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Who benefits

Through investment in YorSpace community shares, the community can act as the “city’s bank of mum and dad”. Purchasing shares in YorSpace enables them to reduce the deposits required of residents to 10% of net building costs.

The York Picture

The current housing market in York is not fit for purpose. York has a significant need for intermediate-cost housing that is not being met by either traditional for-profit developers or by social housing provision.

Rental and property prices are significantly above the region averages. Since 1997, house prices have risen over 300% in York. A 2014 Shelter Report identified an average increase in 3.3 years needed for first time buyers to save for a house deposit in York, compared to the regional average. Furthermore local incomes are not significantly higher to accommodate these higher prices, meaning average house prices are 8.62 times the local average income, compared to the region average of 6.47 times average income.

This causes many younger and middle income families to become caught in the “rent trap”, live in otherwise unsuitable accommodation or move outside York entirely. This increases pressure on already congested roads and harms York’s air quality. Since 2014 monthly rents in York have risen by 17.3%, compared to the Yorkshire/Humber regional average increase of 9.3%. Likewise, average local earnings have not kept pace with these increases in rent prices, with average earnings increasing by 8.9%.

Mutual Home Ownership Society

Each YorSpace development will be delivered through a locally-based Mutual Home Ownership Society (MHOS). Using this type of mutual ownership of homes allows YorSpace to meet one of it’s core objectives of disrupting the housing market by preventing properties from being sold on the open market, for profit.

In traditional housing co-operatives, residents rent their property and do not own any part of the Society. An MHOS contains equity that the residents purchase and subsequently sell back to the Society upon leaving their property. MHOS members, therefore, can enjoy a version of homeownership whilst mitigating the risk of demutualisation of the Society to release the asset.

In Mutual Home Ownership there is no outside institution owning any of the properties, they are fully owned by the MHOS and the members collectively own the MHOS.

 Advantages to the MHOS model of mutual homeownership include:

  • Retaining collective control over the properties preventing them from ever being sold for profit on the open market thus protecting their affordability in perpetuity across the generations
  • MHOS members own equity in their Society allowing residents to leave with their equity without having to dissolve the Society to access its assets
  • Affordable housing schemes are typically based on a rental model of tenure, whereas the MHOS model affords residents the dignity and stability of equity ownership.
  • Mutual societies can own assets that would otherwise be liable for Corporation Tax in a tax-efficient manner, thereby retaining affordability.

Notably, the MHOS is unable to raise external share capital from non-resident members. This leaves Societies needing to tap residents for very large deposits in order to leverage development funding. In many cases, this financial barrier proves to be insurmountable. For this reason, YorSpace will forge this innovative relationship with MHOS's to maximise the benefits of both types of society: the funding that a Community Benefit Society (YorSpace) can leverage, combined with Mutual Home Ownership.

In practical terms this means that each MHOS will lease the land purchased by YorSpace using community share capital and held in a Community Land Trust. This relationship has been designed to be replicable and scalable so as to be utilised by others as a template for future developments.

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