[Fwd: Re: Afforability]
From: peterpiper (peterpiperriseup.net)
Date: Thu, 4 Feb 2010 15:53:45 -0800 (PST)
I've finally ploughed through all the messages on this general topic that got filtered into my C-L folder. I'd like to commend to you the innovative new tenure model (that I posted about on 12 January), which must be amendable to the laws of the USA.....

MUTUAL HOME OWNERSHIP SCHEMES (MHOS): a new model of affordability

An MHOS is a bona fide Industrial and Provident Society (IPS) registered with the Financial Services Authority (FSA) in the UK. It is run by its members and has a cooperative structure. All adult residents are members and no one else is eligible for membership.

The MHOS owns the land and the houses. Each household has a fully repairing lease for their property. In this lease they commit to paying 35% of their net income which finances their equity shares and management, maintenance, insurance and service costs.

Each equity share is worth £1000 at the start of the project. The number of equity shares assigned to a household correlates to the proportion of the total MHOS mortgage they can afford the repayments for with 35% of their net income after the deductions for management, maintenance, insurance and service costs. The relationship between gross income and the no of equity shares a household can finance ranges from a factor of 3.59 to 3.36 depending on house size.

Each household’s no of equity shares must be within 10% +/- of the build and design cost of the project. Any households who can finance more then the 110% of the build and design cost contribute the remainder to the contingency and futures fund.

This model of home financing moves towards decoupling ability to pay from the quality and size of the home, and away from housing as an investment. In addition in creates a community build to a high ecological standard.

Comparing to a traditional view of affordable housing where those in social rented accommodation live in homes with a build cost of ≤ £520/sq metres and can not have any ownership of their homes, those in intermediate housing live in homes with a build cost of ≤ £927/sq metres and may only be able to rent or own a share in their home and those in open market homes can choose the quality and cost of their homes an MHOS creates a truly mixed community with everyone having the same quality and level of ownership of their home.

The homes will be permanently affordable and held in perpetuity.

The minimum gross household income for each property is £15,277 for a 1 bed, £20,812 for a 2 bed, £24,599 for a 3 bed and £31,007 for a 4 bed property. This means that some households who would currently be eligible for social rented accommodation could afford to live in the scheme. Unfortunately those on housing benefit could not live in the scheme as housing benefit can not be used to accrue equity.

Lilac’s membership policy and selection process will ensure diversity in all areas including income. It would be beneficial to have some high earners as for some households to have less equity shares then the build and design costs other need to have more. In addition for high earners 35% of their net income would finance more equity shares then allowed and so a proportion would go to the contingency and futures fund. This will be beneficial to the project and will also probably limit the number of high earners.

-------- Original Message --------
Subject: Re: [C-L]_ Afforability
Date: Tue, 12 Jan 2010 22:11:22 +0000
From: peterpiper [at] riseup.net
To: Cohousing-L <cohousing-l [at] cohousing.org>

An input from the UK ...

We, LILAC, are planning to use an innovative new tenure model Mutual
Home Ownership Society. Rather than people buying a house, they pay
approx 35% of their income to buy equity shares in the Society, which owns the cohousing development. We've costed how this will work, and the minimum household income needed is approx US$ 26,000. We want a diverse cohousing community - not just rich people - so this model is the system we are going to use.

There are some more details in Section 1.5 of our Project Development
Plan: http://www.lilac.coop/home/61/. But the best people to talk to
about it are the people we got the idea from: CDS Co-operatives

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