This growing sector is part of the way we need to be delivering a more diverse offering of housing options in New Zealand and we’re pleased to have been researching and working in this space for a number of years now. Here is a summary of some of our key thoughts about CFH and growing the sector in New Zealand.

What is Community-focused housing?

Community-focused housing (also referred to as community-led housing) is its own sector within the housing ecosystem – it differs from the approach taken by Community Housing Providers, although both sectors are committed to a ‘not-for-profit’ or ‘limited profit’ model and treat housing as a human right, not a commodity. Government support for both sectors is needed.

Community-focused housing is where people and communities play a leading role in addressing their own housing needs. There is no profit being made by the ‘traditional developer’ in this process. There are a range of models that have varying degrees of resident and community involvement, that have been used internationally to address issues of housing affordability, social disconnectedness and sustainability. They are models, not ‘housing products’, as defined by the set of legal, financial, governance, management, and design parameters that shape them, and include:

• Community Land Trusts (CLT)
• Cooperative housing, and
• Cohousing

Currently in New Zealand there is a handful of cohousing projects including High Street in Dunedin, Habitat Collective in Wellington, and Cohaus in Auckland. However, there are also several projects, including CLOser Developments in Bay of Plenty, Corletts Corner and Madras Square, both in Christchurch, and Hamilton City Council, that are pushing the boundaries of both tenure (ownership) and typology (design) and exploring the viability of the cooperative and communityland trust models. For more information on these, see www.theurbanadvisory.com or www.cohousing.org.nz

Who does it serve?

Internationally, national and local governments view CFH models as a primary means to fill inthe ‘intermediate’ housing market, offering options for people whose income levels disqualify them for subsidised, affordable housing, but also does not enable them to purchase housing at market prices. The intermediate housing market is defined as private sector renter households, having at least one member in paid employment, which are unable to affordably (using no more than 30% of their gross household income to service mortgage expenses) purchase a dwelling at the lower quartile housing market sale price). Currently, there are limited options for this segment of the market, despite the large quantum of people falling into this category. Community-focused housing encompasses new builds as well as existing buildings. Community-focused housing has proven to be an effective regeneration and anti-gentrification and displacement tool and assists in stabilising the housing market in economic downturns. Importantly, many governments have learned the added value of community-led models as they have proven to achieve much higher levels of social and ecological sustainability and design excellence targets over more traditional, developer-led approaches.

What are the benefits from Community Focused Housing?

Community-focused housing lowers the cost of the initial purchase price, and produces perpetual affordability by:

• Providing stewardship over land by retaining ownership, therefore reducing the cost,
• Facilitating access to finance at low interest rates, in recognition of CFH’s not-for-profitstatus,
• Pooling members’ resources to leverage their buying power, and sharing the costs associated with home ownership among a greater number of people,
• Delivering a high level of environmental sustainability and energy efficiency, and making cost efficient, future-focused decisions informed by the whole-of-life costs.
• Controlling resale conditions to ensure that subsidised homes remain in circulation andavailable to subsequent buyers.

Community-focused housing builds stronger communities by improving personal health (physical, emotional, and mental), and household wellbeing (reduced healthcare needs andcosts). CFH also offers a greater degree of flexibility and diversity, by providing fit-for-purpose intergenerational housing options that meet demand, and that are culturally appropriate, by:

• Providing support networks and opportunities to reduce isolation and loneliness,
• Creating diverse mixed-income neighbourhoods that reduce anti-social behaviour,
• Allowing residents to reclaim space within, and control of, their neighbourhood,
• Adopting a participatory design and development process, delivering design typologies witha broader range of functionalities that respond to people’s needs,
• Supporting housing mobility within the same dwelling, as life phases change, and
• Integrating non-housing elements, such as shared laundries, playrooms, guest houses, gardens and cooperative enterprises.

Community-focused housing builds skills and capability by allowing people to participate in the ownership and management of their homes through democratic governance (control) by:

• Enabling residents to develop a range of social, financial, operational, administrative, leadership and job-seeking capabilities that allow them to access further education, qualifications, and employment opportunities, and
• Building democratic capability, thus encouraging participation in civic activities.

Why is it different from other forms of housing development?

The approach taken to design, fund and develop the building(s) is unique to each model, and depends on things like the nature of the issues in the community, the housing demand and most importantly the type of partnerships that can be developed across sectors and their available resources (land, finance and capability).

These models do in some instances adopt the principles of the more commonly understood ‘shared equity’ model. Shared equity is a tenure (ownership) structure that serves as a tool to preserve housing affordability, which can be part of the solution to closing the wealth gap. This style of homeownership mitigates the risks of traditional homeownership, strengthens residential stability, and promotes equitable wealth-building. The equity can come in the form of land or cash. Shared equity homeownership programs make homes affordable to lower income families by investing public resources to reduce the initial prices, and then they keep the prices affordable to all future home buyers through resale restrictions. The organisation supports the residents to attain and sustain homeownership. In return, the homeowners agree to sell their homes at a resale-restricted and affordable price to other lower-income home buyers in the future. Consequently, the homeowner can successfully own a home and build wealth, while the organisation is able to preserve the public’s investment in the affordable home permanently to help family after family.

Community-focused housing development offers a range of tenures (including shared equity) thereby promoting mixed income housing communities. However, the primary difference between community-led or community-focused housing and other mixed income developments, delivered by developers, housing providers and/ or the government, is the process by which itis developed. As the name suggests, CFH involves the residents and a co-design process, so the development generally looks different and people’s roles within the community are also different. Community focused housing promotes the use of a range of different common areas (centralised large areas and smaller pods on levels), including:

• Allotments / community gardens
• Community workshops (tools, arts, music)
• Shared library
• Wellness centre (fitness, sauna, multi-purpose)
• Common house
• Common goods (e.g. household equipment, games)
• Community kitchen and large hireable or shareable dining
• Meeting spaces / community centre
• Play areas/rooms
• Guest rooms
• Solar energy and community heating
• Shared utilities (internet/phone)
• Parking at edge/shared vehicles

In addition to the programme looking some what different from a traditional speculative development, the way that developments are managed and operated is different, with a level of democratic participation and control afforded to those who live there. Fundamentally, CFH developments operate as a community, while also providing for privacy and individual living.

How can we grow the sector in New Zealand?

Growing CFH in New Zealand requires a commitment by both central and local government, and organisations across sectors, to use their resources, and capability, to work together towards a mutually agreed set of outcomes that are underpinned by public or ‘common good’ objectives (be they affordability, social, broader economic or environmental). This represents a shift from ‘highest and best use’ to highest and best ‘public’ use on public land.

A partnership approach makes these models work, and that requires a process that is collaborative, open and transparent; therefore, a commitment is needed to shift from the procurement approaches traditionally taken by the public sector, to a genuine partnership-based approach. Many governments around the world have learned that their role can be partner and enabler of community-led models by adopting a different risk-sharing profile; one where the public sector takes on some of the earlier risk, to unlock the benefits offered by CFH, namely through providing access to land and less expensive development finance.

Transactionally, there is not much difference between a local council engaging with a traditional developer versus a community-focused development group. Contracts and legal instruments would not be dissimilar to manage risk and liabilities between each party. From a procurement perspective, there is a difference. Local governments across the United Kingdom, mainland Europe and North America have evolved their governance and management of land and housing to recognise community-led housing as its own distinct sector within the housing continuum. Numerous local governments have amended their housing, land governance and procurement strategies to specifically support the growth of CFH within their municipalities. For instance, Vienna and Berlin passed laws prohibiting sale of public land, with only CFH or state-sponsored social housing being able to be developed on government land through 60- or 99-year groundleases (Vienna goes a step further to proactively acquire land and reserve it for cooperativehousing development only).

Should developers wish to partner with social housing organisation or community-led housing groups, they must adhere to strict criteria weighted as follows:

• 90% criteria weighting on urban/architectural design excellence, sustainability, social value creation
• 10% criteria weighting on tender price

In addition to supporting community-focused housing groups to find and access land for development, local governments also provide critical seed funding to support capacity building, training and resources to help scale the community-led housing sector. For example, in 2019 London Mayor Sadiq Khan approved a £38million ($NZ80million) fund to finance the growth ofthis sector in London, known in the UK as the community-led housing sector.

To overcome financial barriers to underwriting community-led housing models internationally, numerous local and national governments have also provided support through:

• The creation of Revolving Loan Funds to provide critical gap financing solutions to support projects,
• Loan guarantees and cross-collateralisation of public assets to reduce underwriting risks from senior lender,
• Allowing ground rental payments to be subordinate to senior debt payments,
• Direct grants to support group formation and design development phase, and
• Ground rent concessions to reduce rent levels to meet local income affordability levels (i.e.income derived rents < or = 30%).

As the government looks to ‘infrastructure’ to form the basis of the post Covid-19 rebuildingof the NZ economy, there is an opportunity to take a new approach to addressing issues of housing affordability, social disconnectedness and environmental sustainability through supporting the growth of the community-focused housing sector. An introduction to what CFH is, and why it would be beneficial to New Zealand, as well as some of the things that the government organisations could do to unlock the newer models, including cooperative housing and community land trusts, has been provided in this brief article.

Written by Greer O’Donnell with contributions from Jason Twill.