appropriate advice, which financing route is right for them. for right is route financing which advice, appropriate

likely that members will know at an early stage, with the the with stage, early an at know will members that likely

of considerations will fall into typical patterns, and it is is it and patterns, typical into fall will considerations of Financing Structure Mutual Home Ownership considered.

As more projects develop in Ireland these types types these Ireland in develop projects cohousing more As

so alternative options will normally have to be be to have normally will options alternative so Options Society (MHOS) (or mortgage) to a newly minted housing group, group, housing minted newly a to mortgage) (or

banks are unlikely to provide a long term loan term long a provide to unlikely are banks support funding? support

unlocking the viability of a project. High street street High project. a of viability the unlocking which may allow it to leverage specific specific leverage to it allow may which

5. the focus of this pamphlet, as it is essential to to essential is it as pamphlet, this of focus the

Will the project cater to any particular group group particular any to cater project the Will The following is a summary of some of the financial models This a model developed by the New Economics Foundation and

finance

. It is this long term finance which is is which finance term long this is It . which have been used in cohousing projects in recent years, pioneered at the LILAC housing project in Leeds, UK. It aims to

construction loan is paid-off using long term term long using paid-off is loan construction

sustainability? and which may suit the particular needs of an Irish group: combine affordability with the opportunity to accrue an asset

the the costs. Once construction is complete complete is construction Once costs.

to build to a particularly high standard of of standard high particularly a to build to over time.

bank loan is required to pay for construction construction for pay to required is loan bank spaces for work, community spaces, or or spaces, community work, for spaces

3. construcction 3.

Normally a specialised type of commercial commercial of type specialised a Normally

beyond their own housing, such as providing providing as such housing, own their beyond rental This model is suitable for those with limited The model is described as a shared equity co-op. Members

4.

Does the group wish to achieve any goals goals any achieve to wish group the Does co-op equity. Under this model members form a co-op must deposit equity equivalent to 10% of the value of their new

trusts (CLTs). trusts and may be able to avail of funding, home. With this money the co-op sources financing to carry out

various structures such as community land land community as such structures various

those who live there in the future) the in there live who those ethical finance or social housing assistance if construction.

Purchase: SOA pamphlet. Site cost may be reduced using using reduced be may cost Site pamphlet. SOA

that the homes are affordable in perpetuity (for (for perpetuity in affordable are homes the that their incomes meet the requirement. Rental

2. Site Site 2. 3. 3. This topic is dealt with in detail in a separate separate a in detail in with dealt is topic This Should the ownership model be structured so so structured be model ownership the Should co-ops may allow members to own some equity Once members move in, they pay a maximum of 35% of their

in the form of shares, which they can sell if they net income into the co-op each month. They continue to do this

are normally the first costs encountered. costs first the normally are

homes outright? homes leave, or may be fully mutual, meaning members until their portion of the construction loan has been paid off,

costs: matters, including a planning application. These These application. planning a including matters,

monthly rent, or will members own their own own their own members will or rent, monthly own the co-op but do not own any personal after which time they pay a small monthly fee.

1. professional professional 1. Those associated with design, finance and legal legal and finance design, with associated Those

the project and to which they pay an affordable affordable an pay they which to and project the equity. At the La Borda cooperative in Barcelona

desired? Will the group form a coop which owns owns which coop a form group the Will desired? members invest some personal savings in the As a member pays off their portion of the loan they are accruing

2. 2. What sort of final ownership arrangement is is arrangement ownership final of sort What When Is Finance Required? Finance Is When project and may withdraw equity when they equity shares in the co-op, and should they decide to move on

leave. An example of a fully mutual cooperative they can sell these shares to a new resident. The sale value of

equally?

available in Ireland. in available is the Kindling in Oxford, these shares is controlled in order to maintain affordability for

means, or should all members contribute contribute members all should or means,

desirable and necessary to broaden the spectrum of housing housing of spectrum the broaden to necessary and desirable where no member investment was required. future residents, but members have the benefit of knowing that

for members to contribute according to their their to according contribute to members for

tested systems tested , and we believe that similar systems are both both are systems similar that believe we and , their monthly payments are contributing to the value of an asset

expected to contribute? Will the group allow allow group the Will contribute? to expected other European countries have tried and and tried have countries European other

This is an area where where area an is This building group This model is typical in Germany in situations which they own.

1. How much equity should members be be members should equity much How

at 4 projects in particular in terms of how they were financed. financed. were they how of terms in particular in projects 4 at (german baugruppe where co-op members have sufficient equity

sources of finance that have been used elsewhere, and looks looks and elsewhere, used been have that finance of sources model) to carry out the building project using This is the model currently being pursued by Common Ground

community-led housing projects, summarises some of the the of some summarises projects, housing community-led

indication as to how to proceed: to how to as indication from sources such as the state investment bank CoHousing in Bray, Co. Wicklow, which aims to realise the first

explains some of the basic concepts involved in financing financing in involved concepts basic the of some explains

structure of the completed development will give an an give will development completed the of structure and commercial banks, and members typically example of this model in Ireland.

need to attain sufficient financial backing financial sufficient attain to need a housing group from the outset the from group housing a . This pamphlet pamphlet This . the

, and the desired financial financial desired the and , end up owning their own homes. Whereas this

financial delivery of a project should be considered by by considered be should project a of delivery financial Central to the realisation of a self-organised housing project is is project housing self-organised a of realisation the to Central The The option may seem out of reach for many people in

Ireland at the moment, if similar state investment

bank financing became possible here, and if

Start leasehold purchases of sites were facilitated,

then this type of arrangement would become

How to to How Introduction much more affordable. A recent example of this type of project is Ritterstrasse 50 in Berlin.

Who We Are and How You Existing Sources Of Finance Further Can Get Involved Financing In Ireland Information

Although there is currently no established financial support If you’re interested in finding out more, the following websites SOA is a collective with the simple goal of improving the CoHousing structure for community-led housing projects in Ireland, there and books are worth a look: quality of living environments in Ireland by making new are a number of existing financing structures which could be forms of housing available. leveraged for their potential benefit: website brickstarter.org Our members and supporters represent a growing diversity cooperativecity.org of skills and expertise, and we are always open to new hbfi: (home building This is a company set up by the Department neweconomics.org contributions and ideas. finance ireland) of Finance to provide construction finance for cds.coop “commercially viable residential developments” communitylandtrusts.org.uk If you would like to get involved, either to contribute time where small and medium-sized builders cohousing.org.uk or expertise, or to join a group of people planning to create experience difficulty securing finance from www.theruss.org their own homes, please get in touch, or pop along to one commercial banks. ecology.co.uk of our workshops, Cohousing Cafes, or other public events. www.triodos.com rebuilding ireland This is a government scheme designed to help radicalroutes.org.uk home loan first-time buyers. Although aimed at individual owch.org.uk buyers, it is possible that this financial support commongroundbray.com could be used by members of a housing group to boost their potential to use mortgage finance books Cohousing Cultures for investment in a cohousing project. Institute for Creative Sustainability (Jovis)

energy efficient This scheme proposed by the Irish Green Cohousing Inclusive mortgages action Building Council is not in operation, but La Fond & Tsvetkova (Jovis) plan should this or a similar scheme be initiated it would make loan finance more easily Selfmade City available to sustainably designed housing Ring (Jovis) projects. Translating Housing: Berlin to Belfast Sheridan (DSD)

A Right to Build Parvin, Saxby, Cerulli, Schneider (University of Sheffield)

soa_ie www.soa.ie soaresearchirl [email protected] June 2019 how have existing Many community-led projects in Europe are how have existing Many community-led projects in Europe are projects been financed from a mix of different sources, Financing Example 1: Financing Example 2: projects been financed from a mix of different sources, financed? often finding alternative means of finance to financed? often finding alternative means of finance to give confidence to a commercial bank to lend La Borda Co-Op Oderberger Strasse 56 give confidence to a commercial bank to lend the balance of what is required. The following the balance of what is required. The following information describes the sources of finance Barcelona, Spain Berlin, Germany information describes the sources of finance which have been used by some existing which have been used by some existing community-led housing projects: community-led housing projects: 19% Other Loans and Grants 46% Commercial Bank Financing member equity A basic building block for most projects is cooperative When a housing project is set up as a the use of member savings as the initial 57% Coop 57 Funding, formed by: finance cooperative it is often possible to source equity for a project. Depending on the Housing Loan finance from other , or cooperative financial structure of a project the amount Participatory Loan lenders. One good example of this is seen at of equity required from members can vary Issue of Participatory Titles the La Borda project in Barcelona, where a considerably. (i.e. co-op funding from other sources) cooperative called Coop57 34% KfW Funding provided much of the funding for the project. commercial bank Commercial banks are generally involved (state investment bank) Coop57 only funds cooperative members finance in the financing of cohousing projects, but projects, and although it is not a profit driven unless the members have a high level of lender it has a higher success rate in lending equity it is normally necessary to obtain than comparative commercial lenders. other finance first before a commercial bank 8% Collaborating Members loan will be offered to cover the balance of credit Irish credit unions are in some ways the costs. Generally a bank may lend a project 19% Member Equity 9% Self Build unions organisations in Ireland most similar to ethical the equivalent of the maximum combined lenders. They are not profit driven in their 11% Member Equity mortgages of the members, i.e. 3.5 times lending, and appear to be interested in lending their combined net incomes. for housing construction. However it may be necessary for the central bank to clarify that reduced land This is a wide area dealt with in a separate they may carry out such lending before it can costs pamphlet, which describes the possible use Description of project: 28 apartments fully owned by the La Description of project: Situated on an urban brownfield site, the take place. of leasehold arrangements to reduce the cost Borda co-op, with members having rights to use their units. project comprises 19 units including work and gallery spaces in of land for new projects. Community Land The site is in a former industrial area and is leased by the co-op a high density experimental format. Legally structured using the community Somewhat similar to ethical lenders, Trusts (CLTs) have become commonplace from the city of Barcelona on a 75 year lease. Members pay an Baugruppe model, half of the space is in private ownership and finance organisations such as Community Finance in the UK in recent years, and operate affordable rent. Much of the funding was organised through half is rented. The rented spaces are managed by a separate Ireland and Clann Credo have a remit to by offering the home owner or co-op a Coop 57, a “financial services cooperative” which provided a legal entity created for that purpose, and this entity borrowed support community projects which find it perpetual leasehold on their site with certain housing loan and third party peer to peer-type financing. a portion of the money to fund the construction project. difficult to obtain commercial finance. CFI rules regarding resale etc. In this way new have not traditionally financed housing, homes on CLT land can be kept affordable in Viable in Ireland? Viable in Ireland? but have stated an interest in projects of a perpetuity. Requires further development in ethical, peer to peer lending, The legal structure used to form a Baugruppe is not familiar suitable scale where the applicant as a track and willingness of local authorities to provide leaseholds on here, but should be possible. An alternative to state investment site (or to create Community Land Trusts). bank funding would be necessary

state investment The German state investment bank, the philanthropy/ Where a particular ethical or social need is banks KfW Bank, has a remit to finance projects Financing Example 3: Financing Example 4: csr being served it may be possible for a housing which may not otherwise be able to avail of project to benefit from philanthropic or commercial lending, and which improve the LILAC New Ground OWCH corporate social responsibility funding. environmental performance of the national building stock. By designing buildings of a high Leeds, UK Barnet, UK peer to peer Innovative lending models are emerging which environmental standard many community-led financing allow individuals and groups to lend directly housing projects in Germany have been able to one another where they have a particular to benefit from KfW financing, and this money 54% Ethical Bank Finance (Triodos) Balance of payment from leasehold interest in the success of a project and can has enabled them to access further private owners paid later. Members paid make a suitable return on their investment. bank finance. In Ireland, there is currently individually via the housing association Property Bridges is an example of an Irish peer no equivalent. SOA have proposed a State which was running the project, so each to peer lender that facilitates the finance of Investment Fund for Innovative and Sustainable member had different levels of equity housing projects from interested individuals. Projects, and the Irish Green Building Council and borrowing have published an Energy Efficient Mortgages loan stock, Some cooperative have financed projects Action Plan, each of which aim to create similar member shares by selling loan stock or shares to interested funding opportunities in Ireland. investors. In this way, independent investors who would like to see the success of the project uk community led This government fund has been set up in the can make a financial contribution, which is paid housing fund UK in order to increase the number of homes 20% Additional equity from back within an agreed period (for example 3 provided in the community-led sector and to members who could afford it years) with an agreed interest payment. provide housing which remains affordable Approx value of land used for units in perpetuity. This fund aims to support both crowdfunding Now commonplace in financing business design/administration and construction costs 16% Grant Funding (from Dept purchased by housing association and start-ups, there has been some interest in the and is administered through local councils. of Energy & Climate Change) provided leasehold to members use of crowdfunding as a source of finance for housing. In order to avail of it a project ethical Ethical lenders are lending institutions which 10% Member Equity 10% Member Equity paid at start would probably have to have some wider lenders do not prioritise profit, but rather try to lend of construction benefit to the community of funders. www. to project which they see as worthwhile in brickstarter.org is a Finnish project that has one way or another, normally for social or investigated this possibility, and the La Borda environmental reasons. A large number of Description of project: The LILAC project in Leeds uses the Description of project: Members chose to leave individual living project in Barcelona used some crowdfunding such lenders operative in the UK and Europe, Mutual Home Ownership Model (MHOS). Ideally this system and form a housing community, so had private equity. They also in its financial mix. and are frequently instrumental in getting is combined with a CLT, but in the case of LILAC this was not wanted to help provide social housing. This new co-op partnered housing community-led housing projects possible. 20 new homes were provided. Member equity is put with a housing association which facilitated the development, self-build/ Community-led housing always brings with across the financial line. Examples include into the co-op which borrows the money to build the homes. building 25 self contained units with shared facilities: 17 flats self-completion it the possibility for member involvement in the Ecology (UK), Triodos Members pay the balance of the cost into the co-op (which owned by occupants on 250 year leases, and 8 social leases with construction. Self-build for multi-occupancy (NL - and formerly operating in Ireland) repays the construction loan) over time at an affordable rate, assured tenancies which are managed by the co-op. building requires significant skills, but “self- UmweltBank (GR), GLS BANK (GR) and Banca and build equity as they do so. Lower earning members my pay completion” is a relatively easy means to Etica (IT). off their portion more slowly. Viable in Ireland? reduce construction costs. Once members have sufficient private equity this structure Viable in Ireland? Common Ground Cooperative in Bray are in should be possible here, although it may be difficult to replicate the process of developing a project here now. housing association commitment to funding.