Stop wasting your- rent - set up housing Co-operative

[Deleted User]

Well said Pixie.

Running_Horse

And in one discussion we see what can go wrong when a group of people try to act cooperatively while being lead by a dominant personality. The number of times I have seen campaigns, meetings, groups etc disintegrate due to human nature is just the depressing reality. Get it wrong at the start and the outcome is a foregone conclusion.

Pixie5740

For anyone not put off the idea of housing co-ops I found this guide this morning produced by an organisation called Radical Routes (I have no affiliation to them)

http://www.radicalroutes.org.uk/images/stories/HowtoHousingCo-op6theditionJuly2011low-res.pdf

This guide explains some of the co-op models available, how to fund them, how to operate them, and some of the potential pitfalls. It's actually quite balanced in the pros and cons of housing co-ops.

Due to some of the potential pitfalls of being part of a housing co-operative if I wanted to buy a property but could not currently afford to do so I would (in no particular order):

• Reduce my expenditure, increase my income and save more.
• Build my own home. That programme where people built their own homes for £100k was facinating.
• Accept that I can't afford to buy and continue privately renting whilst putting my name down for social housing and not hold my breath.
• Emmigrate.

If none of those options was viable then, maybe I'd look at a housing co-op. Firstly I'd look for an existing co-op to join. If there wasn't one then I might consider starting one myself. Either way I'd want a real co-op owned by the members i.e. the residents, not some overbearing overlord who controlled everything because the rest of us were too thick.

mohawk

Radical Routes I know well & have had conversations with them about what they do.

They exist entirely for their declared premise that it is their belief that no-one should actually 'own' property at all.

They are very ‘political’ in this respect and are dead against any co-op enabling any form of personal ownership and they seem to be mostly ‘communes’ of people living together, often with strict rules about no meat here etc.

I also know of numerous other co-operatives already in existence and have spoken to many, but I have never said I want to be housed in an existing co-op. I don’t want to be housed in any of these co-ops or by anyone else at all for that matter geddit ?

Everyone here seems to have completely missed the point that I want to set up a co-op expressly to enable it’s members to build up a deposit for them to buy their own home.

And if that logic is extended as fully as it could be, it would also mean a prospective tenant would be able to come to this (new form of co-op) and say they have chosen a house they would like to buy and could afford to pay the mortgage for, but they can’t actually get a mortgage to buy it because they might be too old or have a bad credit rating or the mortgage lender can have a hundred and one other reasons for refusing someone a mortgage.

The co-op could then buy that home with it’s own supply of money and be the owner of that home, making the person who wanted to buy it the tenant paying a rent which pays the mortgage. Over time, the tenant will acquire an increasing financial stake in the property just like they would if they had bought it using a mortgage from a bank.

I read in the business press a few days ago how mortgage lenders were often refusing mortgage applicants who qualified in every possible way, because all the mortgage lenders have been pressurised by the Bank of England to reduce the amount they have loaned.

This is the reason there is a recession.

It first started when all the banks took fright in 2007 and stopped lending to each other because of Lehmans bank going bust when all the other banks became too frightened to lend their money to Lehmans & each other because they could see Lehmans had already borrowed too much & could not pay it back.

Governments then became involved, doing a variety of things to try and sort the mess out. Unfortunately, what governments have done is go on and on about how everyone should spend less, save more & pay all their debts off because everyone has too much debt.

So banks are required to lend less and everyone has been persuaded to repay debts & reduce borrowing. This included individuals, businesses (including banks) and even governments.

The big, big snag is. It is the banks which actually create 97% of all money by means of actually lending it - which they have done a lot of. But now they are being required to lend much less.

When a bank lends a homebuyer (or anyone else, business etc) money, say, a £200 000 mortgage to buy a home, then that bank has just ‘created’ an extra £200 000 of money which the homebuyer gives to someone else in exchange for a house. All that £200 000 then gets spent into the general economy, increasing the total of money the whole nation has available to spend by £200 000.

When that homebuyer pays back his loan of £200 000, returning all that eventually to the bank, then all the £200 000 disappears again out of the economy and it just vanishes completely until the bank chooses to lend it yet again. But now banks are lending a great deal less.

This is how money is generated. The amount of money available for all of us to spend is entirely reliant on the banks lending ever increasing amounts of money - hence inflation. This whole idea is unstable, by the way.

And right now the whole of Europe is heading for disaster because all the banks and governments are all busy endlessly sucking increasing amounts of money out of the system meaning less and less money is available as economies shrink.

Most politicians haven’t the faintest idea what is going or where money comes from as you can see if you have a look at the positive money link below.

Read a lot more about it on the ‘Positive Money’ website here. http://www.positivemoney.org/how-money-works/how-banks-create-money/

It is a political pressure group trying to change the monetary system because it is unstable. It will tell you really, really interesting things you probably don’t know about how money works.

It will explain, for instance, how it is why house prices are so high. It is not because there is a shortage and not because they cost that much to build either. A 200 square metre house with four bedrooms might cost £240 000 to actually build but is more likely to cost about at least a million pounds in most parts of Southern England.


Quite simply house prices are so high because the banks have deliberately lent more and more money in mortgages to buy homes because they make more money doing that than other types of lending - particularly to business and smaller loans to individuals.

That is why the banks destroyed the building society movement which used to be the sole provider of mortgages. The banks saw it as an opportunity to enable them to lend larger and larger sums of money more safely for them even though it was at the cost of impoverishing homebuyers and destroying the economy. The banks couldn’t care less about the damage they were causing. That is why the banks are such incredible rip off merchants, among many other reasons.

Running_Horse

mohawk wrote: »

I don’t want to be housed in any of these co-ops or by anyone else at all for that matter geddit ?

Everyone here seems to have completely missed the point that I want to set up a co-op expressly to enable it’s members to build up a deposit for them to buy their own home.

I must admit I don't "geddit". You don't want a house, but according to your manifesto you want to undermine the whole banking system by encouraging more home ownership?

Go right ahead. I applaud your initiative.

booksurr

so your business plan appears to be:

- find alternative sources of funding outside of the "banking system" to enable you to purchase property because you have ethical objections to banks

- offer a rate of return to your lenders which is higher than the banks can currently provide but fix that rate because your future success depends on a static cost of borrowing. All that at a time of historic low interest rates which within a matter of 1 - 2 years will resume their rising trend therefore removing the margin your lenders have at the moment leaving them invested in a static product with no growth potential and little marketability

- offer your co-habitees a lower rent that a private LL would require because you are not a greedy LL and have no personal profit agenda (really???)

- allow your co-habitees to withdraw the rent they have paid at a time of their choosing because they need to move

Question: where do you think the cash is coming from to cover those repayments or is your plan to continually refinance on the basis that house price inflation means the asset value is increasing relative to the loan . But wait, your lenders don't own the property or have a mortgage over it because you disdain banking as the co-habitees are the owners

I admire the fact your have decided to reinvent yourself and have a clear area of personal interest which you wish to follow based on your now being a graduate, however, your presentation skills and your general demeanour of how you write and refer to your readers leaves a lot to be desired if you expect to compete in a professional marketplace. Your comments about the money system also show that your grasp of economics is somewhat conspiracy theory rather than being based on a sound understanding of simple supply and demand. Presumably as a LL of 30 years you did not supply accommodation in an area where there was demand for it and you did not charge a market related rent because you did not want to make a profit ?

Pixie5740

So just to be clear, you are not looking for somewhere to live and have no intention of ever living in this housing co-op?

This housing co-op your proposing means that a prospective tenant finds a property they would like to buy but for whatever reason are unable to so they approach the co-op to buy the property for them. The tenant then pays rent and with each rental payment acquire a share of the equity in the property.

It sounds a bit like social housing where people paid rent, built up a discount and were able to exercise the Right To Buy if they wanted to.

My first question is where does the money to purchase the properties come from? Wealthy philanthropists? Investors? Do the people putting money into the co-op make any money out of doing so or is this a purely altruistic act?

Are there any affordability checks done on the prospective tenant? To be declined by every mortgage lender would mean that there's something seriously wrong with your credit history. Why trust someone with a history of not paying back money they've borrowed and\or not paying their bills with such a valuable asset? You wouldn't want a tenant with this kind of history renting a normal BTL let alone using this co-op scheme.

Who is responsible for the repairs and maintenance of the property?

After the tenant has been paying rent for X number of years and they've built up sufficient equity, does the co-op just sign the property over to the tenant?

fairy_lights

But what happens if the tenant changes their mind and decides to move, what would the co-op do with the house it bought in their interest then?
Or if after building up a stake in the property the tenant decides to sell - would they only be allowed to sell back to the co-op?
Would the tenant still have to have a deposit saved up to get in to the co-op? I'd say getting the deposit together is a bigger obstacle than getting a mortgage for most people.

Cautious_Optimist

mohawk wrote: »

why house prices are so high. It is not because there is a shortage and not because they cost that much to build either. A 200 square metre house with four bedrooms might cost £240 000 to actually build but is more likely to cost about at least a million pounds in most parts of Southern England.

.

And in some places, the cost of building (even with economy of scale) is more than the sale value...

http://www.bbc.co.uk/news/uk-wales-24288018

[Deleted User]

And is an intelligence test going to be required for your prospective tenants .., or will they just have to nod, bow, touch their cap, agree to everything you say to indicate the 'proper' attitude (which probably is an automatic fail on any intelligence test anyway)?

Or will it just be the lucky members of your board who have to do the above? Which again is probably an automatic fail on the intelligence test.

Hmm .., forget the intelligence test.