This Blog was written by Tessa Gooding, Co-director of Urban Patchwork
In global cities like London, where many people buy residential property as a capital investment and/or buy-to-let and also spend their holidays (often renting homes short-term through companies like Airbnb and having second homes), the cumulative impact of the exchange of housing as an asset/investment is increasingly eroding its use – its ability to provide for people’s basic needs as a home, as many are priced out of the market or excluded for other reasons.
London is experiencing a growing homelessness crisis, together with an ever-increasing number of people being dependent on finding housing in the private rented sector and having to travel greater distances to get to and from home to work. At the same time, the exchange of housing is opening up more flexible work, leisure and movement patterns for those who can afford to buy-in to these markets. In terms of their ability to be able to call different places home from month to month or year to year, whether renting in the private rented sector, through a holiday let or buying and selling property.
The exchange of housing has become integral to the economy in our market society and to the freedoms and restrictions people feel within it. In a context where central governments are providing (both directly and indirectly) less and less much-needed social housing, intermediary housing and housing more generally, social enterprise* innovations are coming about that are aiming to stem the tide of the exchange of property eroding its use as a home by redistributing profits/surpluses gained from its exchange back into providing more and better homes for people, and/or contributing to the community in other ways.
Many social enterprises are using the high demand for various intermediary services in the housing market, and housing itself, to do this. They also aim to improve professional standards in the property sector in the process.
For example, in the private sector Dot Dot Dot Property Guardians makes use of empty properties to house people at subsidised rents who commit to volunteering in their community at least 16 hours a month. This is a ‘win, win, win’ model that meets property owners’ needs by keeping their property secure and well-looked after, provides more affordable great homes to reliable tenants, and increases community connections and social capital in the process.
In a context of less central government funding, some local authorities are borrowing directly from the treasury to meet open market demand for housing – often setting up spin-out non-profit social enterprises to develop directly or through joint ventures with developers. They are then using the income generated from this to cross-subsidise and provide the intermediary and social housing that is desperately needed. This approach is now underway in London boroughs like Harrow and Barking & Dagenham. The majority of housing associations also pursue this model.
Finally, there are organisations like us, Urban Patchwork. We are a self-funded social enterprise estate and lettings agency in Southwark, providing friendly residential sales and lettings services aiming to compete with market-leading agents in our area, and will use the majority of profits (alongside any reinvestment needed) to meet more people’s housing needs through funding homeless housing and support projects. In a similar vein, lettings agencies like Homes for Good in Glasgow use the surplus from their core business to provide support services to their most vulnerable tenants, helping them sustain their tenancies, often with incredible results.
Organisations like ours aim to encourage a return to the estate agency sector’s roots, where local independent agencies provided value to their community by supporting local events and projects on top of personable sales and lettings services. We are also in the unique position to review practice and influence positive change in the agency sector from the inside out.
All the examples mentioned here are a break from a model where there is seemingly a focus on profit above all else. This approach is now being increasingly questioned by customers wondering what value they are getting for their money – from all sides: landlords, tenants, buyers, sellers and society more broadly.
Housing-related social enterprises are emerging in different guises across the private, third and public sectors in an attempt to recapture some of housing’s waning social value as a home, creating – or at least retaining – more civic value than is commonly the case in the process.
This innovation is coming about in a context of questioning the status quo in economic thinking to re-define how we conceptualise and measure civic value and to question the aims of economic growth. As economists Mariana Mazzucato and Kate Raworth have recently highlighted, traditional economics has tended to promote growth at all costs as the barometer of success and to blur the distinction between ‘value creation’ and ‘value extraction’ – seeing an increasing price as equalling economic value when in fact value may be being moved around or actually destroyed (costing society in other ways).
Mariana Mazzucato in her 2018 book The Value of Everything: Making & Taking in the Global Economy, talks about how having a sense of public purpose can drive innovation-led inclusive growth, while Kate Raworth in her 2017 book Doughnut Economics: How to think like a 21st Century economist, discusses the need to contribute to a more circular economy and sustainable society that creates ‘a safe and just place for all.’
The operating models in this article demonstrate some ways we can help to move towards this as a society. There is no one-size fits-all solution to address the housing crisis. Other approaches are needed such as policy and tax reforms, guidance from industry bodies, changes in how housing investment works and cultural change within the property sector.
However, the approaches outlined aim to do what they can in a city like London to help meet more people’s housing needs and to influence improvements in professional practice in the process. Ultimately, we need a less polarised housing system where housing as property and housing as home work more effectively together.
*Social enterprises are businesses that have social and/or environmental aims. The Social Enterprise UK criteria is:
- The business has a clear social or environmental mission that is set out in its governing documents
- An independent business that earns more than half of its income through trading (or working towards this)
- Controlled or owned in the interests of its social mission
- Reinvest or give away at least half of profits or surpluses towards its social purpose
- Transparent about how operates and its impact.
Tessa Gooding is Co-director of Urban Patchwork, an estate agent social enterprise based by Greenland Dock in Southwark, London SE16 (more info at https://www.linkedin.com/in/tessagooding/or https://www.urbanpatchwork.co.uk/)