#WhatIfWeCan: Create a #4thWay for Affordable Homes?

'Thought Leaders' is a new series of posts from people who influence the work of the Lab - challenging us and making us think differently. They will be people who don't follow the rules and seek to set a new agenda. Today , Peter Hall , MD of PHHS, outlines a bold new vision for affordable housing.

The UK's housing market is broken. Not enough new affordable homes being built for sale or rent. Home ownership fast becoming a distant dream for many. The numbers privately renting increasing exponentially while rents and fees are already the highest in Europe. Social housing being sold off.

 Where will our children, grandchildren and future generations who will power the UK economy live?

 Can any of the existing three ways (home ownership, private or social renting) provide them all with a safe, secure and genuinely affordable place to call home?

 We think not.  

·     Even with a 20% discount through starter homes or Help to Buy, house prices will remain out of reach for many. And home ownership is also not the tenure many younger people are now seeking. Recent extensive surveys highlight well over a third of people actually choosing to rent rather than buy.

·      Private Renting is currently a long-term investment, which requires a long-term commitment, and mainly appeals to the individual investor – hence the explosion in Buy to Let. The apparent £30bn of institutional funding being lined up for Build to Rent is into an existing model. Geared towards obtaining the highest returns possible rather than affordability - maximising profit rather than affordability for the millions who need it. Private renting will remain an expensive, uncertain and high-risk option of little choice for many.

·      And the current government just doesn't want to invest in social housing. It is seen as part of the problem rather than being a solution, and the Right to Buy is being extended. More social housing is and has been sold than built.

Which is why we’re Crowdfunding 4Viea new social enterprise to deliver a vibrant, modern and ethical fourth way.

The vision is simple. To Crowdfund a new enterprise which will build, purchase and manage a stock of homes across the UK - modelled on successful and thriving rental sectors in Europe, and offering what tenants want from a landlord - safe, secure, genuinely affordable and well maintained homes.  Including 35% of rents starting at 35% of average local incomes, no upfront fees, and 7-year renewable tenancies.

Aiming to deliver 6,000 additional homes by 2020 for those who are locked out of home ownership; stuck in expensive, insecure and poor quality private renting; or don't qualify for social housing offered by councils or housing associations.

Offering somewhere safe, secure, and affordable to call home. Somewhere to put down roots. For the long or short term. With an added bonus of a share in a % of annual profits for tenants.

And the finances for the model stack up – delivering a healthy rate of return for any longer term equity investors, and cash to reinvest back into the business to grow. Largely through utilising and emulating the technology and customer service ethos of the likes, for example, of Aldi and Amazon.

 The only reason others cant or aren't doing it is either because they want more of a return, or their operating costs are too expensive.

Why Crowdfunding?

Our initial discussions with philanthropic financiers about the model indicated there is huge scope and appetite for investment it, but we genuinely believe that 4Vie needs to be crowdsourced and crowdfunded from the ground up to gain traction and prove the appetite and need for it.

There may not be the political will to solve the housing issues or crisis the UK faces, but Crowdfunding offers an opportunity for real democracy in action. Allowing people who support the need for genuinely affordable homes to take action in an area that has previously relied heavily on government support. Enabling us to stop being mere observers of the political whims of whichever government is in power, and to sponsor, decide, choose, create and effect what we want.

And maybe the government’s role in all this should just be to pave the way for social enterprises and entrepreneurs to deliver? The great 19th century philanthropists such as Guinness, Cadbury, Peabody & Rowntree provided inspiration by building affordable homes for their workers. But since World War 2, state subsidies have dominated the funding of our not for profit and charitable sectors. Many of whom have ended up chasing the government money rather than the vision. It's become a career path rather than a vocation.

Yet philanthropy is in our culture. Charities Aid Foundation analysis shows that in the UK we gave £10.6bn to charities last year, and British philanthropers gave away £2.6bn to social enterprises or charities, while the amount of cash at their disposal stood at £19bn. And there is a staggering £5,929bn of wealth in the UK.

The challenge is to translate this available funding and the success of Crowdfunding elsewhere (estimated to have raised £5bn globally last year – recent examples including $8m for Fishbrain, a ‘Facebook for fishermen’!) into a Viable, Independent and Ethical #4thway for affordable housing. Just 4% of that £10.6bn of donations last year was for housing – mainly homelessness.

The benefits are certainly clear.

No politics to get in the way. No bureaucracy. Just good quality, well managed and genuinely affordable homes for the millions of those who need it.

If you would like to make a difference, you can pledge your support or donate at: www.crowdfunder.co.uk/crowdfunding-affordable-rented-homes-1

If you have any queries or comments on the project, message or follow us on twitter (@4VieUk) or message/like us on Facebook (https://www.facebook.com/4VieUK)