This is another of our favourite models. It has been used by the Lilac co-op in the UK. The solution aims to ensure housing affordability, a strong community and low environmental impact . So as much as possible it also matches our values. It is not only the project model that is innovative in this cohousing, so you can be sure that you will hear more about it on the blog when we cover other topics.
In the meantime, I have to admit that I am not sure whether the Lilac model could be an inspiration for creating its equivalent in Poland. We will certainly talk about it. All interested in the discussion are invited to our meetings. Information about the dates and places of meetings appear in our Facebook group.
How does the model work?
But to the point. Cohousing Lilac was set up as a Mutual Home Ownership Society Ltd. The members of the Society are the residents of the homes, so they retain democratic control of the property. The Society remains the owner of the whole property and the residents have the right to use individual houses.
The loan to finance the construction was taken out by the Society and provided by the ethical bank Triodos. It is repaid through monthly fees for the use of the houses. These are based on the income of the residents and have been set at 35% of the net household income. As the financial situation of the members changes, the fees change. In simple terms it can be said that the rents are higher than in social housing but lower than market rents.
Shares in the Society
In return for fees, members receive shares in the Society and the use of one of the houses. The number of shares allocated depends on the income and cost of the house. So in this model, households that earn more can buy more shares than the value of their home, so that more disadvantaged households can still benefit from the scheme. Once all the shares are paid for by the household, the payments are reduced to 10% of net income.
When a household leaves Lilac, it can sell its shares. If this is done before three years of resident has moved in, the person leaving the scheme will receive a refund of the original value of the share (or a lower value if they have decreased in value). Members who move out after three years will receive 75% of the change in value of the equity share. This value is calculated based on changes in national average incomes rather than local house prices. This decoupling of house values from local property prices is an important step towards preventing speculation in the housing market and ensures that lower earners will still be able to benefit from Lilac homes in the future.
Who can become a member of the Society?
However, we must emphasise that this model cannot currently be used by people in financial difficulties. For Cohousing Lilac to work it is necessary for each household to achieve a minimum income. Without this condition, repayment of debts would not be possible. Payments from higher earning households can partially offset the fact that disadvantaged households are unable to pay the full construction costs attributable to their home. Over time, however, the model can also become affordable for those on much lower incomes.
This is how the model works in a nutshell. The system of buying or selling shares and paying construction costs is a little more complicated. We will certainly analyse it in more detail.
