Houses at Ashley Vale community self build
The funding of community self build can be quite difficult because the UK has few well proven models to follow, unlike for instance the Scandinavian countries which have been doing it for decades. (eg. the cohousing movement in Denmark)
The conventional method here is for a lender to tie a mortgage back to an individual borrower (rather than a group) and the lender wants to be able to sell a mortgaged property without any complications in the case of a default on the loan. The reasons that a community of people might want to build collectively (such as having some of the facilities owned in common) is the very thing that the individual type mortgage system has difficulty handling.
This could be for a couple of reasons -
- The community may have conditions for membership and this could make it more difficult for the lender to sell the property in case of default on the mortgage.
- It may be that the ownership of a property within a community goes hand in hand with ownership of a shared part of the the community assets so that they both have to be sold at the same time in case of default. This then becomes even more complicated. Not only does the bank/building society have to find a purchaser who is acceptable to the community but it also has to be someone with the cash to buy into the shared assets.
In some countries the equivalent of housing associations have come to the rescue to provide finance (and in the past that has happened here to a limited extent, along with some local authority involvement). However housing associations are now mostly dealing with more urgent housing need.
Other models are available and probably the simplest for a financial lender to deal with is if the community forms a limited company with its members as shareholders and acts like a normal commercial developer (but for itself). It then borrows money from a bank or building society and makes self build available to its members on a leasehold basis.
Triodos bankhave a policy of lending to community groups and groups who are involved with environmental change. They have been involved with cohousing schemes in the past and actively support it.
The Ecology Building Society lend to housing coops and also to developers involved in small scale ecological housing.
The Co-op Bank may be helpful, not only in mortgaging properties but possibly also with the often complex task of supplying finance during the various stages of setting up and building
Unity Trust is a specialist bank for social enterprises.
