Co-operative Housing

Part of the debate – in Westminster Hall at 5:20 pm on 11th July 2012.

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Photo of Jonathan Reynolds Jonathan Reynolds Labour, Stalybridge and Hyde 5:20 pm, 11th July 2012

Absolutely, and I too am aware that this issue is causing significant concern. The concern stems from the understanding that co-operative tenants would be entitled to claim housing benefit only if clarification was sought. As I understand it, housing benefit is not usually payable to people with leases over 21 years, so this ruling would cause a significant problem to those people. Can the Government confirm as a matter of urgency whether co-operative tenants, like other tenants, would still be eligible to claim housing benefit?

When making the judgment, Supreme Court Justice Baroness Hale highlighted the fact that the rule about certainty was invented long before periodic tenancies. Others, including the retired Law Lord, Lord Browne-Wilkinson—back in the early 1990s, I believe—have acknowledged that this area of the law is not in a satisfactory state. I understand that CDS Co-operatives, the largest co-operative housing service agency in England, is already seeking to bring a test case before the Supreme Court. That case will ask the Court to consider whether the principle that a tenancy cannot be for an uncertain term can be overturned. However, that process will be long and costly, and even if CDS Co-operatives succeeds, the Supreme Court may rule that it is the role of this House and Parliament, not the Court, to change precedent derived from an interpretation of centuries of feudal law.

The Supreme Court ruling has raised serious questions for the co-operative housing sector. It would be wrong to leave the sector to deal with that fallout alone, so today I ask the Minister whether he can offer urgent assistance to housing co-operatives as they try to navigate their way through the implications of the judgment. However, I still firmly believe that Parliament needs to change the law in this area.

As my hon. Friends the Members for Luton South (Gavin Shuker) and for Rutherglen and Hamilton West (Tom Greatrex) said, last year I introduced a private Member’s Bill that would have acknowledged co-operative housing in law for the first time. I argued that existing landlord and tenant law assumes a fundamental conflict of interest between landlord and tenant and that that was inappropriate for the co-operative model. I suggested that the new form of tenure would open the way for the expansion of co-operative housing schemes at a time when the UK faces a significant housing crisis. The change in the law would formally have acknowledged the nature of housing co-operatives for the first time, but it would also have had the potential to increase access to affordable housing and would have enabled members of housing co-operatives to build up financial equity at a time when people are finding it harder than ever to take their first step on the housing ladder. That point is in response to what my hon. Friend the Member for Luton South said, because if that Bill had become law, it would for the first time give people a real option between ownership and renting. By virtue of being a member of the co-operative, they could pay an amount of money appropriate to their income, giving them an equity stake that would grow. They would not face the financial hurdles of buying for the first time, but they would have a greater stake than if they were simply renting.

In many countries, co-operative housing tenure is already recognised as a distinct way for members to acquire the right to occupy their homes. For example, in Sweden, where 18% of the population live in housing co-operatives, that has been part of the law since the 1920s. I am delighted that, in Wales, the housing White Paper, “Homes for Wales”, gives due prominence to the need to support co-operative schemes through legislation, committing to create co-operative housing tenure in Welsh housing law. I congratulate the Welsh Labour Administration, the Welsh co-operative movement and the Minister for Housing, Regeneration and Heritage, Huw Lewis AM, on Wales being the first part of the UK to do so.

The importance of the issues highlighted by the Berrisford v. Mexfield ruling is inextricably linked with the seriousness of the growing housing crisis in the UK. I am sure that I need not remind hon. Members here today that in the private rented sector, rents are increasing more quickly than wages, and at a time when living standards for working families are being squeezed and people are under huge pressure. Local authorities and housing associations own 1 million fewer homes now than in the late 1970s. Families can no longer rely on social housing. With the average price of a property in the UK in excess of £165,000, it is now harder than ever for first-time buyers to step on to the housing ladder.

We urgently need to find solutions to the problem. Co-operative housing schemes do provide an alternative solution. They can offer affordable, quality accommodation to residents, while empowering them to play a key role in the decisions that relate to their property. What is more, they have the potential to attract new investment into the provision of much-needed housing. We should be doing all we can to support the growth of the co-operative housing sector. We need to do more and we should start today by supporting existing co-operatives in the wake of the Berrisford v. Mexfield judgment.