areas of the USA.

Low risk, high stability

One of the strongest points of evidence is that community-led housing developments pose very low risk and high levels of occupant stability. Evaluations have found that community-led developments that are far below national averages, with the most substantive study finding that foreclosure was 5.9 times less likely; and serious loan delinquency 4.3 times less likely. CLTs were far more resilient to the financial crash – the risk of foreclosure increasing by just 0.04% compared to the 1.43% for market housing. This evidence is especially impressive because CLT mortgages are often held by households on low incomes. Duration of home-ownership by occupants is also very high: one study found that 90% of owners remained in residence after 5 years – indicating stability and owner satisfaction.

Key studies: Conaty and Lewis 2011, DEMOS 2015, Emeus and Stokes 2010; Heywood 2015; Jakobus and Davies 2010, Paterson and Dayson 2010, Temkin et al 2011, Thaden 2011, Thaden and Davis 2010

The main problem that led to the financial crash is the high-risk credit-fuelled nature of house purchasing and its links to speculative finance. The short term incentives of private banks and brokers, where higher churn leads to greater gains, is to shift assets, meaning that credit is given to people who may not actually be able to afford mortgage repayments, especially if their individual conditions, or market conditions, change. This is a problem for individual house-owners, but it also creates enormous systemic dangers. As we know, the epicentre of the 2007/​8 financial crash was the highly leveraged and deregulated housing credit market, especially the ​’sub-prime’ sector.

There is good reason to think that community-led housing can be part of the solution here, because a fundamental advantage of community-led housing is the low ownership risk and high levels of stability the model leads to. This is a point of consensus in most of the studies we consulted. A review of the evidence of this aspect of community-led housing argues that community-led housing results in default rates and foreclosures that are far below US averages. An in depth comparative analysis of 7 CLTs and a more extensive survey of 42 CLTs, including 2,173 mortgages across the USA find the same results: the studies find that foreclosure was 5.9 times less likely in CLTs and serious delinquency 4.3 times less likely. CLTs also proved far more resilient to the financial crash – the risk of foreclosure increasing by just 0.04% compared to the 1.43% of market housing. They also show that despite variance all seven programmes reported lower levels of foreclosure and delinquency than local averages.

Such performance is impressive in itself but becomes even more so when considering that CLT mortgages are often held by households on lower incomes than those purchasing on the market. Moreover, an important second measure of the effectiveness of these programmes to both help low income families into housing and avoid foreclosure is the duration of home-ownership by occupants. In three community-led housing programmes that data is available for, 90% remained owners after 5 years. So, community-led housing programmes substantially outperform the market in terms of stability as well as risk. There is substantial evidence to prove this point.

The reason why community-led housing performs so well is because of the stewardship that the development has over the properties following sale, and an abiding interest in safeguarding occupiers’ and owners’ success. Tenants can be supported through a range of strategies such as pre-purchase education, prevention of high risk loans, ongoing support for homeowners following purchase, early action and intervention in delinquency and foreclosures, financial counselling and even using emergency rescue funds.

Liveability

Because of the reduced need to maximise profits, community-led housing developments can invest in the kinds of social and physical infrastructure necessary for community building and improved liveability. Studies have found higher levels of tenant satisfaction, improved customer service, repairs and maintenance of occupied and communal areas.

Key studies: DEMOS 2015; Heywood 2015

The currently paradigmatic house-building model that Shelter call ​“speculative house building” prioritises the extraction of maximum value from housing developments. The provision of the kinds of infrastructure that can make places liveable and conducive to the development of community is pursued only in so far as it does not undermine the pursuit of profit – which it mostly does, especially the short term profits that private firms seek. This leads to low quality of life at individual level, and at collective level it feeds into the development of febrile communities made up of atomised individuals.

Because they do not follow a logic of profit maximisation, community-led housing developments are more amenable to including the kinds of social and physical infrastructure necessary for community building and improved liveability. Thus, research found increased levels of tenant satisfaction, customer service, repairs and maintenance, and looking after communal areas in community-led housing. A review by the Smith Institute also finds evidence in support of increased liveability of community-led housing developments arguing that ​“it represents a genuine reflection of demand – homes people have invested a personal interest in, ensuring satisfaction; that are not imposed on them, ensuring support; and that they are providing in their own back yard, ensuring quality”.

Collective benefits

The evidence on community-led housing on public land also shows a range of purely collective benefits (apart from those associated with aggregate effects of individual benefits outlined above). They are:

1. Benefits for the public purse;
2. reduction of NIMBYism;
3. and community building and social capital generation.

Fiscal benefits

Indirect fiscal benefits might accrue from the lower levels of rent arrears, and lower risk and higher stability in community-led housing, by reducing demand for housing benefits or emergency social housing and accommodation. Research by NEF found that the development of community-led models on just 10 sites being sold for private development could reduce the housing benefit bill by £231 million over 30 years.

Key studies: DEMOS 2015; Emeus and Stokes 2010; Heywood 2015; Martin and Devlin 2016

There is some evidence to suggest that community-led housing is a good use of tax-payer money. This is important because, given the continued trajectory towards privatisation and the antipathy to public housing in contemporary policy making, it means that community-led housing may be the only way to ensure housing that is genuinely affordable. Moreover, the demonstrated benefits of community-led housing in terms of lower levels of rent arrears or repayment delinquency, and higher tenant satisfaction could lead to savings in other areas of government – should the state decide to support and scale up community-led housing. Two studies which support these points can be found here and here.

NEF has calculated that instead of privatising the land for a one off cash receipt, on just 10 of the public land sites currently up for sale, 4,631 low cost rented homes could be built. On these 10 sites alone using the land for genuinely affordable housing could reduce the housing benefit bill by £231 million over the next 30 years.

NIMBY reduction

Community-led developments generate more local support than private developments. This is because local communities are genuinely consulted on the development; and community-led developments are more likely to protect community public goods, rather than compensate for their loss. Survey evidence also suggests that support for new homes from local residents is higher where local people have more control over what is built, where community participation in the planning process is introduced, and where design of new homes is considered to be of high quality.

Key studies: DCLG 2013; DEMOS 2015.

DEMOS find substantial evidence in favour of the notion that community-led housing could reduce local opposition to new developments. This is because of the increased use of participation and consultation to ensure that developments include features that local residents would support.

First, local residents are more likely to support housing if the community is given more say, and trust is generated in the process. In order to achieve this however it is important that developments are not tokenistic in their use of participation and consultation and can demonstrate that local residents have had a genuine say. Second, concern for collective goods drives local opposition to new developments and thus projects that protect public goods are more likely to be favourable than ones that compensate for their loss. If developments are genuinely community-led there is a higher probability that local collective goods will be protected.

The evidence here is somewhat limited, but there are good logical/​theoretical reasons to suggest that if it were scaled out democratically community-led housing would engender less local opposition to housing development and thus increase the speed of the construction of much needed housing. DEMOS’s research is backed by survey evidence suggesting that support for new homes from local residents is higher where local people have more control over what is built, where community participation in the planning process is introduced, and where design of new homes is considered to be of high quality. UK case study evidence also suggests DEMOS are right to claim that community-led housing can reduce NIMBYism – an in-depth evaluation of a CLT in Wessex found that deep seated attachments to place were mobilised by the development, which usually would express themselves in opposition to development but were channelled into leadership and advocacy through the CLT. The evaluators claim that CLTs were trusted as vehicles for development and disposal of land by local landowners.

Community building

Community-led developments generate increases in the social fabric and social capital of a community by acting as a vehicle for local investment and charitable giving; increased community control; enhancing provision of local community amenities and social assets; and encouraging collaboration between state and community actors.

Key studies: Heywood 2015; Hill 2014; Patterson and Davidson 2010; Saegert 2013

The community building and social capital generating benefits of community-led housing are well evidenced. Some researchers argue that CLTs can act as a local scale vehicle for charitable giving and social investing, and increased community control and participation resonate throughout the studies consulted. An in-depth study of Wessex CLT shows how they can enhance the provision of other community assets such as local pubs, and stores and the promotion of community activism, or civic agency. This is a major theme in another study which finds that community-led housing engenders effective forms of collaboration between state and citizens, that humanise and democratise social and physical change, can create more resilient places and new political leaders and spatial planners (other research supporting this can be found here and here). Another study finds that as well as ensuring permanent housing stock affordability, community land trusts increases social and cultural capital.