Expert article
Edit 18 June 2021
by Nils Scheffler

Recommendations for the establishment of a new housing cooperative to provide affordable housing in Mataró

Image by Gerd Altmann from Pixabay
Image by Gerd Altmann from Pixabay

Background

The city of Mataró has developed the project “Yes, we rent!” to provide affordable housing in the private rental market. Cornerstone of the approach is the establishment of a new housing cooperative. Its purpose is to provide its members access to decent housing at an affordable price, to advice and train in tenure issues and to facilitate its members with services in the flats that can improve their living conditions in the different stages of their lives. The main idea of the project is to acquire private empty flats, renovate and rent them via the cooperative to its members for an affordable price.

In 2020 Lorenzo Vidal, Raquel Gallego and Charlotte Fernández from the Institute on Government and Public Policy (IGOP) of the Autonomous University of Barcelona have analysed this approach during the starting phase of the “Yes, we rent!” project. Based on the analysis they have come up with three main recommendations on what to take care of in the further implementation of the "Yes, we rent!" project in order to build a strong cooperative in line with the project's goals.

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1. Reinforce the technical support to the founding members of the cooperative

It is important to relieve the founding members of the technical and administrative workload in order to free up space and time for decision making. Technical support would also help the founding members in making the decisions necessary to formalize the cooperative. Key documents to develop are the bylaws, the internal rules and regulations and the business and feasibility plan. Two specific issues to be resolved also stand out at this point: determining the model and amount of membership fees and resolving the legal and fiscal doubts related to the possibility of introducing the cooperative as a party to rental contracts.

2. Develop non-economic incentives to attract and keep flats in the “Yes, we rent”! housing system

The project has developed a series of economic incentives (subsidy, payment guarantees) and management incentives (integrated rental management) for owners. But it has less developed non-economic incentives linked to the innovative and cooperative nature of the “Yes, we rent! housing initiative. Motivating owners to participate in the initiative because of their ties to the social and solidarity economy can contribute to strengthening their commitment to the project and to the long-term sustainability of the initiative. Including the social and solidarity dimension more explicitly in the project's communication would be a first step to consider. In the future, generating spaces for meeting and mutual knowledge between landlords and tenants and involving landlords more directly, both formally and affectively, in the initiative could favor symbiotic dynamics" between the cooperative, the tenants (cooperative members) and the owners.

3. Outline strategies to capitalise the (future) tenant cooperative

The resources of the UIA are a good opportunity to capitalize the (future) tenant cooperative for its long-term continuity. In this sense, the lower the rents are of the apartments acquired during the project, the more margin there will be to increase the monthly payments of the tenant-members, which will feed the cooperative's own funds. Subsidies for rehabilitation works serve as a counterpart for the reduction of the monthly rent, so a high subsidy/rent ratio would make it possible to articulate this capitalization strategy. In addition, it could be considered to dedicate part of the budget line for technical assistance to identify subsidies to which the (future) cooperative could apply for once it is completed.

1. Reinforce the technical support to the founding members of the cooperative

The founding members set up the cooperative out of personal and not professional interests or motives. This means they establish the cooperative on a voluntary basis in their "spare time". On the one hand, this limits their time capacities to found and develop the new cooperative, and on the other hand, they have very limited experience in founding and establishing a cooperative. And the particular challenge is, that they are supposed to create a new cooperative model with few precedents and references to draw inspiration from and at the same time doing it in a participatory way.

In this regard, the founding members need technical and professional support to investigate and design the best possible fit for the establishment of the cooperative, in order to develop such a new approach as the "Yes, we rent! project foresees, especially within the tight timeframe set by the UIA project (under COVID conditions). The support is mainly needed to speed up decision-making processes. The cooperative members need practical suggestions and ideas (for bylaws, internal rules and regulations, business and feasibility plan, legal advice for rental contracts) that the founding members can discuss and develop together. Because the cooperative members must see their needs and preferences reflected in the final design of the model. Through technical support, the founding members can draw on experience without having to reinvent the wheel themselves. But an active exchange and cooperation has to be ensured between the technicians and the founding members to both, bring in the ideas of the cooperative members and the experience of the technicians. Only through the co-design process the cooperative members can feel ownership of the results; as one founding member puts it:

“We want to carry out the project with the technicians, but if there is no dialogue they are useless.”

2. Develop non-economic incentives to attract and keep flats in the “Yes, we rent!” housing system

So far, the "Yes, we rent! project focuses on acquiring vacant flats mainly via economic incentives for the owners. However, due to the Urban Leasing Law, these flats are only rented to the cooperative for 5 years. Thus, there is a risk that after the five years the owner will not renew the lease of the flat via the cooperative, e.g. because he/she can rent it out more lucratively on the free rental market or because the guarantee of the rent can no longer be financed by the cooperative (see "3. Outline strategies to finance the tenant cooperative"). As founding members of the cooperative put it:

"Refurbishing can attract very clever people, it takes advantage of 5 years and then they march.“

With regard to this, it is important to consider and establish further, also non-economic incentives that bind the owners more strongly (emotionally) to the cooperative and give them the possibility of a more active role (not only passive provision of the flat). So the identification with the cooperative and its solidarity, social and innovative values should be strengthened, too. There is scope to strengthen personal ties and relationship of the owners with the cooperative and its members (the tenants) i.e. through community activities of the cooperative that allow owners and tenants get to know each other – social ties (i.e. joint grilling and dinner evenings) or cooperative/ tenants provide “services” from which owners can benefit or greater public recognition for their participation in the cooperative through the city of Mataró. This could increase the chances that owners will leave their flats to the cooperative also beyond the 5-year period, if possible at the same conditions.

The possibility of a longer-term lease or right of use of the flat could also be discussed with owners before the 5 years expire. Another option proposed is to offer owners the possibility of becoming partners or cooperative collaborators. This option could establish a bond of affinity and foster a "symbiotic" relationship between the parties. Another proposal is to create a mixed cooperative of owners and tenants, but this might face the difficulty of managing the various conflicting interests between owners and tenants within the same organization.

3. Outline strategies to finance the tenant cooperative

Currently, the financing of the activities, that the cooperative is supposed to carry out independently in the future, is financed via the UIA Initiative (e.g. mobilisation of vacant flats, subsidy for the refurbishment of flats, guarantee of rent payments). The uncertainty about how such activities can be financed by the cooperative in the future makes it difficult to build up and participate in the cooperative: the members wish to have "certainty" about what they are getting into (financially). Thus, concrete and realistic possibilities have to be worked out within the framework of the business and feasibility plan how the cooperative can develop its own financial resources in sufficient amounts for these activities (e.g. about membership fees) - also in order to be able to finance the necessary staff of the cooperative. The capacity of the cooperative to be able to finance these activities in the future is linked in part to the volume of flats captured during the UIA project and the amount of member fees they will be able to collect. In this sense, the lower the rents can be negotiated, the more margin will be to increase the monthly/ annual membership fee of the cooperative members (tenants). Currently the cooperative has established a fixed fee of 12% of the rent for all flats.

Furthermore, it has to be examined to what extent subsidies and credit lines (e.g. from social economy entities, such as Coop57) can be accessed by the cooperative; also through the city of Mataró.

These suggestions were partly taken up and on 18.02.2021 the cooperative "BlocCooperatiu" was founded. Nevertheless, the founding members still have some work ahead of them to fill the cooperative with life and to put it on an independent, sustainable foundation.

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