INTERNATIONAL LABOUR OFFICE HOUSING CO-OPERATIVES .;->'.;..,;. GENEVA G ENEVA V, ' , > • l •s 5" 1964 •••••4.:.^J-'-:''::" STUDIES AND REPORTS New Series, No. 66 PRINTED BY "LA TRIBUNE DE GENÈVE", GENEVA (SWITZERLAND) CONTENTS Page INTRODUCTION 1 PART I GENERAL DESCRIPTION CHAPTER I : Characteristics and Advantages of Housing Co-operatives . . . . The Co-operative Housing Sector Building Workers' Co-operatives Co-operatives Conferring Individual Ownership Collective Ownership Co-operatives Tenants' Co-operatives Mutual Self-Help Co-operatives Management Co-operatives Building Credit Co-operatives Scandinavian System Developing Countries Advantages of the Co-operative System The Main Positive Factors Needed 7 7 8 8 8 9 9 10 10 10 10 11 12 PART n THE SCANDINAVIAN COUNTRIES CHAPTER II: Sweden Historical Background Organisation Structure of the H.S.B " Daughter " Co-operatives " Mother " Co-operatives The National H.S.B Membership of H.S.B. Co-operatives Allocation of Housing Repair Fund Relationship between the Co-operative and Its Members Transfer of the Right of Co-operative Ownership Dissolution System of Financing of the H.S.B Internal Financing Financing of Co-operative Building The Role of Public Authorities Inter-Co-operative Financing The H.S.B. and the Building Industry Swedish National Building Society Social Significance 15 15 16 19 19 19 21 22 22 23 23 24 25 25 26 26 29 32 32 33 34 IV HOUSING CO-OPERATIVES Page CHAPTER III: Denmark Historical Background Organisation General Federation of Danish Housing Associations The Arbejderbo Financing Mortgage Credit Co-operatives Building Workers' Co-operatives The Role of Public Authorities Building Fund Social Significance CHAPTER TV: Norway 36 36 36 37 38 40 40 41 41 42 43 45 Historical Background Organisation Membership Transfer of Co-operative Property Youth Co-operative Movement Financing Co-operative Finance The Role of Public Authorities Social Significance 45 46 47 48 48 50 51 51 53 PART in OTHER EUROPEAN COUNTRIES CHAPTER V: France Historical Background Organisation of the H.L.M. Co-operative Movement Types of Co-operative Housing Schemes Co-operatives of Future Owners Privileged Users' Co-operatives Tenants' Co-operatives Financing of H.L.M. Co-operatives Homes for Ownership Homes for Rent Comprehensive Loans Savings Membership of H.L.M. Co-operatives Limited Means Nationality Protection of Members' Interests Social Significance CHAPTER VI: Federal Republic of Germany Historical Background Present Situation Organisation Regional Audit Unions National Union Building Workers' Co-operative Movement Some Characteristics of German Housing Co-operatives 57 57 58 59 59 59 61 62 62 62 63 63 64 64 65 65 65 67 67 67 68 70 70 71 73 CONTENTS V Page Financing Members' Contributions Private Credit Institutions The Role of Public Authorities Social Significance CHAPTER VII: Poland 75 75 76 76 78 80 Historical Background Organisation Financing Social Significance 80 81 82 82 CHAPTER VIII: Spain Historical Background Social Housing Policy Organisation Financing Social Significance 85 85 85 86 88 90 PART IV NORTH AMERICA CHAPTER IX: Canada 95 Historical Background Organisation Nova Scotia Quebec Ontario New Trends Financing Social Significance 95 98 98 98 100 102 102 105 CHAPTER X: United States Historical Background Organisation Financing Social Significance 107 107 110 112 116 PART V DEVELOPING COUNTRIES CHAPTER XI: Colombia Historical Background Organisation General Characteristics Characteristic Type of Housing Co-operative Mutual-Help Co-operatives Colombian Federation of Housing Co-operatives Financing Social Significance 121 121 121 121 122 123 123 124 125 VI HOUSING CO-OPERATIVES Page CHAPTER XII: India 127 Historical Background Organisation Financing Subsidised Industrial Housing Scheme Low Income Group Housing Scheme Middle Income Group Housing Scheme Village Housing Projects Scheme Social Significance CHAPTER XIII: United Arab Republic Historical Background Organisation Financing Social Significance 127 127 129 130 130 130 131 132 133 133 133 134 136 PART VI CO-OPERATION AND THE HOUSING PROBLEM IN THE DEVELOPING COUNTRIES CHAPTER XIV: Suggestions for Adaptation of the Co-operative Formula in Developing Countries 139 Organisation 139 The Three Basic Forms 139 Selection of the Type of Co-operative 140 Comprehensive Housing Co-operatives 141 Personal Mutual-Help Co-operatives 142 Co-operatives of Future Owners 142 Management Co-operatives 143 Tenants' Co-operatives 144 Building Workers' Co-operatives 144 Certain Essential Requirements 145 Co-operative Education and Training 145 Federation of Societies 146 Relations between Co-operatives 146 Economic Organisation 147 Normal Market Prices 147 National Housing Policy 147 Special Legislation 148 Housing Agency 148 Building Sites 149 Credit Facilities 149 Stable Interest Rates 149 Subsidies 149 Agents of Social Policy 150 Financing 150 Housing Co-operatives and the Building Industry 152 Model Urban and Rural Neighbourhood Communities 153 CONTENTS VII Page LIST OF TABLES I. France: Maximum Loans Granted by the State for the Construction of Low-Cost Family Housing 63 II. Germany: Housing Construction, 1927-35 68 III. Federal Republic of Germany: Homes Built by and on Behalf of Cooperatives, 1950-61 69 IV. Federal Republic of Germany: Co-operative Share Capital, 1950-60 . . . 77 V. India: Development of Housing Co-operatives, 1957-60 128 INTRODUCTION Housing is one of the basic needs of man, and a shortage of housing constitutes a grave problem from two points of view: the one social, and the other economic. Social, because a shortage of accommodation compels many families to dwell in unhygienic conditions, with harmful consequences for their health; because the home environment in which a child grows up has a very important bearing on the forming of his character as an adult and on the part he will come to play in society; and because a worker who Uves in wretched conditions is usually unable to engender a consciousness of true human dignity either in himself or in his children. Economic, because the bad social conditions in which the worker lives cause his standard of output to fall; so much so that the success of economic planning may be said to depend in some respects upon the housing facilities available to the people. This explains why the International Labour Organisation has always shown such active interest in seeking a solution to the housing problem, in line with the principles embodied in the Constitution of the Organisation and reaffirmed in 1944 in the Declaration of Philadelphia, which recognises the solemn obligation of the I.L.O. to further among the nations of the world programmes which will provide adequate housing. The problem of housing—and workers' housing in particular—has therefore been debated at a great many meetings organised by the I.L.O., and significant conclusions and resolutions have been adopted on the major aspects of this problem. In 1960 and 1961 the subject was discussed at the General Conference of the I.L.O., culminating in the adoption in 1961 of a Recommendation concerning workers' housing which sets forth a series of provisions on the objectives of national housing policy, the responsibility of public authorities, housing provided by employers, financing, housing standards, measures to promote efficiency in the building industry, house building and employment stabilisation, and town, country and regional planning, and suggests a series of practical measures regarding these matters. 1 At the same session in 1961 the International Labour Conference adopted a resolution concerning international action in the field of workers' housing, in which it requested the Governing Body of the International Labour Office to 1 Official Bulletin (Geneva, I.L.O.), Vol. XLIV, 1961, No. 1, pp. 4 ff. 2 HOUSING CO-OPERATIVES find ways and means of increasing, in collaboration with the organisations concerned, both international and national, practical assistance in particular to developing countries in solving their housing problems with respect to thosefieldsin which the I.L.O. has a special competence under the United Nations Long-Range Programme of Concerted Action in the Field of Housing and Related Community Facilities and, in particular, vocational training of building workers, productivity in the building industry and co-operative housing.1 The problem of housing is in no way new, but it continues to be of pressing and profound concern, despite the achievements realised in some countries since the Second World War. The problem is a complex one, since the causes of a housing shortage are many-sided. Aggravating factors include the growth in the world's population, the increasing concentration of workers in the industrial urban centres and the general failure to develop available resources of building materials. From the point of view of the workers, and of low-income families in general, the real problem amounts to this : is it possible for the mass of the workers, alone and unaided, to acquire decent homes of their own if they set aside a reasonable proportion of their incomes for that purpose? A series of surveys shows that in the majority of cases the reply is in the negative. In view of the gravity of the problem, the need is daily becoming more apparent for investigation of the principal methods which might be encouraged in an endeavour to help find a satisfactory solution to the distressing problem resulting from a shortage of housing. One such method is the co-operative system. This is a field of activity in which the International Labour Organisation has special competence2 and with which it has concerned itself ever since its foundation immediately after the end of the First World War, as a means of helping to raise the standard of living of the working classes. The author of this study is Mr. Samuel Ruiz LUJAN, a member of the Co-operation and Small-Scale Industries Division of the I.L.O. Its purpose is to describe how some of the principal co-operative housing schemes came into being and are operated in certain countries, as revealed by the documentation available when the report was prepared. The most interesting achievements in the field of housing are noted, and attention is drawn to the factors which have led to success or failure, in the hope that this will be of help in particular to developing countries by providing information on the great advantages and savings to be 1 Official Bulletin, Vol. XLIV, 1961, No. I, p. 26. See, for example, UNITED NATIONS: Twentieth Report of the Administrative Committee on Co-ordination to the Economic and Social Council, document E/2931, 18 Oct. 1956, paras. 14 and 15. 2 INTRODUCTION 3 derived from the successful use of co-operative techniques. Further studies which may be produced later in this field may deal with other aspects of the housing problem or describe the co-operative achievements of other groups of countries in the different continents. The I.L.O. wishes to express its appreciation to the Swedish H.S.B. (Hyresgästernas Sparkasse- och Byggnadsföreningars Riksförbund), and in particular to Mr. Sven Kypengren and Mr. Âke Johnsson, for the most valuable information on which the section concerning the Scandinavian countries is based. PART I GENERAL DESCRIPTION CHAPTER I CHARACTERISTICS AND ADVANTAGES OF HOUSING CO-OPERATIVES There are various forms of co-operatives to meet the need for accommodation: some deal only with specific phases in the provision of housing, such as financing or building, while others cover all the phases from the selection and purchase of the land to the administration of the completed project and the establishment of complementary community services. THE CO-OPERATIVE HOUSING SECTOR It has been debated in the past whether co-operative housing should be classified as a consumers' movement or a producers' movement. In actual fact, this type of co-operation aimed at satisfying the need for housing in the wide sense in which it is considered in this study has always had a twofold character, embracing both consumption and production, depending on whether people join together with a view to becoming occupants, in which case they look upon the accommodation not as a production article but as a consumer commodity, or whether teams of workers in the building industry band together on a co-operative basis and operate undertakings to produce dwellings for others. A typical example of a large-scale co-operative housing scheme which is predominantly a consumers' movement is the Swedish Tenants' Savings Bank and Building Society, or H.S.B., whereas the Swedish National Building Society, or S.R., the other big housing co-operative in Sweden, is a classic example of co-operative housing in which production is the keynote. The way in which both societies operate will be discussed fully in the section dealing with achievements in the field of co-operative housing in that country. There also exists a third form of co-operative housing which has been particularly successful in Canada, whereby both objectives are combined in a single organisation. Societies organised as teams of workers produce a given number of dwellings, not for third parties but to be occupied by the members who have built them and who will then be using them as consumer goods. 8 HOUSING CO-OPERATIVES The truth is that every day it is becoming clearer that co-operative housing forms a well-defined sector on its own, having its special features and problems, and having developed its own specialised methods and activities in this sphere. In its widest sense it embraces the organisations of both producers and occupiers of housing, and is a movement on its own, although naturally bound by the generally accepted principles and methods of international co-operation and linked with the other branches of the same movement. BUILDING WORKERS' CO-OPERATIVES Co-operatives in which production is the dominant feature, and which are organised in the main by building workers with the immediate aim of creating employment for their members, generally cover all the phases involved in the construction of a particular house or group of houses. Sometimes they build for other co-operatives of future occupiers or for other non-profit organisations concerned with housing; sometimes for the employees of the consumers' co-operatives or of other private undertakings; sometimes for municipal housing programmes; sometimes for individual families; and sometimes they handle projects for other residents' co-operatives organised under their auspices. CO-OPERATIVES CONFERRING INDIVIDUAL OWNERSHIP Among the co-operatives organised with the primary objective of building houses to be lived in by the members themselves, some confer individual ownership upon their members while others retain the ownership of the buildings and allocate the individual dwellings to their members, giving them privileged occupancy rights which they may pass on to their heirs. Of the co-operatives which confer individual ownership on their members, some do so as soon as building is completed, if each individual member is directly liable for the financial obligations incurred; it is more usual, however, for the deeds not to be made over until the mortgage has been paid off. Such societies normally build single-family houses, and are frequently wound up once the houses have been handed over. COLLECTIVE OWNERSHIP CO-OPERATIVES Co-operatives which retain the ownership of the property have confined themselves in the main to constructing buildings or groups of buildings, or even large residential estates, with particularly noteworthy achievements in the Scandinavian countries and in New York City. CHARACTERISTICS AND ADVANTAGES 9 These organisations are of a permanent nature, and are characterised by the fact that they not only endeavour to satisfy the housing needs of their members but also create additional amenities for the benefit of the community in the neighbourhood. In these co-operatives—as in the societies conferring individual ownership—the member pays for his accommodation in accordance with the agreed financial arrangements, but instead of becoming the individual owner he receives a stake as co-owner of the building or group of buildings which make up the project, being allotted a dwelling which he lives in and runs as if it were his own. He may sell his stake in the property, but naturally only in accordance with the stipulations laid down in the rules of each society, so as to preclude profiteering contrary to the principles of co-operation. A variant of this type of comprehensive housing co-operative has emerged in the United States since the Second World War, based on large-scale projects for buildings constructed mainly by the Government as part of its war time programme, which has made it easier for many families of modest means to acquire homes. The organisation, functioning and advantages of these mutual home ownership associations will be studied in the chapter on the United States. TENANTS' CO-OPERATIVES Between the respective methods whereby ownership is either conferred on members or retained by societies come the tenants' co-operatives. In these, as the name indicates, the members are not individual owners nor have they a privileged right of occupancy which may be transferred. They are tenants, but as members they do not just pay a reasonable rent but also have a voice and a vote in the administration of the actual buildings they occupy, which are leased to them by the society. These tenants' co-operatives have thrived in France in particular during the past few years and, as examined below, they have special financing arrangements. MUTUAL SELF-HELP CO-OPERATIVES Another interesting type of housing co-operative has emerged in Canada, in particular as part of the so-called Antigonish Movement, which combines the two elements of production and consumption in a single association, as discussed above. The principal characteristics of these co-operatives are that they consist of small groups which first study the different aspects of the housing problem and its possible solution for their families and then organise themselves on a co-operative basis as teams of workers to construct the houses needed. 10 HOUSING CO-OPERATIVES MANAGEMENT CO-OPERATIVES In some countries, once the job of building is completed and the houses allocated, the co-operative is wound up or devotes itself entirely to other projects, and the residents form a new society to manage the dwellings and organise complementary services. These societies are known as management co-operatives. BUILDING CREDIT CO-OPERATIVES Societies extending credit for building represent another of the ways in which co-operation can help to solve the housing problem. The funds of such co-operatives are derived from two main sources : either shares taken out by members, or deposits made by the members or by other persons or bodies. Each member of a society must subscribe and pay for shares or deposit a sum equivalent to at least 7 or 8 per cent, of the cost of the house he wishes to buy or construct. The society offers mortgage loans, generally for 80 per cent, of the value of the building, to be paid off in instalments over a specified number of years. This type of cooperative has made a noteworthy contribution to the house-building industry in some countries, particularly in Great Britain. SCANDINAVIAN SYSTEM In Scandinavia, which is the most interesting group of countries as far as co-operative housing is concerned, the three aspects of saving, building and the subsequent administration of the projects, instead of being handled by individual specialised societies, are combined in a single organisation, with very satisfactory results. In the chapters which follow, and in particular in connection with Sweden, it will be seen in detail how this system works, and what is the structure of the so-called " mother " and " daughter " societies which are characteristic of the co-operative housing movement in the Scandinavian countries. DEVELOPING COUNTRIES Housing co-operatives certainly do not represent the only possible answer to the grave problem of accommodation. Progress on these lines is hindered by a variety of obstacles which may be financial or sociological, administrative or of some other nature. Nevertheless, the results obtained in countries where this form of co-operation has advanced to a notable extent will be seen below to give grounds for the belief that in other parts CHARACTERISTICS AND ADVANTAGES 11 of the world, and in developing countries in particular, similar achievements can be realised through the adoption of the co-operative outlook and techniques as an integral part of the social housing programme of the various state and municipal authorities. Part VI is devoted to examination of the possibility of adapting such techniques to the developing countries. ADVANTAGES OF THE CO-OPERATIVE SYSTEM Among the advantages offered by the co-operatives as a way of helping to solve the housing problem, mention may be made of the following: Financial: They encourage people to save, and channel such money into the financing of house building. They reduce and stabilise prices by eliminating a series of speculators at all stages from sale and development of land to actual building. They facilitate credit on favourable terms. They can practise mass-production methods. They purchase building materials at wholesale prices. They are directly engaged in production, establishing their own factories. They produce and use best quality materials, since they are non-profit bodies. Technical: They organise their own technical services. They engage highly qualified technical staff. They carry out their own surveys in respect of all the problems relating to building. They set quality standards. They introduce new techniques into the construction and running of homes. Social: They offer many low-income families the only means within their reach of acquiring a decent home. They encourage people to turn their spirit of initiative and mutual aid towards solving their own housing problem by inviting them to participate in a joint programme rather than depend entirely on outside help. They relieve the state and municipal authorities of a large part of their administrative and economic responsibilities in the field of housing. 12 HOUSING CO-OPERATIVES They establish additionalfinancial,cultural and recreational amenities as part of their housing programmes. They help to create new communities where neighbours who come to know and appreciate one another better through engaging in the same co-operative activities are likely to maintain closer ties. They constitute a satisfactory method for public authorities in their social housing programmes for the modernisation of large cities, replacing old districts full of unhygienic dwellings with well-planned cooperative projects equipped with the best amenities for the people. THE MAIN POSITIVE FACTORS NEEDED It goes without saying that if co-operation is to play an important role in solving a country's housing problem it is necessary first of all, as shown in the chapters which follow, to create a favourable climate in which co-operatives can flourish. What must be done in the first place, for instance, is to awaken the interest of the people who are to form the foundation of the co-operative system, in order that they may realise the strength which comes from self-help and mutual aid, and may thus be ready to play an active part in the co-operative programme to solve their housing problem. A well-thought-out national housing policy is needed, giving co-operatives favourable conditions in which to operate and providing the necessary financing institutions to extend credit on terms that will enable low-income families to participate in the programmes also. Well-organised co-operatives are needed which will co-ordinate their housing activities so as to make use of all available resources in their programmes, set up their own subsidiary companies for the production of materials and derive the greatest benefit from modern building techniques. PART II THE SCANDINAVIAN COUNTRIES CHAPTER II SWEDEN HISTORICAL BACKGROUND Sweden is in the vanguard of the countries where co-operatives play a role of great importance in the solution of the housing problem.1 Although a society for the construction of housing was founded in Gothenburg as long ago as 1872—setting an example which was quickly imitated by a number of other societies of the same type which were founded in Stockholm from 1874 onwards—the co-operative housing movement as such is of more recent date, having originated in the period between the two world wars. The building societies which were founded at the end of the last century and in the period before the First World War were isolated enterprises with a very limited field of action, from which the profit motive was not always excluded. Nevertheless, despite the fact that these societies were not really co-operatives, it must be acknowledged that they were of service to the community, not only because they contributed towards relieving the housing shortage but because they introduced a certain spirit of co-operation with the organisation of groups, thus preparing the ground for the formation of the housing co-operatives of today. In 1916 the Central Union of Social Labour, a workers' organisation representing a powerful force in the political and economic life of the country, founded an important co-operative housing society which may be looked upon as the forerunner of the modern movement which was to make its appearance a few years later. This Co-operative Housing Society of Stockholm, anxious to eliminate the profit-making basis which had been a feature of the earlier societies, established the principle whereby the co-operatives as such retained ownership of their dwelling units, allocating accommodation to their members for occupancy for an indefinite period. This first co-operative housing society, which was founded with the assistance of the Stockholm City Council, was a success; by 1951 it was administering over 2,800 apartments for its members. 1 Sweden is therefore the first country to be considered in this document. In view of its achievements in the field of co-operative housing it is examined more thoroughly, and often serves as a point of reference for the study of other countries. 16 HOUSING CO-OPERATIVES Organisation of the co-operative housing movement on a national scale did not begin, however, until 1924. The immediate cause lay in the distressing social conditions following the First World War owing to the shortage of housing, and the consequent soaring of rents which characterised that period, laying a heavy burden on families of modest means. Furthermore, the overcrowding and unhygienic conditions of accommodation available on the market were both a constant menace to health, especially of children, and an obstacle to creating a pleasant home environment. As a result of this situation, even before the end of the First World War, tenants' associations sprang up in the working-class districts of Stockholm to protect the interests of their members and seek a satisfactory means of solving their housing problem. In an endeavour to create a stronger force to achieve their objectives the associations in the different districts set up a central body which they called the Tenants' Union of Stockholm, and this society came to the conclusion that if any radical improvement was to be made in the housing situation the best thing to do was to seek ways of constructing and administering their own dwellings. This led to the founding in 1923 of the Tenants' Savings and Building Society, commonly known by the initials of its name in Swedish, H.S.B. (Hyresgästernas Sparkasse- och Byggnadsförening). The example set by this co-operative society in Stockholm was imitated in other Swedish cities. But there still remained one great hurdle to be overcome before an adequate housing programme could be brought under way: as a result of the war, building costs had risen considerably. So it was that the independent societies formed by tenants in the different cities united to form a central national association with its headquarters in Stockholm which, by pooling all resources and operating on a vast scale, was able to cut down costs. This happened in 1924, a year which will therefore go down in history as the year when the modern co-operative housing movement in this country was born. ORGANISATION Although the various forms of housing co-operative in Sweden are, of course, part of the national co-operative movement, from a structural point of view housing co-operatives have their own special characteristics, and their internal structure within the country is completely independent of that of the other branches of the Swedish co-operative movement. The H.S.B. is the most powerful organisation and the one which best typifies the co-operative housing movement in Sweden. The SWEDEN 17 most striking characteristic it reveals regarding this type of Swedish co-operation is the way in which the three elements of savings, construction and administration of housing projects are combined in a single organisation. The basis for the structure of the H.S.B. lies in the so-called " mother " co-operatives which have been formed all over the country, and which cover specific areas. These societies are joined by all residents of the area interested in obtaining a co-operative dwelling. The strength of the Swedish co-operative housing system lies in these " mother " co-operatives, which are continually planning new building operations for the benefit of their members in the light of the needs of their area of competence. The " mother " co-operatives encourage their members to save, they collect such savings, they acquire the necessary sites and they run the whole building project. Once building is completed and the lucky members installed in their respective homes, the " mother " society organises them into a " daughter " co-operative whose function is the administration and maintenance of the building or group of buildings in which they live. Each " daughter " co-operative is an independent economic and social unit, but the members of the " daughter " association continue at the same time to be members of the " mother " society, with all the rights and privileges deriving therefrom. What is more, the task of the " mother " co-operatives does not finish when building ends, as they continue to look after the interests of their " daughters " by seeing to their bookkeeping, collecting payments due and arranging for administrative, economic or social services. The " daughter " society owns the building or group of buildings, as the case may be. The occupants are in reality neither tenants nor individual owners. Each member who has been allotted a home is entitled to indefinite " use " of that dwelling so long as he keeps up the appropriate payments and obeys the rules of the society. At the national level there is a central H.S.B. body whose members are the " mother " co-operatives. In 1959 it had 188 affiliated " mother " co-operatives which were operating in different parts of the country and had a total membership of 150,000. Under the constitution of the H.S.B. the functions of the national society include the following : to lend assistance in the establishment of new co-operatives of the H.S.B. type, or in the formation of any subsidiary societies that may be necessary; 18 HOUSING CO-OPERATIVES to facilitate the exchange of ideas and experience among the various " mother " societies ; to offer legal assistance to its members; to give technical help to building projects initiated; to purchase building materials at wholesale prices; to make direct arrangements, where advisable, for the production of building materials needed ; to organise and stimulate savings among the members of the H.S.B. movement; to provide loans to " mother " societies which need them. In order to be able to carry out its functions the national H.S.B. has set up its own bank and a number of specialised departments responsible for top-level handling of both the administrative and the technical aspects of the different projects. The national H.S.B. plays a role of great importance in the Swedish co-operative housing movement, not only because it channels and distributes personal savings through its own bank in order to finance an appreciable part of construction costs, and because it represents the individual co-operatives and establishes direct contact with other sources of credit, but also because its position enables it to engage the services of the most highly qualified experts in fields such as economics, town planning, architecture and design to make the necessary surveys and put into effect the building projects called for under its national housing programme. Another very important function of the national H.S.B. is research. In nearly 40 years of activity the national H.S.B. has acquired valuable experience in the construction and administration of buildings, and this experience is studied, analysed and then brought to the notice of the member co-operatives in order that use may be made of it in planning the construction and administration of new housing. This explains why the housing co-operatives were the first to introduce more advanced and efficient building methods in Sweden, as well as initiating significant achievements in making co-operative dwellings more pleasant and comfortable, as will be seen below. Of no less importance is the service performed by the national H.S.B. in testing different construction materials and laying down standards of quality to be observed by its member co-operatives. Moreover, this information is gradually made available to private building firms as well. 19 SWEDEN STRUCTURE OF THE H.S.B. Like every true co-operative, the H.S.B. is a democratic organisation, whether viewed from the national angle or at its base level—i.e. the " mother " society or the " daughter " administering a specific housing project. " Daughter " Co-operatives The supreme authority of the " daughter " association is the members' meeting, which elects four members to the board of the association. Under the rules which govern relations between a " mother " society and its " daughters " the former reserves the right to appoint the fifth member of the board of each " daughter ", as well as an auditor. " Mother " Co-operatives Meeting. In the " mother " society too the general meeting of members is the supreme administrative authority. In the case of co-operatives whose numerical strength is relatively small, representation is direct; otherwise it is through delegates. Thus in the " mother " co-operative for Stockholm, for example, which in 1959 had some 35,000 members, representation is indirect, and the method followed for the election of delegates is as follows : each " daughter " co-operative has the right to elect two delegates, plus an additional delegate for every 100 members after the first 100. Members who have not yet obtained their co-operative dwellings— in 1960 the " mother " society for Stockholm had nearly 20,000 members in this category—elect one delegate for each 75 members. Board. Often the " mother " societies of the H.S.B. elect an advisory board to deal with administrative matters. Such a board is composed of six members, two of whom are elected directly by the tenants' associations, the bodies which founded the H.S.B. shortly after the First World War, and the remaining four by the members' meeting. The rules do not require the members of this advisory body to be members of any of the co-operatives in the H.S.B. movement; it is even expressly stipulated that half of them must be chosen from among outstanding local personalities with an interest in or special knowledge of housing questions, and must not be members of the co-operative. The following are some of the principal matters about which the members of this body have to be consulted in advance : general policy in respect of property administration; 20 HOUSING CO-OPERATIVES acceptance of loans ; consideration of the most important building problems ; long-term investment of available funds; the agenda for meetings of the management committee; the budget; matters to be submitted for consideration to the annual meeting. Another function of this advisory body is to propose to the annual meeting candidates for election either to the management committee or as auditors. Management Committee. The members' meeting, which is normally held only once a year, delegates a considerable part of its administrative functions to a management committee, generally consisting of five members elected for a twoyear term. Elections are staggered, so that the situation never arises where the committee consists entirely of new members who are unfamiliar with the administrative problems in hand. The functions of this committee vary according to the terms of reference laid down for them by the by-laws and by the decisions of meetings in the various societies. Broadly speaking, it may be said that the management committee of an H.S.B. " mother " co-operative is empowered to sell, demolish or rebuild the property of the society. In addition it administers the savings of members, since each " mother " society acts as a branch of the bank belonging to the national H.S.B. The committee is also responsible for organising the educational programme to provide training in co-operative methods for members, especially as regards the problems involved. On the administrative side, it is the task of the committee to admit or expel members or employees, in conformity with the principles established in the by-laws or in the internal rules, as the case may be. The management committee engages the administrative and technical staff needed to cope with the volume of work in each society. At their head, directing the work of every employee of the co-operative, is the manager, who is also chosen by the committee. Generally speaking, managers attend meetings of the committees of their respective societies, and are allowed to speak, but not to vote, in the discussions. Auditing. Regular examination of the books of each society is an item of great importance in the co-operative housing movement of the H.S.B. For the " mother " societies of the H.S.B. there are generally two SWEDEN 21 auditors, one elected directly by the general meeting of the society concerned and the other appointed by the competent department of the national H.S.B. In cases where the State is helping to finance co-operative housing projects, the municipal authorities also have the right, if they so desire, to designate a third auditor. As a general rule auditors are elected for one year, and may be re-elected an indefinite number of times. The National H.S.B. Congress. The supreme authority of the national H.S.B. movement is the congress, attended by delegates from the " mother " societies, which elect their representatives in accordance with their own internal rules. Each " mother " society is entitled to elect one delegate. As the maximum number of congress delegates is fixed at 300, any vacant seats are distributed among the " mother " societies in proportion to the number of their members. As a general rule each delegate is entitled to one vote, except in the case of revision of the by-laws, the election of members of the national board or matters connected with financial contributions, in which specific cases each " mother " society has only one vote, irrespective of the number of delegates representing it at the congress. When other types of ordinary business are being discussed, on the other hand, each individual delegate may exercise his right to vote independently, and it frequently happens that representatives of the same " mother " society express different opinions. Board. The congress of the H.S.B. delegates the authority vested in it under the law and the by-laws to a board, also elected by the congress for a three-year term of office. This board consists of 25 members, two of whom are nominated by the central offices of the H.S.B. and the remainder chosen directly by the congress, which endeavours at all times to ensure representation of all the geographical areas into which the country is divided. The functions of the board include the over-all direction of the executive activities of the national H.S.B.; the examination of reports; the approval of balance sheets; the distribution of any profits which may accrue from the operations of subsidiary industrial undertakings; and the election of members both of the executive committee and of the auditing committee. 22 HOUSING CO-OPERATIVES Executive Committee. The seven-man executive committee is responsible for the day-to-day administration of the national H.S.B. Under the by-laws it may, without prior authorisation from the board, sell or mortgage properties belonging to the national association. But for matters such as the investment of capital to open up new sectors of activity the committee needs the express approval of the board. The committee must also consult the board when the question arises either of widening the scope of activities by the construction of new buildings or of making substantial changes in the quality standards set for building materials, or in similar matters. Membership of H.S.B. Co-operatives In principle anybody who has a housing problem to solve may join the " mother " co-operative in the district where he lives. In order to become a member of the H.S.B. movement he must contribute to the co-operative's capital by taking out one membership share, and must pay an admission fee. In addition the H.S.B. societies insist that prospective members should first join a tenants' association, if one exists in their district. In imposing this condition they remind members of the movement's origins and ideals. Membership of " daughter " co-operatives is naturally limited to those living in the dwelling units which make up the building or group of houses covered by a given project. Allocation of Housing It is not general practice in Sweden for ownership rights to be granted to members who move into newly completed dwellings. The usual procedure—and the same can be said, broadly speaking, of the other Scandinavian countries—is for members to be entitled to " use " of the homes allotted to them. In Sweden the societies of the H.S.B., and following their example the other housing co-operatives which have been set up in the country, grant this right of occupancy for an indefinite period. It frequently happens, however, that the H.S.B., in view of the efficiency it has shown in its efforts to provide housing on favourable terms, is asked to furnish technical help for private house building. In such cases, once construction is completed the houses are handed over as private property. SWEDEN 23 Repair Fund The H.S.B. co-operatives set up a special fund to cover the cost of any repairs which may be needed. The members of the " daughter " cooperatives are required to make monthly payments into this fund until it reaches a specified level, 5 per cent, of the value of the apartment they occupy. Repairs are made with money from this fund; when it drops below a safe level the member resumes his monthly payments. In this way the co-operatives encourage their members to keep their homes in the best condition so that their monthly payments to the fund are kept at a minimum.1 It should be noted that while repair costs are met out of the balance credited to each resident in the fund established for this purpose, members may not order repairs to be carried out without prior authorisation from the management of their " daughter " co-operative. On the other hand, if a member does not take the trouble to keep his accommodation in good repair, then the management of the co-operative will itself order the necessary repairs to be carried out, drawing for the purpose on the funds credited to the offending member. In the case of extensive repair work or modernisation, the co-operative draws on its emergency fund. Relationship between the Co-operative and Its Members As in any good co-operative organisation, within the H.S.B. movement there is a clearly established policy of maintaining the best possible human relations between management and members, in order that the latter may be kept informed of progress and encouraged to take an active part in programmes and activities. In the " mother " co-operatives in the cities of Sweden the number of members varies, as a rule, between 300 and 400; in the " daughter " societies in the towns the number of members is generally from 70 to 80, while in the villages the largest have about 30, and the smallest six. The city of Stockholm, however, is a case apart, since the " mother " co-operative had 35,000 members in 1959, and some of its " daughters " had up to 1,000 members each. This growth in the societies which has taken place particularly in recent years stems from a desire to increase the administrative efficiency of the various projects by basing them on larger units, but it has made it more difficult to maintain close relations between the societies and their members. The societies have consequently 1 UNITED NATIONS, Department of Economic and Social Affairs : Housing through Non-Profit Organizations, Housing, Building and Planning, No. 10 (New York, 1956; Sales No.: 1956. IV.T), p. 99. 24 HOUSING CO-OPERATIVES multiplied their efforts to keep alive the interest and participation of members through a suitable educational and publicity campaign and by forming small study groups. These methods aim at reminding members that they really are the co-owners of the innumerable enterprises of the H.S.B., so that they will look upon their co-operative dwellings as their own homes and realise that the administration and progress of the H.S.B. co-operative movement depends on them, on their interest and on their active participation through the democratic bodies established for the purpose. Transfer of the Right of Co-operative Ownership In the H.S.B. movement a deceased member's rights and obligations vis-à-vis his society may be passed on to his widow or children. Furthermore, since members are registered according to the district in which they live, privileges and obligations deriving from membership may be transferred from one district to another in certain specified circumstances. If a member wishes to leave the organisation, it is acknowledged in principle that he has the right to do so, but in practice he may only do so if he complies with the relevant clauses of the by-laws. Generally a member's resignation will be accepted if he has t o move to another district or if he has belonged to the society for at least two years before asking to withdraw. In no case, however, will a member be allowed to withdraw with less than six months' notice to the management. When a member withdraws from the H.S.B. his society does not return the money he has put in, but it does authorise him to sell his right of co-operative ownership. The member is then free to sell to anybody he wishes, provided, of course, that the buyer satisfies the conditions of membership of the co-operative. In addition, in order to avoid any risk of speculation, which would be alien to the principles of co-operation, the transaction is examined by the board of the " mother " society. The by-laws of the co-operatives of the H.S.B. provide that in such cases the sale price may not exceed the initial payment plus instalments already paid. It is also stipulated in the internal rules that the outgoing member must leave his dwelling in good condition. The cost of any repairs which may be necessary will be charged to his account in the special fund established for that purpose. If his credit under that fund is not sufficient to cover the cost, the sale price must be reduced by the amount needed to pay for the balance of the repairs. Even though in a continually expanding economy such as Sweden's it is not difficult to find a buyer, the H.S.B. has evolved a system to prevent members who wish to sell their co-operative dwellings from getting 25 SWEDEN into difficulties, by setting up a special fund to buy dwellings which the members themselves have not been able to sell. This fund is financed out of revenue from shares taken out by the members of the " daughter " co-operatives. The dwellings acquired in this way by the H.S.B. are leased on the open market until a suitable buyer is found. Only on very rare occasions has it been necessary to draw on this fund, however, and then only for a limited period. In other cases, this same fund has been used to give partial assistance to members in solving personal financial problems in special circumstances. In the same way as members are free to leave the co-operatives, provided that they observe the relevant provisions of the by-laws, so the H.S.B. in its turn can expel members who dishonour the ideals of the movement. The decision to expel a member is taken by the management committee of the " mother " co-operative, but it must be ratified by the board of the society. Dissolution In the event that a society has to be wound up, it is laid down that everything possible must first be done to safeguard the interests of the members. Thus, if the society to be wound up is a " mother " co-operative, the first thing that must be done is to return to the members all the money that has been deposited with the society, and any balance then outstanding is distributed among other bodies whose aims are similar to those of the association in dissolution. In the case of a " daughter " co-operative, here also the first thing is to pay back all the money contributed by the members, any sum left over being handed to the appropriate " mother " society. But if the " daughter " co-operative is one of those financed by the State, once members' contributions have been repaid to them in full any balance remaining is returned to the body which has given financial help. That body, subject to consultation with the H.S.B., may make use of these funds for purposes approved by the central authorities in charge of financial assistance. It is worth recording that as yet there has not been a single case of bankruptcy within the H.S.B. co-operative movement. SYSTEM OF FINANCING OF THE H.S.B. In studying the H.S.B.'s financial arrangements a distinction has to be made between the procedure established for the internal financing of the societies and the system adopted for the financing of the various housing projects. 26 HOUSING CO-OPERATIVES Internal Financing The national H.S.B., which is a co-operative of co-operatives and whose members are the " mother " societies established in different parts of the country, draws its working capital from the following resources : (i) membership fees from its affiliated co-operatives; (ii) wholesale business profits ; (iii) profits from subsidiary industrial enterprises ; (iv) fees for technical work done by its own team of professionals for the " mother " co-operatives or for other bodies which ask for help, such as local authorities; (v) interest from banking operations. The funds of the " mother " societies are derived from the following sources of income : (i) administrative charges for work in connection with the building of new projects; (ii) commission on building materials sold to the " daughter " societies; (iii) fees payable by the " daughter " co-operatives in respect of the administration of completed houses. The " daughter " co-operatives derive their income directly from their members' regular payments in respect of the dwellings they occupy. Financing of Co-operative Building As a general rule members of co-operative housing projects are required to contribute funds to finance the building of their homes, since a co-operative cannot begin work unless it has at least some capital to serve as a starting-point, as the costs of house building are generally high. Savings. When the tenants' associations were formed during and after the First World War in order to solve their housing problem on a cooperative basis, they knew very well that they would need considerable funds to achieve their objectives. Realising besides that members' contributions alone would not suffice to finance their projects, they profited from earlier experience to introduce a new form of organisation which combined both savings and building in a single society. Since then this form of organisation has become one of the key factors in the success achieved by this co-operative housing movement, the principle being clearly established that savings must precede construction. SWEDEN 27 Hence not only is the H.S.B. an organised movement of tenants, but it stimulates saving as the first step in the construction of housing by joint effort. The national H.S.B. states in its by-laws that its objective is to raise the economic level of its members through savings within the co-operative so as to enable them to acquire their own homes. The savings system within the H.S.B. works in the same way as in any commercial bank. In the different areas of the country the " mother " co-operatives collect savings from their members and act as branches of the central bank, which is an agency of the national H.S.B. To encourage saving with a view to solving the housing problem the H.S.B. pays its members interest on their savings at a higher rate than that normally paid by commercial banking institutions. Members who have already acquired co-operative dwellings also take part in this special scheme, saving to modernise their homes or to obtain larger homes for their families. Although not all the savers availing themselves of the services of the H.S.B. do so in order to facilitate the building of a home, the savings of all are used without distinction to help finance the movement's housing projects as a whole. By way of an example, of the 76,000 people who deposited savings with the H.S.B. in 1959, only about 20,000 were members saving under the special scheme as a contribution towards the financing of their own homes. On the other hand, in the same year the total savings deposited in the H.S.B. bank reached a figure of 76 million kronor, which the H.S.B. could use either for the purchase of sites or to finance actual building work. Naturally, as with any other bank, savings may be withdrawn at any time and for any purpose that the saver may have in mind. In this way the H.S.B., through its own organised savings scheme, makes it possible for its member co-operatives to obtain on favourable terms some at least of the short-term loans they need to finance their housing projects. Once a development is completed, the temporary loans extended by the H.S.B. are replaced by long-term credit in the form of mortgages. The national society in its turn uses the money paid back to help finance new projects. Members' Direct Contribution. In the first place the members of the H.S.B. must co-operate in furnishing the organisation's capital by taking out at least one membership share. In addition they must make a down payment on their co-operative homes. The H.S.B. offers four types of housing: a member who applies for a dwelling of type A, in addition to taking out a membership share, 28 HOUSING CO-OPERATIVES must make a down payment equal to 10 per cent, of the value of the dwelling unit. Type B likewise requires a membership share, but in this case, which is the most common, the initial deposit is only 5 per cent. Types C and D are intended for tenants who cannot afford to pay any deposit. Only the first two of these are irue co-operative projects, of course. In the case of types C and D the H.S.B. is lending its technical services and collaborating in the social programme of the municipal authorities, who are responsible for the financing of these projects. The municipal authority reserves the right to exercise a certain control over the selection of tenants, endeavouring in the main to help families with children. Funds constituted by members' payments are treated by the cooperative in the same way as capital from other sources. Thus, at the end of each year the H.S.B. pays its members interest, usually at 4 per cent., both on membership shares and on deposits. The yearly payment made by members in the form of rent includes interest and instalments on loans, fund contributions and payments for services. In an annual rent equivalent to $200, the percentage breakdown would be as follows : Interest on loans Loan instalments Administrative services Hot water and heating Repair fund Reserve fund 60.00 17.50 10.50 8.00 3.25 0.75 100.00 As the societies retain the ownership of the buildings, after 20 years the H.S.B. returns the original deposit the member made to help finance the project. From then on a resident member is only required to make a modest payment each year to cover administrative charges or to restore the special fund which is drawn on for any repairs which may have to be made to his home. There is also a special internal insurance scheme, the annual premium for which is equivalent to 1 per cent, of the funds deposited and may be deducted from the 4 per cent, annual interest payable by the society. This provides that if an insured member dies before the first 20 years of cooperative tenancy are up the deposit is returned in full to his family, which may continue to live in the dwelling indefinitely with the obligation to pay only the yearly administrative charges and the cost of any repairs. In order to assist their salaried and wage-earning employees to obtain accommodation, private bodies such as the Co-operative Union and Wholesale Society of Sweden have their own financial programmes, SWEDEN 29 designed to enable payment of the 5 per cent, deposit required from members wishing to take part in co-operative housing schemes. The present financial arrangements whereby a prospective co-operative co-owner is required to pay a deposit equivalent to 5 per cent, of the cost of the dwelling have only been in existence since 1946. During the period between the two world wars the H.S.B. was obliged to ask its members to pay a deposit equivalent to 10 or even 13 per cent, of building costs. Even at that time, however, in its efforts to bring down the cost of construction, thanks to efficiency of operation, elimination of middlemen, planning on a nation-wide scale and the establishment of subsidiary industrial enterprises, the H.S.B. was able to provide accommodation where occupants were offered savings of up to 20 per cent, on general costs and better facilities than those afforded by comparable private projects in Stockholm. Mortgages. The final loans for the financing of housing projects are granted under the triple-mortgage system instituted in the country for the purpose. The first and second mortgages, which generally cover 60 and 10 per cent. respectively of production costs, are arranged by banking houses, insurance companies or other credit institutions. The third mortgage, offered by the Government as part of its national housing policy, covers up to 25 per cent, of total building costs in the case of co-operatives. This explains why members are normally required to provide only the remaining 5 per cent. The Role of Public Authorities After the Second World War the Swedish Government embarked upon an advanced national housing policy which has helped to make money available to co-operatives by classifying them among the most important of the non-profit institutions which are in a position to make a positive contribution towards attaining the stated objectives. The Swedish housing plan has included long-term measures, such as the third mortgage referred to above, and transitional or temporary measures, such as supplementary loans, family allowances or protection against rising interest on mortgage loans granted by private institutions. Some of these measures have been of direct assistance to co-operatives in financing their housing projects; others have aided indirectly by helping members to find the funds for their personal contribution. The supplementary loan is a kind of capital subsidy which originated in the following circumstances. Although the members of the H.S.B. 30 HOUSING CO-OPERATIVES co-operatives do not, correctly speaking, pay rent for the dwellings they occupy, since they are not tenants but co-owners of the building or group of buildings which make up a project, the annual payments they must make to their own society are none the less subject to the statutory provisions governing rents in Sweden. In order both to maintain a curb on inflation and to stimulate the construction of housing the Government introduced these supplementary loans after the Second World War. They are not granted exclusively to co-operatives, and they are designed to make up the difference between the capitalised value of the statutory rent and the real value of the building, construction costs having risen considerably. These loans are made for ten years, and to begin with no interest was payable; since July 1961, however, under the Government's new financial policy, interest has been charged at 4 per cent. Another difference under the former policy was that, if on expiry of the ten-year period the society could show that its income was insufficient to enable it to pay back the loan, the State and the competent municipal authority would share this " overcost " of construction, contributing 90 per cent. and 10 per cent, respectively. Today, following a decision taken by the Swedish Parliament in July 1959, these loans must be paid back in the normal way. The Government also helps indirectly to finance co-operative housing projects by assisting families to participate through the so-called rent subsidy. This subsidy, which is distinct from the family subsidy payable in respect of each child, is paid to all families with two or more children under 16 years of age provided that the annual income does not exceed 6,000 kronor. For each child after the second the income ceiling is raised by 1,000 kronor a year. The purpose of this subsidy is to facilitate the removal of families with children to homes offering better facilities.1 Another of the measures which indirectly facilitate the financing of co-operatives is the protection guaranteed to borrowers by the Government in the event of any rise in the interest rate of 3 per cent, on the first mortgage loan or 3.5 per cent, on the second. The difference between those rates and the guaranteed interest rate can be deducted from the payment made to the State on the third mortgage.2 For the construction of individual one- or two-family houses, rather than of large projects, the H.S.B. may also negotiate on behalf of its members the loans offered by the Government in such cases, which represent from 50 to 90 per cent, of the cost of construction, depending on the security offered. In this way the cash contribution which has to be made by the member in such cases may be reduced to 10 per cent. 1 2 UNITED NATIONS: Housing through Non-Profit Organizations, op. cit., p. 95. Ibid., p. 96. SWEDEN 31 Furthermore, since houses built for a single family are generally prefabricated, it is common for the member's contribution to take the form not of cash, but of personal labour. It is natural that the Government, offering as it does such generous financial help as part of its national housing policy, should logically require individuals and building contractors to observe a minimum of administrative, technical and sanitary standards. The societies of the H.S.B. have therefore agreed that the municipal authorities should elect a representative to sit as an observer on the board of each " mother " society receiving State aid for any of its projects. By the same token the municipal authorities may elect an auditor to work in collaboration with the auditors appointed by the co-operatives concerned, as explained earlier.1 But it should be borne in mind that the task of these Government representatives is limited to ensuring that official financial aid is put to the proper use, without interfering in any way with the internal management of the co-operative. As regards the provisions stipulating the type of facilities and services which should be made available by housing projects in order to qualify for financial aid from the State, this has never been a problem for the societies of the H.S.B., since these co-operatives have been in advance of the official regulations in introducing the most modern amenities. It is worth noting that in Sweden there is no speculation in land suitable for building, because the municipal authorities, foreseeing the development of their cities, have bought up large areas of land surrounding built-up areas which they make available to co-operatives and other non-profit building associations for new developments in line with the national housing policy. The policy adopted by the municipalities with respect to this land has tended to be in favour of leasing it, usually for a period of 60 years renewable at the end of that time. This policy is important for the official point of view, since the municipal authorities retain the ownership of the land, thus facilitating matters in the event of a future change in town development plans. In practice it has made it difficult for housing co-operatives to obtain mortgage loans from private credit institutions. Faced with this situation a number of Swedish cities, following the example of Stockholm, have founded special credit institutions in which the local authorities are the principal shareholders. These credit agencies are authorised to issue bonds guaranteed by their respective municipalities, and in this way facilitate the financing of housing projects, there being very little difference between the interest they charge and that paid by building firms with their own sites to private credit institutions. ^ e e above, p. 21. 32 HOUSING CO-OPERATIVES Although the national housing policy provides for considerable assistance in the financing of housing projects, nevertheless the societies of the H.S.B.—and the same applies to the other housing co-operatives which exist in the country—enjoy no special tax exemptions, paying the same municipal rates as any other property owner, in accordance with the assessed value of the property. Co-operatives are also subject to the national Government tax of 32 per cent, of net profit. Inter-Co-operative Financing Another factor that facilitates the financing of housing projects consists in relations between co-operatives. Thus, for instance, the H.S.B. movement and the co-operative insurance movement offer each other mutual services. The housing societies insure their properties with the insurance co-operatives, which in turn provide loans to the housing co-operatives to help them in their construction work. THE H.S.B. AND THE BUILDING INDUSTRY The H.S.B. plays a very important role in the country's building industry. It does not, however, build through direct labour; it prefers to get the work done for it by contracting it out in free competition to the firm offering the lowest tender with equal conditions as to quality, workmanship and materials. One of the main factors behind the genuine impact that the H.S.B. has made on the building industry is that it is a national housing movement organised in such a way as to enable it, firstly, to centralise all its technical and financial resources and, secondly, to channel them all over the country through a system of administrative decentralisation based on its affiliated societies. This technical centralisation has made it possible to draw up construction plans on a vast scale, with all the advantages of wholesale purchase of materials and mass production of buildings. The H.S.B., which already has nearly 40 years of experience behind it in the field of construction, is engaged in intensive activity which has helped to bring about uniformity, standardisation and mass production, thereby reducing building costs. Furthermore, far from contenting itself with the purchase of materials, the H.S.B. has also gone into production on its own account. It has set up and financed a number of subsidiary industrial enterprises which produce bricks, pipes, doors and windows to standard specifications for mass-production programmes, as well as modern kitchen and diningroom fittings, sanitary installations, etc. With the same end in view the H.S.B. has purchased the largest marble quarry in the country, which it operates indirectly as a subsidiary enterprise. SWEDEN 33 In addition, the H.S.B. has its own factories mass-producing prefabricated houses. As output far exceeds the demand within the affiliated societies, they are also sold to non-co-operative associations and to private individuals both at home and abroad, and the H.S.B. has therefore set up its own export service. The H.S.B. also has its own research department, which collects and analyses information and reports and has its own laboratories where it tests materials and establishes prototypes which can then be reproduced in large quantities. Realising the H.S.B.'s great experience and the technical and administrative service it has rendered to the building industry, a considerable number of local authorities in Sweden have sought its collaboration in carrying out their own municipal housing programmes. Some have even financed the first stage of their building work with loans from its savings bank. It bears witness to the prestige enjoyed by the H.S.B. that on quite a few occasions its technical services have been sought for the planning of whole new towns or the modernisation of old ones. SWEDISH NATIONAL BUILDING SOCIETY Among the other co-operative housing organisations in Sweden, special mention should be made of the Svenska Riksbyggen (S.R.), or Swedish National Building Society, which was originally founded to combat the large-scale unemployment which existed among the country's building workers at the outbreak of the Second World War. It is primarily a builders' movement, as distinct from the H.S.B., which is essentially a movement of users, namely of individuals who join together for the express purpose of acquiring a co-operative home in which they themselves will live. The founders of the S.R. were the trade unions, and in particular the workers in the building industry. As stated in its articles, the objectives of the S.R. are as follows : to promote the building industry and seek a market for housing; to build homes both for workers in the building industry and for trade union members in general; to construct housing for subsequent sale to families organised into co-operative groups to administer such housing; to construct houses for individuals, groups of buildings or even entire districts for other organisations or local authorities which seek its services. The structure of the S.R. is, in broad terms, of the same type as that 34 HOUSING CO-OPERATIVES of the H.S.B., with its three levels—national, regional and local—and its representative bodies. The methods employed by the S.R. to carry out its housing programme are also very similar to those of the H.S.B. as described above. It should be noted, however, that the S.R. has no factories of its own, although, since it is working in close collaboration with the building unions, it makes use of their subsidiary industrial enterprises. SOCIAL SIGNIFICANCE The Swedish co-operative housing movement means something more in the life of the country than bringing homes within the reach of families seeking them. Both the H.S.B. and the S.R. have distinguished themselves not only by building houses for their members but by endowing each project with the best social and financial amenities in order to make life pleasant and easy for the families living there. The expansion of this type of co-operative throughout the country and the influence which each individual project has on the surrounding district have caused the co-operative housing movement to make a significant impact on national life. To understand the anxiety of the Swedish housing co-operatives to offer the best social conditions as part of their housing programmes it must be borne in mind that, when the tenants' associations set up cooperative societies in an effort to solve their housing problem, one of the primary considerations was the need to provide dwellings offering healthy and pleasant surroundings for family life and proper places for children to play in. This explains why such stress is laid on the social objectives of this type of co-operative in the societies' rules. One of these objectives is centred on the house as a home, others on the general atmosphere surrounding the various projects, while others go even further, indirectly exercising a beneficial influence both on the community, town or city in which the co-operative is situated and on national housing policy. In its desire to play its part in raising the standard of living of the middle and working classes, 40 years ago the H.S.B. became the first housing society in the country to launch a policy of providing cooperative dwellings with modern facilities while at the same time cutting building costs. A social lead taken by the H.S.B. which has had much to do with the success of housing co-operatives in Sweden was the establishment of day nurseries where mothers could leave their children under the care of trained staff. This idea has today become generalised throughout the country and has been taken up by local authorities. SWEDEN 35 Mention may also be made of other social achievements of cooperative housing in Sweden, such as the provision of playrooms and sports grounds for young people, the formation of clubs and voluntary study groups on each estate, the systematic organisation of adult discussion groups to debate problems of general interest to the community or the country, social activities to enable families living on the same co-operative housing estate to get to know one another, or competitions to stimulate residents' artistic talents or occupational skills. The housing co-operatives have also had a tremendous impact on the national building industry. According to data for 1959 one-third of all buildings constructed in Swedish cities were the work of one or the other of the two great national organisations, the H.S.B. and the S.R. Not all of these were co-operative projects, of course: the efficiency, both technical and administrative, of the housing co-operatives was held in such esteem that many local authorities and other non-profit bodies frequently called on the services of the H.S.B. and the S.R. in carrying out their own housing programmes. Up to the end of 1959 the H.S.B. had helped in the construction of 148,700 dwelling units, of which 96,300 were co-operative enterprises, 47,200 were built under municipal projects or for other non-profit societies and 5,200 for individual families under the special scheme which confers individual ownership and where the future occupiers themselves work on the houses allocated to them. The value of the properties constructed by the H.S.B. up to the end of 1959 amounted to 4,500 million kronor. For its part the S.R., while pursuing the traditional co-operative policy of putting quality before quantity, built more than 70,000 dwellings in its first 20 years of existence. Of these, 50,000 were co-operative dwellings in 168 different localities, while the remaining 20,000 were built under the scheme for collaboration in the housing projects of municipalities which are short of funds, or other non-profit bodies. The S.R. has organised some 700 co-operative housing societies in the country and has 26 regional offices.1 Originally founded to solve the housing problem of limited groups of citizens, the co-operatives have made such remarkable strides in Sweden that they are capable, as was shown after the Second World War, of constructing or reconstructing entire towns. 1 International Housing Bulletin (Copenhagen, International Federation of Building and Wood Workers and European Regional Office of the International Confederation of Free Trade Unions), Eighth year, No. 6, June 1961, p. 105. CHAPTER ÏII DENMARK HISTORICAL BACKGROUND Danish national housing policy has not favoured allocating direct responsibility for house building to the State, and the way has been left open for co-operatives and other non-profit associations to tackle the problem of providing accommodation at reasonable cost. The initiative in forming co-operatives as one way of solving the housing shortage came from the working class. The Workers' Housing Co-operative Society, which is known by the initials A.A.B. (Arbejdernes Andéis Boligforening), came into existence in 1912. The following year the organisations of stone masons, cabinet makers and carpenters, which had been formed on the co-operative model in Copenhagen in 1899 in order to conduct a labour dispute, were merged to form a new association with the title of Workers' Construction Co-operative Society.1 Nevertheless, despite these co-operative experiments, it is safe to say that the co-operative housing movement in Denmark only became nation-wide in character after the First World War. ORGANISATION In its organisation the Danish co-operative movement is broadly similar to its Swedish counterpart, having " mother " and " daughter " societies combined with a democratic internal structure in each society in accordance with co-operative principles. Nevertheless, there are certain differences in structure between the Danish and Swedish systems. Co-operative housing, in the wider sense in which it is interpreted in this survey, takes a number of forms in Denmark, chief among them being the following: (a) housing co-operatives proper, the purpose of which is to build houses for their members, ownership usually remaining vested in the society. These co-operatives assume responsibility for building the housing and for managing it afterwards; 1 Cf. UNITED NATIONS: Housing through Non-Profit Organizations, op. cit., p. 23. DENMARK 37 (b) house-building co-operatives. These societies, which are mainly composed of building workers, are intended to construct homes not primarily for their members but for the market in general or for particular groups. They stipulate in their rules that their aim must be to help the consuming public to raise its standard of living by making production methods cheaper and more efficient; (c) co-operative organisations performing auxiliary functions in the field of housing. These include mortgage co-operative associations, which date from the last century, together with technical advisory associations organised on co-operative lines. Housing co-operatives which supply technical and financial services to their members form federations or confederations which enable them to co-operate on a nation-wide scale and thereby to raise building standards and lower costs. There are also a number of low-profit building associations with a membership which mainly consists of trade unions, but also includes local co-operatives which take out shares in them. These associations build housing which they let to the general public at moderate rents, but the tenants have no voice or vote in the management, which in each case is in the hands of a board made up of representatives of the shareholding members, the Ministry of Housing and the co-operative movement. Legally speaking—and also from the standpoint of co-operative principles —these associations are low-profit joint-stock companies. One distinguishing feature of the Danish housing co-operative movement is the extent to which it works with other non-profit organisations. By helping to co-ordinate programmes and provide financial resources, it has promoted a nation-wide housing drive which plays a prominent part in the country's life. General Federation of Danish Housing Associations The General Federation of Danish Housing Associations, which comprises housing and building co-operatives and other non-profit building associations, has been in existence since 1919. Its aims are to safeguard the interests of member associations and to promote national housing policy. Under its constitution the Federation is open to any associations concerned with housing, provided they operate on a nonprofit basis. The internal organisation is democratic. The highest body is the congress, which meets every three years and to which each member association can send at least one delegate. The organisation also has a board and an executive committee. 38 HOUSING CO-OPERATIVES For internal administration purposes the Federation divides the country into areas, and the member associations in each area elect their official representative on the board. Each area is entitled to elect an additional delegate for every 1,000 homes completed or in process of construction, although no area may send more than ten delegates. The executive committee consists of a president, who is elected by the congress and is at the same time chairman of the board, and the official representatives of the areas. This Federation has played a leading part in planning Danish housing policy, and its representatives have regularly been invited to sit on governmental or parliamentary committees appointed to examine various aspects of the housing problem and ways and means of dealing with them. In addition, it has organised educational campaigns on topics connected with housing. At the end of 1958 the General Federation of Danish Housing Associations comprised 313 member bodies, which by that date had built 106,000 homes in 1,659 separate housing estates. Most of the member bodies are co-operative associations. One major innovation introduced by this Federation was the establishment in 1947 of a special central agency for the bulk purchase of building materials in order to lower production costs. This agency, the Bolind, is also empowered to establish and operate its own production plants. Another interesting step taken by the Federation has been the establishment of the Building Estimates Institute 1 , to investigate building methods and costs and circulate the results among the member associations. The Arbejderbo In 1941 the A.A.B., together with the trade unions, founded the Arbejderbo, which is an association set up to promote and advise public utility housing associations; in addition to co-operatives, its membership includes a number of non-profit organisations such as trade unions, as well as various local authorities. (i) Under its rules the objects of the Arbejderbo are as follows: to assist the formation of housing or building associations, together with any other non-profit associations with similar aims, in places where the housing shortage is most acute; (ii) to assume responsibility for the management of building projects on behalf of co-operatives, local authorities or other member associations ; 1 Cf. UNITED NATIONS: Housing through Non-Profit Organizations, op. cit., p. 32. DENMARK 39 (iii) to supervise the building of cultural or other facilities on housing estates constructed by member associations; (iv) to give technical and financial aid for the study of plans for new building schemes. In order to carry out these tasks the Arbejderbo has established branches in each part of the country. These branches conduct surveys of housing needs in their areas, call general meetings to discuss possible ways of tackling the housing problem, explain the national housing policy and foster the organisation of co-operatives or other non-profit associations. In cases where it is decided to form an association of this type, the branch office makes arrangements for giving training to the future managers of the new co-operative or association, and also helps to draft the rules, enlist the support of the appropriate local authority and complete the preliminaries needed to launch the new organisation. When the co-operative or non-profit building association has been legally established, the branch office helps by advising it on the choice of the most suitable sites and by drawing up the initial development plans. Once this first stage has been completed, the head office of the Arbejderbo comes into the picture by making its technical facilities available, helping to secure finance for the scheme and assuming responsibility for awarding contracts, giving preference where possible to local builders. The Arbejderbo is not a building association, but its services are extremely valuable because of its long experience in the management of building schemes, which enables it to select the best tenders from contractors. Like the H.S.B. in Sweden, the Arbejderbo has a highly qualified staff of architects, economists and legal experts whose services are available to member associations. The educational work of the Arbejderbo is not confined to the meetings held before a new association is formed with the help of one of its branch offices. The organisation carries on a constant campaign to pubhcise new ideas and methods, by publishing pamphlets and giving advice on improvements in interior decoration, furnishing, domestic services and other matters of interest to householders. The Arbejderbo is based on democratic internal organisation. The highest body in the society is the general meeting, which elects 25 delegates to make up the board, of whom ten represent associations on whose behalf the Arbejderbo is managing building projects, and 15 represent organisations which are at the time engaged in building projects. This board elects an executive committee consisting of nine members. 40 HOUSING CO-OPERATIVES By the end of 1959 the Arbejderbo had played an important part in organising the building of 29,000 homes in about 700 projects in various parts of the country. In 1948 the Arbejderbo set up another association solely for the management of completed housing schemes, and by the end of 1959 this association was dealing with 8,450 homes coming under 86 estates belonging to 16 member bodies. FINANCING Housing co-operatives always endeavour to finance their building programmes from their own resources, partly by encouraging members to contribute capital and partly by channelling their savings into housing schemes. It has also been the policy of the Danish co-operative movement that co-operatives of different types should help one another, and it is by no means uncommon for consumer or insurance societies to invest their funds in co-operative building programmes. However, the volume of investment capital from these sources is not sufficient to finance the whole national co-operative building programme, which has done so much to speed up the tempo of house building since the war. The Government, therefore, as part of its national housing policy, also helps co-operatives by providing them (together with other nonprofit building associations) with the funds they need to achieve their social aims. Mortgage Credit Co-operatives The first mortgage credit societies set up in Denmark over 100 years ago only made loans against a first mortgage, but from 1895 onwards other societies were formed specialising in loans against a second mortgage. These bodies are autonomous, but are subject to supervision by the State, which in return allows them to issue tax-free bonds negotiable on the market. The distinctive features of these co-operatives are: (a) joint liability of borrowers; (b) loans based on the value of the property; and (c) issue of bonds secured by the borrowers' mortgages. The members of mortgage credit co-operatives are jointly liable, i.e. any holder of a mortgage is not only answerable for his own borrowing with the whole of his property, but also for the loans granted to other members, although in such cases only up to two-thirds of the mortgage on his own property.1 1 UNITED NATIONS: Housing through Non-Profit Organizations, op. cit., p. 45. DENMARK 41 Usually mortgage credit co-operativesfloatloans at the lowest possible rate of interest because they are soundly enough based to have the complete confidence of the general public, and savings institutions, commercial banks, insurance companies and other concerns readily buy their bonds. The interest rates charged by these co-operatives range from 3 to 5 per cent., depending on the annual instalments the borrower chooses to repay; these instalments must cover redemption of part of the capital as well as payment of the interest. In principle, these mortgage credit co-operatives can only make loans on completed buildings, but sometimes they also lend while work is in progress, the money then being advanced by instalments as building goes ahead. Building Workers' Co-operatives The building workers' co-operatives were originally established in Denmark as vertical associations, being made up of workers employed in the same occupation, but in recent years they have tended towards a horizontal form of organisation. They are financed to a large extent by the trade union movement through the Workers' Co-operative Movement Investment Fund. This fund has a twofold function, because it not only invests its own capital in these co-operatives but, by standing surety for their borrowing, helps them to negotiate loans from banks and other sources of finance. The Role of Public Authorities Danish housing policy, which after the First World War took the form of large-scale financial aid for house-building programmes by co-operatives and other non-profit associations, underwent a far-reaching change in 1959. As in Sweden, housing policy in Denmark, especially after the Second World War, was to supply finance in various ways to housing projects undertaken by co-operatives and other non-profit building associations. The new policy involved curtailment of State aid, leaving the main responsibility for financing house building to the societies themselves and to private investors. At the present time, State financial aid is almost entirely confined to guaranteeing the third mortgage, and even then only in certain specified circumstances.1 This new policy of cutting down State aid to housing has led to higher interest charges and building costs, with the result that the rents of houses 1 UNITED NATIONS, Economic Commission for Europe: European Housing Trends and Policies in 1960 (Geneva, 1961; Sales No. 61.II.E/Mim.20), p. 32. 42 HOUSING CO-OPERATIVES built from 1960 onwards have gone up, especially in Copenhagen and other large towns, to a proportionately greater extent than the increase in building costs. According to thefiguresfor the end of 1960, the rents for new houses built without Government financial assistance were between 25 and 75 per cent, higher than those of housing built by co-operatives or other non-profit agencies.1 This policy has also led to the establishment of a number óf new private building firms. The restriction of State financial aid to co-operatives and other non-profit building associations has upset the balance which existed until recent years in Denmark between private building for profit and public utility building by co-operatives and other bodies. In 1960 co-operatives and other non-profit bodies built a total of 6,100 homes in urban areas, which represented only 27 per cent, of the total number of homes completed in Danish urban areas in that year. Despite the marked effect which this new housing policy has had on the number of new non-profit building schemes, the Arbejderbo reported that it worked at full pressure in 1960, but concentrated on the planning of new schemes rather than on current building. Building Fund The rules of the co-operatives belonging to the Danish movement stipulate that co-operative societies do not simply exist to build isolated housing schemes, but that their ideal must be to try to solve the housing problem throughout the country by helping the worst-off sections of the community. The movement has therefore established a special building fund in order to maintain the tempo of expansion. Under this scheme, members of co-operatives forgo a large part of the dividends that would normally be payable to them out of the savings in costs and repaid mortgages. This money is then used tofinancenew schemes. The building fund is divided into two accounts, only thefirstof which yields interest. A third of the fund's income is paid into the first account and two-thirds into the second. The interest on thefirstaccount is distributed at least once every five years to members who during that time have lived in co-operative housing, in proportion to the rents they paid. On the death of a member, his widow or children under the age of 21 draw this interest; if he leaves no such dependants, the amount due to him is automatically paid into the non-interest-bearing account. Undoubtedly, the most important feature of this plan is that it marks a step towards achieving the Danish movement's ambition to have its own source of finance for its building and modernisation schemes. 1 UNITED NATIONS: European Housing Trends and Policies in I960, op. cit., p. 36. DENMARK 43 SOCIAL SIGNIFICANCE The movement has not only built thousands of homes for its members on the best possible terms, but it has also discharged its responsibilities under the country's general economic policy. Being concerned with the well-being of the lower income groups, the co-operative movement has given its enthusiastic backing to the Government's housing policy and has collaborated extensively with special committees appointed to investigate such matters as building methods, tendering systems and rent control and has also made its services available to the Government Research Institute. Moreover, although the hundreds of Danish housing co-operatives do not (as in Sweden) possess a central body at the head of a nation-wide organisation, together with other non-profit organisations belonging to the General Federation of Danish Housing Associations, which has its own staff of economic, technical, legal, educational and social experts, they help to relieve the State of a large part of its responsibilities in this field. When building on behalf of their members, Danish co-operatives have not only adopted the principle of providing the highest standards at the lowest possible price, but, believing that it is not enough just to give families a roof over their heads, they also organise various communal facilities on co-operative lines within each project (e.g. shops, laundries, nurseries) and thereby stimulate a new type of community based on neighbourliness and co-operation. Care for the children of members living in co-operative housing has always been a marked feature of the Danish movement, as it has in all the Scandinavian countries. Co-operative housing estates contain kindergartens where specially trained staff look after children while their mothers are working, together with such amenities as playing fields, recreation rooms and cinemas for young people and adults. Special mention should be made of the youth club movement started in Copenhagen in 1933 which by 1950 had over 1,000 member bodies. These clubs organise sports of various kinds, study groups and various social activities using the facilities of the co-operative housing projects. Financial support is usually provided by the Government and the local authorities. In Denmark, apart from large projects consisting of one or more blocks of flats which are jointly owned by the residents through their society, co-operatives also build single-family houses which on completion become the property of their occupants. Several attractive middle-class housing estates have been built using the co-operative system on the 44 HOUSING CO-OPERATIVES outskirts of Copenhagen. In one scheme of this kind—the Grondalsvaenge —a welfare fund has been set up to help new members with limited means to meet the costs of their participation. The organisational experience and the building and research programmes of the Danish housing co-operatives, in conjunction with the State and other non-profit bodies, have a significance extending beyond the confines of the country and contain features which could certainly be adopted by developing countries. CHAPTER IV NORWAY HISTORICAL BACKGROUND The co-operative housing movement in Norway is more recent in origin than in Sweden or Denmark. Broadly speaking, it can be said that until shortly before the First World War the building industry was entirely in private hands, although it would appear that at that time housing was not a particularly profitable field for investment capital. The years immediately before the First World War saw the emergence of a number of building associations along co-operative lines through which the middle classes endeavoured to solve their housing problem by pooling their own capital. But these were short-lived associations which were wound up as soon as the buildings were completed and in no way claimed to constitute a genuine movement for solving the national housing problem. When the housing shortage became more acute during the First World War, local authorities first of all tried to encourage private investment, and when this policy failed they set up their own building departments which catered mainly for the lower income groups. After some years of trial, this formula of direct building by local authorities was not found to be entirely satisfactory. This was not only for financial reasons but particularly because the management of building operations and of completed homes imposed a new burden on local administration. This led to a shift in policy, which began when the city of Oslo decided to stop building municipal housing estates and to give encouragement and aid to co-operative associations instead. In 1934 the Oslo city authorities gave their financial support to the Oslo Bolig og Sparelag (O.B.O.S.), the Oslo Building and Savings Association. This co-operative was founded in 1929, but in 1934 was reorganised by the city of Oslo on the model of the Swedish H.S.B. 1 Since that date, the O.B.O.S. has expanded its programme to such an extent that it can now cater even for the lowest income groups. 1 See MINISTRY OF HOUSING, Copenhagen; STATE HOUSING BOARD, Helsinki; HOUSING DIRECTORATE, Oslo; NATIONAL HOUSING BOARD, Stockholm: Housing in the Northern Countries (Copenhagen, 1960), p . 102. 46 HOUSING CO-OPERATIVES As members' savings were sometimes inadequate, the Oslo city authorities agreed, in certain cases, to lend the money for the initial contribution so that families were not excluded because they could not afford to participate in co-operative housing schemes. These loans were not made to the associations themselves, but to the members who needed the money, and in return the latter had to undertake to pay off their loans gradually on easy terms. It was, however, only after the Second World War that co-operative organisation became important in Norway as a way of tackling the housing problem. There were two factors which gave special impetus to the development of co-operative housing at that time : the large-scale destruction of buildings during the Second World War and the new emphasis in Government policy on encouraging the provision or modernisation of housing for the lower income groups. Taking advantage of this new shift in national housing policy, the co-operatives reorganised themselves with a view to improving their operating methods and lowering building costs. This reorganisation led to the establishment of the National Federation of Housing Cooperatives. By the end of 1959 this Federation consisted of 910 " daughter " societies belonging to 88 " mother " co-operatives in various parts of the country, with a total membership of 122,000 individuals. The biggest of the " mother " co-operatives belonging to the Federation is the O.B.O.S. in Oslo, which is one of the world's biggest housing co-operatives. This association alone had 63,000 members by the end of 1959, and it is estimated that the number increases by about 3,500 every year. ORGANISATION The Norwegian housing co-operatives have studied and benefited by the organisational and building experience of the Swedish movement, and in taking over its methods have adapted them to Norwegian needs. For example, the O.B.O.S. in Oslo is now a large " mother " cooperative carrying out housing schemes for its members through a large number of " daughter " societies. Taking Oslo as their model, all the major towns and cities in Norway have also set up " mother " co-operatives, which in turn establish " daughter " societies in various parts of their areas. Norwegian co-operative housing has, however, one feature which distinguishes it from its Swedish counterpart—its decentralisation. In Norway the " mother " co-operatives are independent of each other, which is not the case in Sweden, where " mother " and " daughter " NORWAY 47 co-operatives all belong to the same national organisation. It is true that in Norway housing co-operatives form a national federation, but each " mother " society organises, finances and manages its own building programme and is only associated with other co-operatives of the same type through a central secretariat which looks after the interests of the co-operative housing movement throughout the country and provides it with technical, legal, economic and administrative assistance. The " mother " co-operatives set up " daughter " societies consisting of the residents or future residents of their housing estates. It is, however, the usual practice for the " mother " society to acquire suitable sites, draw up the plans, arrange finance, appoint the architects and contractors, and supervise building operations on behalf of its "daughter" societies. Nevertheless, if it is found necessary for technical reasons to make major changes in the plans once they have been approved, the board of the " mother " co-operative is bound to secure the consent of the general meeting of the " daughter " co-operative on whose behalf the estate is being built. On completion of the building or buildings, as the case may be, the " mother " co-operative hands the homes over to its " daughter ". It also supplies details of construction costs and submits proposals for the gradual repayment of the loans needed to finance the scheme. In Norway it is quite common for the " mother " co-operative to be asked to manage the estate on its completion. Membership With the scrapping of the older type of " closed " co-operative which was usual in the years immediately before and after the First World War, modern co-operatives in Norway are open to anyone needing housing who is willing to undertake certain obligations and abide by co-operative rules. Under Norwegian law members of co-operatives must contribute towards their capital by buying a share certificate. However, bodies corporate which join co-operatives, e.g. the city of Oslo, are allowed to acquire more than one share certificate, provided their holding does not exceed 10 per cent, of the total certificates subscribed by individual members. Usually the latter are required to purchase a share certificate in the " mother " co-operative as well as in its " daughter ". They are also required to pay a moderate admission fee on joining together with an annual charge to cover management costs. It should be noted that although municipalities or other bodies corporate which care to join can hold more than one share certificate, they may—in accordance with co-operative principles—only have one vote like any other member. 48 HOUSING CO-OPERATIVES Once members have joined a co-operative in accordance with the rules, they constitute the ultimate authority and exercise their powers through the general meeting, irrespective of whether they are actually in residence or are still waiting for their homes to be completed. The procedures for organising the general meeting and electing the board and executive committee are broadly similar to those described earlier in the case of Sweden. It is common for local authorities to be represented and to vote in these meetings and to have seats reserved for their representatives on the management bodies. This is due to the fact that in Norway there are cases—e.g. in Oslo, where the local authority is not only associated with the co-operative (to which it gives support and financial aid) but uses the co-operative organisation to carry out its social responsibility for providing good, cheap housing for families in the lower income groups. In order to give co-operatives an incentive to speed up their building programmes, their rules entitle members who have not yet been allotted co-operative housing to elect one or more representatives to the board of each " mother " co-operative. Transfer of Co-operative Property Co-operative housing is not the individual property of members, nor is it rented in the strict sense of the term. The co-operative retains ownership of the property and allots housing to its members for occupation by their families in perpetuity. A deceased member's widow or children can inherit his right to live in co-operative housing in the same way as any other family asset. Before transferring or bequeathing this right to any person who is not a close relative, the rules require a member to secure the approval of the co-operative management. If a member wishes to leave his co-operative accommodation, the procedure is as follows. If the transfer is not made to a close relative, preference must be given to another member of the same " daughter " society or of the " mother " co-operative. If no other member is interested, the accommodation can be transferred to any other person who accepts the rules and undertakes to carry out the obligations involved; this person must also be accepted by the management. In order to avoid any speculation in the sale of rights to live in co-operative housing, the terms of sale must first be approved by the management. Youth Co-operative Movement In 1948 a group of young Norwegians launched a housing movement in Oslo based on spare-time work. This movement, the Ungdommens NORWAY 49 Selvbyggelag (U.S.B.L.), began its first housing scheme in 1950 and forms an interesting example of a type of co-operative in which the members' own labour plays an important part. Under its rules the U.S.B.L. has the following aims: (i) to unite in one nation-wide organisation young people who wish to acquire a home through their own exertions and are willing to take part in all the activities needed to build housing for young people ; (ii) to take the initiative in establishing subsidiary building enterprises and to offer personal participation in carrying out building schemes; (iii) to encourage, handle and manage savings by members to finance their future homes; (iv) to build homes for young people who have not yet founded their own families; (v) to give generous assistance to members who already own building sites within approved housing schemes ; (vi) to establish youth clubs, kindergartens, recreation rooms, playing fields and other community welfare facilities on new housing estates; (vii) to give publicity to the shortage of adequate housing, especially for young people, and to ways and means of overcoming it. When joining this movement, members undertake to save regularly to help to meet the cost of their homes. Members' savings are used to buy land or building materials. Apart from any special need for new accommodation on the part of individual members, the decisive factor governing the allocation of homes is the personal contribution of each in the form of labour. For this purpose each member has a special book in which he is credited with as many " housing points " as the number of hours he has worked on the project. The first scheme to be completed by the U.S.B.L. consisted of 16 buildings of which one was for two families and the remainder for four families each. Of the 498 members of the movement at that time, 259 took part in the building of this initial scheme and in all the members contributed 53,000 hours' work. The member who contributed most worked for 1,413 hours, obtaining an equal number of points, and the lowest contribution was 445 hours. Three years later the total contribution by members amounted to 730,000 hours' work, equivalent to about 2 million kroner in value. 50 HOUSING CO-OPERATIVES Nevertheless, by the end of 1953 the increasing complexity of modern building techniques compelled the U.S.B.L. to change its policy. The original idea had been that wherever possible the members themselves should perform the work, such as the purchase of land, planning, buying materials, obtaining loans and organising the actual building work. When the U.S.B.L. launched its housing programme, therefore, it at first concentrated solely on building simple houses, mainly of wood, for occupation by two or four families. Since changing its policy, the association has tended to concentrate on building blocks of flats. Despite this switch, the early idea of personal participation by members in the work of building has still been retained, especially in the construction of singlefamily houses. The present rules of the movement stipulate that members who have no special skills in any branch of the building industry may be given an opportunity of working only on those jobs which require no skill and in so far as it does not involve any unnecessary delay in the project. By changing its policy in this way, the association considerably extended its scope and by the autumn of 1958 had completed 2,000 homes. In order to increase its efficiency, while at the same time reducing building costs, the association has set up its own technical departments at headquarters and has also established contracting firms specialising in various branches of the building industry. Since 1957 the U.S.B.L. has taken a further step forward by opening its own factories for the mass production of building components. For legal purposes these contracting and manufacturing concerns are organised as joint-stock companies, but the bulk of their shares are held by the U.S.B.L. FINANCING The first experiments in co-operative house building in Norway were mainly financed out of personal contributions by members and loans obtained from private sources of finance. This was particularly true in the years immediately before and after the First World War. But after the Second World War, when the housing shortage worsened to such an extent that it became one of the most serious problems facing the country and building costs rose sharply, the Government intervened by supplying low-cost credit to co-operatives to enable them to expand their programmes. The Government thereby became the main source of finance for the modern co-operative housing movement. For their part, the cooperatives justified the confidence placed in them, backing up the public authorities by making their organisation and facilities available for carrying out official housing programmes. NORWAY 51 Co-operative Finance It is always the " mother " co-operative which bears responsibility for arranging finance for a project, although the members themselves must take the initial step by contributing towards the cost of their future homes. The practice in recent years has been to require members to contribute between 15 and 20 per cent, of the estimated cost of the accommodation they require. In order to encourage participation, the largest Norwegian co-operatives insist that, once members' applications have been approved, they should open special deposit accounts with their society and regularly pay in their savings until they can make the down payment. It is not uncommon in Norway for local authorities or private firms to make loans on easy terms to enable certain classes of citizens or employees, as the case may be, to make the necessary down payment and thereby join the co-operative housing programme. In accordance with common practice in co-operative organisations, the Norwegian societies allocate 20 per cent, of the savings obtained by large-scale production or bulk purchase to a reserve fund to cover any losses they may incur. After housing has been allotted to members, the Oslo O.B.O.S., together with a number of big co-operatives throughout the country, opens another special account to cover the cost of maintenance and decoration. This account, which is based on the example of the Swedish co-operative movement, is constituted and operated in much the same way as described in the account of co-operation in that country. The Role of Public Authorities The key measure in the Norwegian Government's housing policy was taken in 1946 when it established a special bank to assist the building industry by helping to finance new housing schemes. In accordance with the social purposes for which it had been set up, this bank (called the Housing Bank) launched a programme of easy credit involving low interest rates and long repayment periods. Under its new housing policy, the Government accepted the principle that residents should also be allowed a share in the ownership of the dwellings they inhabited, and co-operatives were given preferential treatment for official assistance through the Housing Bank.1 The first loans needed to begin building are usually obtained from savings funds and private banks, after the Housing Bank has given its 1 See Housing in the Northern Countries, op. cit., p. 94. 52 HOUSING CO-OPERATIVES approval to the plans. Once building is completed, the Housing Bank grants the final loans against mortgages on the homes. These loans are first mortgages, but are usually sufficient to cover the whole cost of the building or buildings in the scheme. The Housing Bank makes its loans in one instalment. Since 1948 another banking institution, the Smallholders' Bank, which formerly used to operate in rural areas and financed other farming activities as well as house building, has been reorganised by the Government and now works in close collaboration with the Housing Bank and along the same lines, although concentrating on rural housing. Loans by these banks are not calculated on the market price of the housing, but are based on the banks' own estimates which, in turn, make allowance for the social aims of the country's housing policy. The procedure for paying off loans granted by the Housing Bank is as follows. If a house is built of non-flammable material such as brick or concrete, the annual repayment is 1 per cent, of the loan, which means that the process takes a hundred years. In the case of wooden houses, the annual repayment is 11¡3 per cent., i.e. it takes 75 years. No repayments are made on loans by the Smallholders' Bank during the first two years, and thereafter annual repayments must be made for 47 years. The annual amount may, however, be changed by the Housing Bank if circumstances make it necessary, but only after ten years.1 When these banks began operations, their loans bore interest of only 21/2 per cent., but 3y2 per cent, is charged on all loans granted since 1 January 1957. (The average interest charged by mortgage banks before the Second World War was 5 per cent.) The rate of interest charged by the Housing Bank remains unchanged for five years, as opposed to 15 years until 1 January 1957. In addition to this special aid from the Government, co-operatives derive indirect financial benefit from direct State assistance to large families in the lower income groups, the elderly and the disabled to enable them to acquire homes in co-operative housing projects. For its part, the Housing Bank requires co-operatives and other nonprofit bodies which benefit by its credit facilities to abide by certain technical standards in their building programmes. This is, in any case, in accordance with the principles and practice of the co-operative movement. In addition, co-operatives financed by the Housing Bank cannot be wound up or change their rules without prior approval by the Housing Directorate 2, which is the official body in charge of national housing policy. 1 2 See Housing in the Northern Countries, op. cit., p. 95. See UNITED NATIONS : Housing through Non-Profit Organizations, op. cit., p. 102. NORWAY 53 SOCIAL SIGNIFICANCE The Government's strong appreciation of the economic and social programme of the Norwegian co-operatives and the confidence it has shown in them by largely relying on them to carry out the national housing programme are eloquent evidence of the important part played by this type of co-operative in Norwegian social and economic life, especially since the Second World War. In 1946 there was an acute shortage of housing in Norway, especially in the towns. It was estimated that, because of the complete standstill in the building industry, between 60 and 70 thousand homes were needed to meet the needs of normal population growth. A further 22,000 homes had been completely destroyed by military action.1 According to figures for the year 1959 published by the International Co-operative Alliance, the housing co-operatives affiliated to it had by that date helped to solve this acute shortage by building 47,000 homes. They were continuing to build at a steady rate of 6,000 homes a year with an approximate value of 276 million kroner. In Norway, as in the other Scandinavian countries, the co-operatives have shown by their achievements that housing should consist of something more than a roof and four walls for each family. They have also tried to carry out official social policy by taking care not to create separate neighbourhoods for workers, for the elderly or the disabled, or for large families in the lower income groups. They have done this by making membership open without discrimination to anyone in need of housing (making special arrangements with the local authorities to deal with needy cases), with the aim of creating a new form of community living in accordance with the requirements of modern industrial democracy. 1 See Housing in the Northern Countries, op. cit., p. 90. PART III OTHER EUROPEAN COUNTRIES CHAPTER V FRANCE HISTORICAL BACKGROUND The first attempts in France to solve the housing shortage by means of co-operative organisation date back to the end of the last century. These were spontaneous working-class experiments supported by a handful of middle-class philanthropists, with the State playing a completely passive part. In order to have a legal existence, these early associations based themselves on the Companies Act of 1867, but later the authorities came to realise what could be done by this type of organisation towards improving housing conditions for the working classes, and a series of legislative measures were passed from 1894 onwards. At the outbreak of the First World War there were still no organised co-operative housing movements in France, but the seed had been planted by such recent experiments as the promising " Terre et Famille " society formed by a group of office workers, manual workers and craftsmen in Paris in 1908. Between the two world wars the existing housing co-operatives expanded their activities and concentrated on building houses which became members' individual property after repayments had been made for some years. But it was only after 1945 that the co-operative housing movement, with its past experience to draw on, began to play a leading part in national construction. With the large-scale destruction of property, the problem of housing the population assumed alarming proportions. In view of the emergency the Government recast the housing policy which had been followed since the end of the First World War and devised a series of measures to encourage house building. It decided to make use of the savings, provident and low-cost housing societies normally known as H.L.M. co-operatives (habitations à loyer modéré), and gave encouragement to those wishing to form new associations of this type in order to speed up the drive to provide adequate homes for the lower income groups. This marked the real beginning of the modern French co-operative housing movement. 58 HOUSING CO-OPERATIVES ORGANISATION OF THE H.L.M. CO-OPERATIVE MOVEMENT In the French co-operative housing movement there is no system of " mother " and " daughter " societies of the kind found in the Scandinavian movement. In France the co-operatives are more decentralised in structure and have more in common with the German system of local, regional and national bodies. But although local co-operatives do not have " daughter " societies as in the Scandinavian movement, their practice follows much the same lines, because the members living in a block of flats or group of homes on an estate constitute a separate unit within the co-operative and hold their own meetings to deal with matters affecting the homes they occupy. They can then submit their problems to the general meeting, which decides any issues affecting the society as a whole. The local co-operatives in turn combine to form regional unions, whose chief purposes are as follows : (i) to maintain contact between the housing co-operatives in the area and to facilitate examination of problems occurring at the regional level in relations with the local authorities ; (ii) to help smaller or new co-operatives by providing them with information obtained from larger societies participating in meetings of the National Federation. According to information published in ihe Annuaire de la coopération H.L.M.1 for 1961, there were 15 area unions in operation in France on 1 January of that year. These unions in turn belong to the National Federation of H.L.M. Co-operative Societies. The Federation is the central body which officially represents the H.L.M. co-operative movement and, as such, has an influence on national housing policy. It has its own representatives on the main national and international bodies in its particular field and is responsible for safeguarding the interests of its member societies. In addition, the Federation provides technical services through the area unions and also, by means of short-term exchanges of staff between societies, helps to train competent managers and administrators for co-operatives with limited means or of recent origin. In 1960 the National Federation of H.L.M. Co-operative Societies joined the National Union of Federations of Low-Cost Housing Agencies, and H.L.M. co-operatives now benefit by that Union's efforts to promote a national policy for the building and management of low-cost housing. 1 Published in Paris by the National Federation of H.L.M. Co-operative Societies. FRANCE 59 The main activities of the Union are as follows : (i) compiling information concerning improved family and popular housing, with special reference to the low-cost housing movement; (ii) publishing literature to inform public opinion about the working of the H.L.M. movement and the practical operation of its family and popular housing policy; (iii) maintaining permanent links with public authorities and other national bodies, and representing the H.L.M. movement both nationally and internationally; (iv) co-ordinating the programmes of its member bodies, reconciling differing viewpoints, and working out a single course of action for submission to national authorities.1 Although it has joined the National Union, the National Federation of H.L.M. Co-operative Societies has retained some degree of freedom: for example, it still has its own national secretariat and issues specialised literature. In addition, under an agreement approved by both bodies in 1960, the National Federation of H.L.M. Co-operative Societies is represented by three delegates on the board of the National Union and by a permanent delegate on the executive committee. TYPES OF CO-OPERATIVE HOUSING SCHEMES Co-operatives of Future Owners The traditional French housing co-operative up to the end of the Second World War was a society formed to provide a means for workers to acquire their own homes. Under this system, a member was required to purchase a number of share certificates equal in value to the cost of his future home. The State nowadays provides assistance by granting a loan, which is usually equal to 70 or 75 per cent, of the total cost, while the member is required to make a down payment of only the remaining 25 or 30 per cent. The State loan, which is paid off over a period normally ranging from 25 to 30 years, also comprises life insurance guaranteeing payment of the remainder in the event of the member's death. Once the price of the share certificates has been fully paid off, the member becomes the individual owner of his home. Privileged Users' Co-operatives A second type of housing co-operative, which was introduced in 1947, aroused fresh interest among the public by easing the financial 1 Annuaire de la coopération H.L.M., 1961, op. cit., pp. 67 ff. 60 HOUSING CO-OPERATIVES burden on co-operative members and has undoubtedly given new impetus to the French co-operative housing movement. This scheme is much the same as the method widely used in Sweden and the other Scandinavian countries, namely an intermediate formula between individual ownership and tenancy. When this new scheme was first launched a member also had to purchase a number of share certificates equal to the cost of his future home, and a State loan was granted to cover the difference between the cost and the down payment. The main difference, as compared with the traditional type of co-operative housing which had hitherto been known in France, was that under the new scheme a member, even after paying off the whole of the State loan, still did not become the individual owner of his home. Ownership remained vested in the co-operative, which therefore continued to manage the property. The terms on which this new scheme was launched were not, in fact, very attractive from the standpoint of the individual member and led to confusion and disputes. However, the French co-operators learned from their initial experience and the Government also took an interest in the new scheme. In 1956 it restricted the amount of share certificates that had to be purchased by members, who now only buy them to the value of their down payments, i.e. the difference between the State loan and the total cost of the dwelling. Moreover, under French law cooperatives can obtain bigger loans in respect of such tenancy contracts. The initial number of share certificates which a member is required to buy depends (under the latest legislation) on the type of dwelling to be built, but generally does not exceed 15 per cent, of the total building cost. It is also quite common for members to receive individual assistance in financing their purchase, either from such bodies as the family allowance funds, or the auxiliary loan funds, or else from their employers or the welfare funds of the co-operatives themselves. Sometimes members' contributions only amount to about 6 per cent, of the total building cost. At the Sixth Congress of the H.L.M. Co-operative Movement in February 1962 it was pointed out that participation involving a purchase of less than 6 per cent, of the cost in the form of share certificates was undesirable if members were to be induced to take an interest in co-operative building and management. Under arrangements laid down in an order dated 8 February 1954 (which is still in force for contracts of this type), H.L.M. co-operatives charge their members 1 per cent, interest on their loans, which are repayable over 45 years. During the first three years all interest charges are waived and capital repayments are deferred. This second scheme is fully in accordance with the true co-operative FRANCE 61 spirit. While a member is never granted individual ownership of his home, he is covered by a special contract which he signs with the cooperative entitling him to use his home as if it were his own property. This entitlement derives from his initial purchase of share certificates and, as long as he retains ownership of them, he cannot be deprived of his right to live there. He may sell his certificates and thereby transfer his right to the property to the purchaser, but naturally the new member must first be approved by the board of the co-operative, and in no circumstances may the sale of the certificates become a speculative transaction. On a member's death his lawful heirs inherit his rights unless he transferred them earlier. Thus, by acquiring a home under this scheme a member enjoys all the rights which normally go with traditional individual ownership, while at the same time remaining free of the obligations and burdens involved. Moreover, as the co-operative remains the owner of the property and each resident in his capacity as a member is entitled to speak and to vote, he has an opportunity of taking part in the general management of the project. In short, this type of housing co-operative can be described as a co-operative of privileged users. Tenants' Co-operatives In its effort to provide housing on reasonable terms for families in the lower income groups who cannot make the down payment needed to qualify under the individual ownership or privileged users' schemes, the French co-operative movement, with Government backing, has successfully tried out a new formula. The H.L.M. co-operatives have made considerable efforts to obtain additional sources of finance to enable them to meet the cost of this scheme, under which members' down payments are reduced to a minimum. The scheme is based on a cooperative tenancy arrangement. It involves a lease with the following distinctive features : (i) the scheme is designed as a social service and not as a profit-making enterprise; (ii) each tenant is a member of the society which leases the homes; (iii) a resident of one of these co-operatives differs from a tenant in that he is not only entitled to live in the housing as long as he pays the agreed rent but, in his capacity as a member, he shares to the full in the life and management of the co-operative ; (iv) a member must also make an initial down payment by purchasing share certificates, but the amount is very small ; 62 HOUSING CO-OPERATIVES (v) as opposed to other schemes, a member has no privileged residence rights, either for himself or for his heirs ; (vi) the monthly amount payable by member-tenants is regulated by the decree of 8 April 1960. Until a short time ago the H.L.M. co-operatives freely used all three plans, but nowadays the tendency—in accordance with Government policy—is towards specialisation. In other words, each H.L.M. cooperative is asked to specialise by organising societies for either owners, privileged users or tenants. It should be noted that even in the H.L.M. co-operatives which have made simultaneous use of all three systems there have never been any classes with greater or lesser rights. All members enjoy the same right to share in the management of their society in the established democratic way and with the same opportunities for taking advantage of co-operative facilities. FINANCING OF H.L.M. CO-OPERATIVES In carrying out their policy of building homes for families with limited means, the H.L.M. co-operatives have been forced to rely mainly on Government loans. The main State agency providing finance for housing is the National Deposit Fund, which is authorised by law to grant loans at low rates of interest. The terms on which these loans are made vary in accordance with the form of co-operation selected. Homes for Ownership It is possible, in principle, to obtain a loan equal to 70 per cent. of the cost of buildings for future ownership, and when there is a guarantee by the département or commune the loan may be as much as 85 per cent. In practice, however, under an order dated 25 April 1959, loans depend on the type of dwelling required and the location. As of 1 January 1954 loans for new building of this type or the enlargement or modernisation of existing buildings which meet the statutory requirements of the lowcost housing programme bear 2 per cent, interest and are repayable over a period not exceeding 30 years. A discount of 1 per cent, on the capital to be repaid is allowed during the first ten years (order dated 8 February 1954). Homes for Rent When homes are not being built for individual ownership by members, co-operatives, together with other non-profit bodies and institutions 63 FRANCE participating in the low-cost housing programme, are granted easier financial terms (as was explained before in describing the work of the privileged users' co-operatives). The following table gives details of the amounts up to which State loans may be granted for the building of low-cost family housing for rent, as laid down in an order dated 11 January 1960: TABLE I. FRANCE: MAXIMUM LOANS GRANTED BY THE STATE FOR THE CONSTRUCTION OF LOW-COST FAMILY HOUSING (In francs) Geographical area * Type of home F.l l . . . . FAbis . . F.2 . . . F.3 . . . F.4 . . . F.5 . . . F.6 . . . F.7 . . . . . . . . . . P A B c D 7,800 15,300 19,100 22,800 26,600 30,300 34,200 37,500 7,200 13,800 17,200 20,700 24,200 27,700 31,300 35,000 7,000 13,600 16,900 20,300 23,700 27,100 30.7C0 34,000 6,600 12,900 16,100 19,400 22,700 26,000 29,500 32,700 6,300 12,300 15,400 18,500 21,600 24,700 28,000 31,200 Source: Sixth Congress of the H.L.M. Co-operative Movement; 5-7 February 1962; II: Financement (nouveau régime), logements économiques et familiaux, H.L.M. à usage locatif. 1 Classified according to the number of main rooms, excluding sanitary facilities. 8 P represents the Paris area. The other areas comprise the other départements classified according to local building costs. The amounts quoted in the table may be increased by 350 francs for each room in a dwelling with a central-heating installation which meets the technical and administrative standards laid down by the authorities. In the case of a block of flats more than five storeys high, an additional 900 francs may be granted per flat to cover the cost of installing a lift. These figures are based on surveys and statutory provisions regarding maximum building costs for each type of dwelling and area. Comprehensive Loans Under the legislation implementing the national housing policy, H.L.M. co-operatives are able to obtain comprehensive loans to finance building schemes consisting of estates for future owners or blocks of flats for rent, without having to apply for a loan to cover the cost of each housing unit. Savings Apart from this principal system of obtaining finance and any loans which can be secured from other public or private sources, the French 64 HOUSING CO-OPERATIVES co-operative movement also has its own savings programme, which receives special Government guarantees against the danger of inflation and is used to finance the purchase of land, to cover part of the building costs or to repair or modernise existing buildings. MEMBERSHIP OF H.L.M. CO-OPERATIVES As is the normal practice in any genuine co-operative, membership of the French co-operative housing movement is open, in principle, to any persons who are willing to co-operate and abide by the rules of the society they wish to join. However, in order to take part in the building programme and benefit by the financial facilities made available by the Government as part of its low-cost housing policy, members are subject to certain restrictions which are imposed, not by the co-operatives themselves, but by law. The decree of 27 March 1954 lays down the principle that the legislation to promote house building only applies to natural persons of limited means and, first and foremost, to workers living mainly on their earnings. In practice, there are two conditions imposed on members wishing to benefit by the Government-sponsored low-cost housing programme: they must be of limited means and of French nationality. Limited Means Members wishing to qualify for the financial benefits available under the low-cost housing scheme must not have incomes in excess of a certain level (without counting family allowances). In the case of housing for ownership, the upper limit is higher than in the case of homes for rent. The calculation is based on the net monthly income, having regard to the number of dependants and the rules laid down in the order of 29 September 1960. Usually no application is entertained from persons who already own their homes. Although the programme caters mainly for workers who live on their own earnings, applications from members of the professions are not rejected if they can show that their incomes are not higher than the ceilings laid down in the regulations. Applications are also considered from the social angle and from the standpoint of the convenience of having a member of a particular profession on the estate who can serve all the residents. In the case of professional workers and craftsmen, co-operatives usually add on an extra room which can be used, for example, as a surgery by a doctor or a workshop by a craftsman. FRANCE 65 Nationality Government assistance to housing co-operatives in building homes for ownership is only given in respect of French citizens, although it can be extended to nationals of countries which have concluded reciprocity treaties or conventions with France, e.g. Belgium, Italy and Poland. As regards the financing of house building for rent, there is at present nothing to stop foreign members from benefiting by the privileged use or tenancy schemes of the H.L.M. co-operatives. Protection of Members' Interests In order to protect members' interests, the Government reserves the right (through the appropriate agencies) to supervise co-operative societies' handling of the public funds entrusted to them on behalf of their members. Apart from this officiai supervision, however, cooperatives control their own affairs effectively by delegation from the general meetings of their members. SOCIAL SIGNIFICANCE The H.L.M. co-operatives have been one of the principal elements in the Government's nation-wide low-cost housing programme. But they are not alone, for other non-profit bodies and institutions are also recognised to be playing an effective part in tackling the French housing shortage. Nor are the H.L.M. co-operatives the only form of co-operative organisation in France to participate in the drive to make adequate housing available for the lower income groups. Since the end of the Second World War the French trade unions have launched a number of schemes to secure social progress through adequate housing. They have, for example, encouraged building workers to form labour co-operatives, which are carrying out their own programmes as part of the national policy of encouraging non-profit house building. There are also building loan societies which do not themselves engage in building but help to overcome the housing shortage by granting loans for schemes carried out by other bodies. Mention should also be made of the self-help and mutual-aid movement known as the " coopératives de Castors " launched in 1948. Figures taken from the Annuaire de la coopération H.L.M. for 1961 show the scale of the contribution made by H.L.M. co-operatives towards solving the housing shortage in France. Between September 1947 and 31 December 1960 they completed 88,575 dwellings, and at the latter date a further 78,090 dwellings were under construction. 66 HOUSING CO-OPERATIVES But the French co-operative housing movement has done more than perform an outstanding social service through its three-pronged housing programme. The co-operative formula has also helped to create a community atmosphere of good neighbourliness among members living in the same housing projects. In many cases, when building is for ownership and also in schemes for rent where the society building the project is not responsible for its subsequent management, a special type of co-operative is set up to manage the completed scheme. In addition to the normal functions of estate management, such societies do much to improve the amenities, e.g. by planting trees and gardens, installing cultural facilities, providing various services for members, organising sports groups and fostering the co-operative spirit among members. The " Castors " movement has put up a number of large estates in various parts of the country for its worker-members. This is an interesting experiment which suggests yet another approach which could be tried and developed as part of the national drive to supply adequate housing on reasonable terms for the lower income groups. The French housing co-operative movement has not stopped there. In its determination to improve its systems and methods by drawing on the experience of other countries, the National Federation of H.L.M. Co-operative Societies, under the auspices of the Ministry of Building, called an international conference in Paris in October 1960, which was attended by representatives of housing co-operatives in 16 European, Asian and African countries. This meeting and the survey it made of common problems and possible ways and means of dealing with them strengthened the leaders of the French co-operative movement in their effort to adapt their methods to changes in the building industry and to find additional sources of finance and new approaches to enable them to discharge the social responsibilities falling to the co-operative movement in a dynamic modern economy. CHAPTER VI FEDERAL REPUBLIC OF GERMANY HISTORICAL BACKGROUND German housing co-operatives have a long history. The earliest experiments in co-operative housing schemes were made in the midnineteenth century, but it was only from 1889 onwards that the movement acquired any momentum, because until that year German law only allowed societies to operate on an unlimited liability basis, and many people were deterred from joining through fear of losing their own capital if the society were to show a deficit. However, the co-operative housing movement only began to play an important part in the German economy after the First World War. Official policy was the decisive factor governing the development of this type of co-operation. After the First World War the housing situation in Germany was extremely serious, partly because hundreds of thousands of families were in need of homes and partly because the economy had been undermined by inflation and building costs had risen sharply. In order to tackle this problem it was decided to grant largescale Government aid for house-building projects, and co-operatives and other non-profit bodies, many of them co-operative in form, were given priority for their building programmes, whether on behalf of their own members or for other persons or groups. Table II shows the steady contribution made by co-operatives and other non-profit organisations towards solving the housing shortage. This lasted until the 1930s, when the country was hit by the slump and, in addition, the co-operatives found their scope considerably circumscribed as a result of the change in political régime. PRESENT SITUATION Although there was an acute housing shortage in Germany at the end of the Second World War, and the co-operative movement immediately overhauled its own organisation, it was unable to do any largescale building until 1950, i.e. until members could begin to save some- 68 HOUSING CO-OPERATIVES TABLE II. GERMANY: HOUSING CONSTRUCTION, 1927-35 (Numbers and percentages) Year 1927 1928 1929 1930 1931 1932 1933 1934 1935 Private builders Co-operatives and other non-profit societies Public bodies and authorities Number % Number % Number % 169,395 180,900 173,139 156,754 118,749 91,672 99,660 133,542 154,845 60.3 59.6 55.5 51.3 51.7 70.4 75.4 70.5 73.0 78,426 90,889 109,121 121,394 92,587 27,282 19,546 30,187 40,050 27.9 30.0 34.9 39.8 40.3 20.9 14.8 15.9 18.9 33,269 31,538 30,010 27,148 18,492 11,337 12,986 25,760 17,127 11.8 10.4 9.6 8.9 8.0 8.7 9.8 13.6 8.1 Source: H. UMRATH: European Labour Movement and Housing (Brussels, European Regional Organisation of the International Confederation of Free Trade Unions, 1953), p. 35. thing towards the cost of their homes following the currency reform of 1948. This did not apply to the co-operatives alone, for little of importance was accomplished by the German building industry during the first inflationary post-war years. Table III shows the part played since then by housing co-operatives in national reconstruction. The modern German co-operative housing movement which has come into existence since the Second World War has little in common with the co-operative experiments made at the end of the last century and the beginning of this. Those experiments were undertaken by idealists without much co-ordination between their schemes or any real business sense, although they did at least reveal the difficulties and opportunities in the co-operative method as applied to housing. The modern societies are highly efficient organisations using up-to-date methods and equipment, and administered by skilled managers. As a result, the German co-operative housing movement has played a prominent part in the building industry and has helped to strengthen the national economy by providing the lower income groups with adequate housing at reasonable prices. ORGANISATION Unlike the Swedish co-operative housing movement, which is characterised by a centralised national organisation, through the H.S.B. movement, the German societies are usually local enterprises which remain independent of each other and confine themselves to building TABLE III. FEDERAL REPUBLIC OF GERMANY: HOMES BUILT BY AND ON BEHALF OF CO-OPERATIVES, 1950-61 Total number of co-operatives Number of co-operatives submitting returns Homes built by co-operatives on their own account Average number of homes built by each co-operative Number of homes built by private contractors on behalf of co-operatives Average number of homes built by private contractors on behalf of each co-operative Total number of homes built by and on behalf of co-operatives Average total number of homes built by and on behalf of each co-operative 1950 1,750 1,591 60,028 38 2,800 2 62,828 40 1951 1,860 1,703 61,954 36 7,156 4 69,110 41 1952 1,855 1,771 59,496 34 6,022 3 65,518 37 ¡« Year O a so > r a •tí 1953 1,840 1,718 65,977 38 7,101 4 73,078 43 G ta 1954 1,835 1,686 58,633 35 7,980 5 66,613 40 n 1955 1,787 1,719 46,816 27 8,867 5 55,683 32 1956 1,762 1,698 47,459 28 9,432 6 56,891 34 1957 1,720 1,641 39,770 24 9,711 6 49,481 30 1958 1,689 1,632 35,053 21 8,485 5 43,538 27 1959 31 1,679 1,628 40,744 25 9,598 6 50,342 1960 1,651 1,586 35,787 23 9,046 6 44,833 28 1961 1,647 1,527 34,079 22 8,969 6 43,048 28 O en ¡w 2 > •z Source: GESAMTVERBAND GEMEINNÜTZIGER WOHNUNGSUNTERNEHMEN: Empfehlungen zur Entfaltung gemeinnütziger Wohnungsbaugenossenschaften (Cologne, 1962), p. vin. 0\ VO 70 HOUSING CO-OPERATIVES homes for particular groups of individuals in the town or rural district in which they operate. There are, however, a number of co-operative federations in Germany, at both the regional and national levels, which do very useful work, especially as regards accounting and cost control. Regional Audit Unions At the regional level there is a network of audit unions, each dealing with a particular area. At first these unions were solely concerned with helping the co-operatives (and non-profit building associations in general) within their areas, by auditing their books and helping them to keep better accounts. As time went by, however, their functions were enlarged to include technical help over management, planning and layout, the legal aspects of contracting, financing, costing, purchasing of material and equipment, negotiating contracts with technical staff, standardisation, the management of completed housing owned by societies, insurance schemes, etc. National Union At the national level the housing co-operatives, in conjunction with other non-profit building associations, formed in 1949 a central organisation called the Gesamtverband gemeinnütziger Wohnungsunternehmen (G.G.W.). This Union of Non-Profit Housing Enterprises is a nation-wide organisation with the following objectives: (i) to promote the establishment of co-operatives and other non-profit building associations; (ii) to represent the interests of such bodies; (iii) to supervise the work of the regional audit unions; (iv) to conduct research into new building techniques which could be used for the construction of low-cost housing; (v) to maintain contact with the public authorities and to participate in all aspects of national housing policy. The democratic structure of the G.G.W. comprises three main bodies : the congress, the board, and the executive committee. Congress. The congress (Gesamtverbandstag) is the highest authority within the G.G.W., consisting of delegates representing the regional audit unions, together with the co-operatives and other non-profit building associations FEDERAL REPUBLIC OF GERMANY 71 affiliated to the G.G.W. Its main responsibilities are to formulate a social housing policy for member bodies and to elect the executive committee and general secretary. Board. The board consists of 28 members, the chairman being elected directly by the congress and the remainder by the audit unions. This body settles any major issues arising out of the G.G.W.'s social and economic policy and draws up programmes and projects for submission to the congress. Executive Committee. The executive committee is elected by the congress for three years and consists of five members, two of whom represent the audit unions and two the local societies belonging to the G.G.W. ; the fifth member is the general secretary, who is elected for a period of five years. This committee, working through the audit unions and local member organisations, is responsible for carrying out the housing policy laid down by the congress and any decisions approved by the board. Building Workers' Co-operative Movement The German trade union movement has also contributed towards solving the housing shortage by sponsoring the formation of co-operatives. Not only have the unions promoted co-operatives to provide adequate housing for their own members, but they have also encouraged building workers to form co-operatives to put up homes for other groups of workers or for the general housing market. Building workers banded together to form co-operatives because they were convinced that in this way they could demonstrate that it was possible to build good housing at reasonable prices. In 1919 members of the building trade unions organised themselves as producers and set up their own co-operative societies in Berlin and other German industrial cities. The unions quickly realised, however, that, if these co-operatives were to achieve their purpose and provide adequate housing at prices within the reach of the working class, it was necessary to co-ordinate the scattered efforts being made in various parts of the country. The nationwide Verband sozialer Baubetriebe (V.S.B.), or Federation of Non-Profit Building Enterprises, was therefore founded in 1928.1 1 See H. UMRATH: European Labour Movement and Housing (Brussels, European Regional Organisation of the International Confederation of Free Trade Unions, 1953) p. 37. 72 HOUSING CO-OPERATIVES After the V.S.B. was established, its responsibilities were enlarged and, in addition to co-ordinating and helping its member co-operatives and other workers' non-profit building associations, it also organised new enterprises with the same aims and in the same spirit. Adhering to the distinctive feature of administrative decentralisation, the V.S.B. set up regional unions in the most industrialised areas of the country to act as co-ordinating and operating centres for member organisations in their areas. Two years after its foundation, in 1922, the V.S.B. had already formed 207 new local societies through its regional unions. In the early days, however, the efficiency of the V.S.B. left a good deal to be desired. It was an organisation of workers which was also managed by workers, but individuals who might be highly skilled in their own trades were not necessarily qualified to become competent managers, especially in the inflationary period through which Germany passed in the early post-war years. Nevertheless, the V.S.B. did not confine itself to co-ordinating and helping its member societies, but also entered the building industry as a contractor. To start with, it only acted as a contractor for co-operatives and other non-profit associations belonging to it, but later it undertook contracts on behalf of public and private bodies. In the interests of efficiency the V.S.B. set up a technical department in 1926 to advise member societies on building management. It also standardised accounting systems so as to facilitate comparative analysis of costs and thereby help to keep them in line with estimates. In order to make homes available on reasonable terms to families of moderate means in accordance with its fundamental principles, the V.S.B. went a step further and decided to go in for production as well, with the result that by 1929 it was making many of the materials for its housing projects in its own factories. By the end of 1929 the V.S.B. had become one of the biggest concerns in the German building industry, making a contribution of outstanding social value towards solving the housing shortage. This was not only because of its own manufacturing activities and services to its member organisations, but also because of its striking success in reducing building costs. Unfortunately, just when this type of co-operative house building was forging ahead, the slump occurred in 1930 and the German economy was badly hit. Nevertheless, it was not the slump but the political regime that came to power shortly afterwards which destroyed the work of the V.S.B. and its member societies. One of the first steps taken by the German trade union movement in FEDERAL REPUBLIC OF GERMANY 73 reorganising itself after the Second World War was to demonstrate its renewed interest in co-operative house building. First of all the unions asked for the co-operative assets which had not been destroyed to be returned to them so that they could be reorganised. Later, owing to the sheer scale of the problem facing the country because of wartime destruction, the new German trade union organisation decided that its housing policy, instead of being confined to societies in which the unions themselves had a stake, should be enlarged to include the many families who had lost everything, especially refugees needing homes near their new places of work. By 1951 the co-operatives and other union-sponsored associations on the co-operative model had already built about 10,000 homes with the help of the consumer co-operatives, backed by the Wholesale Society of the German Consumers' Co-operatives, which supplied them with high-quality materials at reasonable prices.1 Since then, workers' building co-operatives, operating as autonomous local bodies, have continued to carry out housing schemes while belonging to regional and national associations which ensure co-ordination and enable them to take advantage of each other's experience or obtain the benefits of standardisation and large-scale manufacturing or purchasing. All these measures enable them to provide homes for families in the lower income groups at reasonable prices. Some Characteristics of German Housing Co-operatives This survey does not set out to describe the democratic internal structure of the German housing or building co-operatives, nor its underlying principles, because basically they are the same as elsewhere in the international co-operative movement and very similar in operation to those described in detail earlier in connection with the Swedish H.S.B.—apart from the fact that the German co-operatives are more decentralised. It is, however, worth mentioning certain distinctive features of the way in which the German co-operative housing movement is organised. Individual Ownership. Some of the homes built by the co-operatives are intended for sale to the families living in them. As there is no question of making a profit, the sale price is calculated on the basis of the mortgage obtained by the co-operative on the property. It should be noted that the pur1 See UNITED NATIONS: Housing through Non-Profit Organizations, op. cit., p. 111. 74 HOUSING CO-OPERATIVES chasers remain members of the co-operative even after they become the owners of their homes. According to figures published by the Economic Commission for Europe, by the end of 1956 a total of 82,787 homes built by co-operatives had in this way become the individual property of their occupiers.1 In such cases co-operatives take special precautions (as permitted by German law) to ensure that purchasers do not then resell their dwellings for speculative purposes. This is done by inserting a clause in the contract of sale empowering the co-operative to re-acquire the property in such cases as are allowed by the legislation on public utility housing. Collective Ownership. Usually, however, housing co-operatives retain the ownership of the dwellings they build, not only in the case of large blocks of flats, but also in the case of housing estates consisting of small homes for one or two families. It is often said that in such cases the co-operatives are building houses for rent at moderate rates to their members, but in fact the latter cannot be said to be tenants since, as members, they are co-owners and co-managers of the properties in which they live. When a member is allocated a co-operative dwelling, he becomes entitled to live in it for the rest of his life provided he remains a member of the association and carries out his obhgations. In allocating co-operative dwellings, priority is given (other things being equal) to length of membership of the co-operative. Members' contributions to their co-operative's capital in the form of share certificates are practical evidence of their collective ownership and entitlement to occupy the dwellings respectively allocated to them. In principle, a member can at any time transfer his share certificates to another person by means of a written contract signed by both parties. In such a case, however, he must first secure the approval of the society's management committee for the sale, and the committee must register the deed with a notary. If the share certificates are acquired by a person who does not belong to the co-operative, the rules require him to apply at once for permission to join. A member can also withdraw from a co-operative, in which case the normal procedure is for him to give two years' prior notice in writing. The management committee is required to register his withdrawal with a notary at least six weeks before the expiry of the financial year in which the withdrawal actually occurs. 1 See UNITED NATIONS, Economic Commission for Europe: Financing of Housing in Europe (Geneva, 1958; Sales N o . : 58.II.E.3), p. 81. FEDERAL REPUBLIC OF GERMANY 75 In the event of a member's death, his rights only expire on the expiry of the financial year in which he died. Until then all his rights pass to his heirs. If there is more than one heir they may only act collectively in exercising the rights of the deceased member. FINANCING In accordance with the true spirit of co-operation, which is not to rely entirely on outside assistance in financing building schemes, the German co-operatives have tried to cover as much as possible of the cost of their projects. But in the circumstances resulting from two world wars, which largely shattered German society and, in fact, the whole national economy, and with the extremely acute housing shortage caused by the almost complete destruction of many cities and towns during the last war, the German co-operatives, on resuming operations in 1945, had to rely on external assistance in undertaking the large-scale reconstruction that was needed. The Government, for its part, realised the valuable work that co-operatives could do as voluntary agents of its social policy for coping with the emergency, and gave them generous assistance out of public funds, while at the same time respecting their internal autonomy. One of the advantages of co-operative organisation is that it generates its own capital out of the savings secured by the bulk buying of materials, production in co-operative factories and large-scale building operations, and also by means of the nation-wide technical and financial services provided by the co-operative federation. In addition to this capital of its own, the main sources of finance for the housing co-operative movement are members' contributions, private credit institutions and public funds. Members'" Contributions When combining to form a co-operative, members undertake to contribute towards the capital of the association by purchasing one or more share certificates. They also undertake to pay a prescribed deposit in due course. The amount and conditions depend on circumstances and are laid down in the society's rules. Societies set up their own savings funds to encourage and facilitate participation by members in this way. In the rural areas of Western Germany it is also common for members' contributions to their co-operative to be wholly or partly in the form of their own labour instead of cash. A special agency, the Lastenausgleichsfonds, was set up after the war to help refugees and other sections of the population which had 76 HOUSING CO-OPERATIVES suffered serious hardship in the war to join co-operative housing schemes. This agency granted interest-free loans repayable at the rate of 2 per cent, per year. The loans varied according to the type of home needed by each family1 and enabled recipients to purchase share certificates in the same way as other members. Table IV shows the contribution of members to the formation of co-operative capital through share certificates. Private Credit Institutions The main credit institutions providing funds for housing in the Federal Republic of Germany are the insurance companies, mortgage banks, savings funds and building societies. These bodies make loans on the first mortgage up to 35 per cent, of the total building cost. Repayment periods vary between 30 and 40 years, and the interest rate is usually 6 per cent.2 It is also by no means uncommon for private companies to advance money to co-operatives to finance building schemes for their own employees. The Role of Public Authorities The key legislation governing house building in Germany after the war was passed in 1950 and amended in 1953. The 1950 Act laid down general principles governing the granting of second mortgage loans and encouraged Land and local authorities to give this policy their backing. It specified that the maximum interest on such loans must be 4 per cent, and allowed interest charges to be waived altogether if it could be proved to be necessary to enable a building scheme to be financed. Between 60 and 65 years were allowed for repayment. The Act also stipulated that housing built under this programme would be subject to lower taxation for a specified number of years. The 1953 amendment marked a significant shift in national housing policy by favouring home ownership. It encouraged the growth of housing co-operatives and entitled them to preferential financial treatment from the Federal Government if they built flats for individual or joint ownership (title of ownership in the latter case being vested in the co-operative) so that members could become co-owners with indefinite rights of possession. 1 See Herbert ASHWORTH: Housing Finance in Western Europe (London, International Co-operative Alliance), p. 38. 2 Ibid., p. 40. TABLE IV. FEDERAL REPUBLIC OF GERMANY: CO-OPERATIVE SHARE CAPITAL, 1950-60 Percentage increase of share capital compared with preceding year Average share capital per co-operative (in DM) Percentage increase of average share capital compared with previous year Year Total number of co-operatives Number of co-operatives submitting returns Total share capital (in D M ) 1950 1,750 1,591 186,819,000 — 117,422 — 1951 1,860 1,703 201,934,000 8.1 118,575 1.0 1952 1,855 1,771 236,296,000 17.0 133,425 12.5 1953 1,840 1,718 260,250,400 10.1 151,485 13.5 1954 1,835 1,686 294,389,700 13.1 174,608 15.3 1955 1,787 1,719 324,744,313 10.2 188,915 8.2 1956 1,762 1,698 355,895,265 9.6 209,597 10.9 1957 1,720 1,641 391,400,583 10.0 238,513 13.8 1958 1,689 1,632 430,981,147 10.1 264,082 10.7 1959 1,679 1,628 481,890,543 11.8 296,002 12.1 1960 1,651 1,586 530,581,077 10.1 334,540 13.0 m O ta ¡a ta ES c r ts o it O m !» Source: GESAMTVERBAND GEMEINNÜTZIGER WOHNUNGSUNTERNEHMEN: Empfehlungen zur Entfaltung gemeinnütziger Wohnungsbaugenossenschaften (Cologne, 1962), p. vi. -J 78 HOUSING CO-OPERATIVES In addition to this Government aid over second mortgages in nonprofit housing schemes, the Federal Republic of Germany operates a subsidy scheme to help families in the lower income groups pay their contributions and thereby participate in co-operative housing schemes and other associations with similar methods and aims. The amended legislation passed by the Bundestag in 1961 enlarged the facilities available for those wishing to take part in housing programmes sponsored by the Federal Government and introduced a number of major changes to help families of moderate means, the extent of the help depending on the number of children. It also included former prisoners of war and persons who had suffered from persecution under the previous political régime. This legislative reform in 1961 emphasised the trend to grant subsidies to house-building associations which encourage stability of residence by occupants of flats or houses and allow them to manage their own affairs.1 All these features are characteristic of co-operative housing. However, the same trend has been noticeable in the Federal Republic of Germany in recent years as in the other Western European countries, whereby State aid for house building is being steadily curtailed in view of the changed economic circumstances, and financial aid from public funds is confined to special sections of the population.2 SOCIAL SIGNIFICANCE The great social significance of the German co-operative housing movement is apparent from the major contribution made both by genuine co-operatives and by other non-profit associations in rebuilding the country, especially since the Second World War. One example of this highly successful contribution is the Neue Heimat in Hamburg. This society, which has now extended its operations to other areas such as Bremen and Lübeck, has its own technical department with specially qualified staff and has devised a scheme based on short-term loans financed out of the savings and monthly contributions of the residents on its housing projects. Neue Heimat has not confined itself to isolated projects but has also built large estates with up-to-date, modern services, such as those at Hohnerkamp, Farmsen and Vedel, with 1,520, 1,992 and 1,700 homes respectively. A noteworthy point is that, by making full use of co-operative methods to increase efficiency 1 See International Housing Bulletin, loc. cit. 2 UNITED NATIONS: European Housing Trends and Policies in 1960, op. cit., p. 32. FEDERAL REPUBLIC OF GERMANY 79 and generate capital, this society has managed to build several hundred dwellings without having to rely on the State for financial aid.1 From the social standpoint, however, the greatest contribution made by the German co-operative movement towards housing reconstruction has been its effort, in collaboration with the authorities and other nonprofit organisations, to tackle the problem of housing the refugees. An example of this is the pilot project carried out in Schleswig-Holstein. In 1946 the position in Schleswig-Holstein was extremely serious because of the enormous increase in the population caused by the influx of refugees in need of homes and work if they were to support themselves. The German trade union organisation therefore decided to carry out a joint scheme (to serve as a pilot project) involving the construction of 10,000 homes for the refugees. The aim was to demonstrate the scope for cutting costs through large-scale building, bulk purchase of materials and use of modern techniques. The co-operatives played a leading part in this scheme (in which the Land of Schleswig-Holstein, the trade unions and various non-profit organisations also took part) by managing it and contributing their own special techniques and experience in the field of house building. Apart from the building or housing co-operatives, the consumer co-operatives also took part, e.g. the Wholesale Society of the German Consumers' Co-operatives, which acted as a central purchasing agency and bore the main responsibility for lowering building costs.1 To sum up, the gains from this pilot scheme were as follows: in human terms, 35,000 displaced persons were accommodated in decent housing close to their new places of work; as regards organisation and administration, it demonstrated the advantages of co-operation between public and private bodies concerned with the same subject; and from the economic standpoint the Schleswig-Holstein experiment showed that large-scale building and modern techniques could not only lower construction costs but also raise productivity substantially. It also greatly helped the Land of Schleswig-Holstein to overcome the acute housing shortage and to derive some benefit from the absorption into the local economy of thousands of refugees, once they had settled in their new homes close to the manufacturing centres. 1 See UMRATH: op. cit., p. 46. CHAPTER VII POLAND HISTORICAL BACKGROUND The Polish co-operative housing movement has a tradition dating back to the end of the nineteenth century, the first such society having been founded in 1890. Between the two world wars there were 400 housing co-operatives in Poland.1 Some of these societies discharged a valuable social function during these years. For example, the Warsaw Housing Movement, which was founded in 1921 by wage and salary earners of moderate means, had by 1932 built 14 blocks containing a total of 1,200 flats for its members; ownership of the property remained vested in the co-operative. Nevertheless it was only after the Second World W a r that co-operative organisation as a means of dealing with the housing problem began to assume nation-wide importance under the Government's reconstruction plan. It was agreed that, in order to rebuild the country after the virtually complete destruction of many towns and villages, it was essential to encourage participation by the homeless themselves in acquiring housing for their families. Co-operatives were considered to be the best way of enlisting such participation. For example a society was founded in Warsaw in 1945, consisting entirely of homeless workers, which concentrated on repairing partly damaged buildings in order to make them fit for occupation once more, and by the following year there were 33 of these societies in existence, which between them repaired 2,177 dwellings in a single year. By the end of 1947 nearly 100 co-operatives of this type had been formed in the capital alone. At that time the Government was not in a position to give any substantial financial aid to the societies, but the Warsaw municipal authorities (which now owned the land) made sites available to workers belonging to co-operatives. Despite the existence of the societies and the Government's declared desire to encourage this form of co-operation, house building or repair 1 See Bohdan TRAMPCZYNSKI: The Tasks and Activities of the Co-operative Movement in Urban Centres (Warsaw, Supreme Co-operative Council, 1962), pp. 28-31. POLAND 81 by co-operative societies until 1957 was on a very small scale, and barely accounted for 1 per cent, of the total number of dwellings available in the urban centres. But the Government's new housing policy launched in 1956 gave fresh impetus to the co-operative movement, with the result that, whereas in 1957 there were only 280 societies in the whole country, three years later in 1960 the number of societies was over 1,000, comprising 120,000 families.1 ORGANISATION The main types of housing co-operative in Poland are as follows : (i) collective ownership, which is the oldest form and traditional in Poland. These societies finance and build homes which they then assign to their members for an indefinite period while retaining ownership themselves. Collectively all the members are owners of the block or blocks of flats forming part of the project; (ii) associations formed to help the construction of single-family homes by co-operative methods; on completion the houses are allocated to members, and the society itself is usually wound up; (iii) management co-operatives which are set up solely for the purpose of providing and organising communal services for a particular housing scheme. The traditional type of Polish housing co-operative, in which the society retains ownership of the property, can take one of two forms. In the first case the cash contribution by members towards the cost of their homes is comparatively slight, and members are entitled to live in the homes allocated to them for an indefinite period but cannot sell them to a third party. Under the second system members make a somewhat bigger financial contribution and are entitled not only to live in the dwellings indefinitely with their families, but also to sell their acquired rights in the society. In principle housing co-operatives are open to any person supporting himself by his own labour, but preference is given to workers employed in socialised establishments or productive undertakings, especially if they are saving out of their own earnings to acquire a new home. 2 As regards internal organisation, the chief authority in each cooperative is the general meeting of members. This meeting elects a management committee which in turn appoints a manager. 1 See Witold KASPERSKI: "Housing Co-operation", in Polish Co-operative Review (Warsaw, Supreme Co-operative Council), Sep. 1960, p. 25. s See TRAMPCZYNSKI: op. cit., p. 30. 82 HOUSING CO-OPERATIVES At the national level all housing co-operatives belong to a central federation, which, together with the other federations, belongs to the Supreme Co-operative Council; this is the policy-making body of the movement, which co-ordinates the programmes of its member organisations. At one time the Council consisted of Government nominees, but now the delegates are chosen by the affiliated federations. FINANCING Although at one time building programmes were wholly financed by the Government, the new national housing policy in operation since 1956 encourages those directly concerned to make a financial contribution as well. Responsibility for implementing this policy has been given to the co-operative movement, which has thereby achieved greater freedom of action. Since 1957, therefore, there have been not one but two housebuilding programmes: State-built projects financed entirely out of public funds, and co-operative schemes. Under the current national housing policy, co-operative members are required to make a down payment equal to 15 per cent, of the building cost, which may be done at any time until their homes are actually allocated. The undertaking in which the member is employed usually advances two-thirds of this down payment. The co-operative makes itself directly responsible for financing the remaining 85 per cent., for which it obtains an interest-free bank loan repayable over a period of 40 years. If a member undertakes (through his co-operative) to pay off his loan in regular instalments, he need pay back only two-thirds of the total, as the remaining third is automatically cancelled. In addition the Polish Government assists co-operatives during their early months and provides them with suitable sites for their building projects. With this financial backing given to Polish co-operatives and the favourable terms granted to members, it is not surprising that the cooperative housing movement should have expanded considerably from 1957 onwards, and now even families of moderate means are able to take part in co-operative building schemes. SOCIAL SIGNIFICANCE By the end of 1961 there were 1,104 housing co-operatives in Poland with 212,000 rooms in 74,500 flats and a membership of 175,000. In other words, the co-operative housing movement, which played such POLAND 83 an important part in the post-war reconstruction of the country, and especially of Warsaw, is continuing to occupy a major role in the country's housing drive. As in other countries, such as Sweden, Norway, Denmark, the United States and Canada, the co-operative housing movement in Poland has sought to do more than build homes for its members—it has tried to create an environment for genuine co-operative communities. One of the methods used by the Polish co-operatives for this purpose is to call a meeting of the future residents of a housing project some two months before the dwellings are due to be allocated. At this meeting members can get to know one another and are told how to make the best use of their new homes, what are their rights and responsibilities and how they should set about organising certain communal services in order to make life pleasanter in their housing estate or block. This initial meeting between the future residents, who are quite often of different educational standards and of different backgrounds, creates a bond of common interest, and it is not uncommon for teams of volunteers to be formed at the first meeting—which is usually held on the building site itself—to do various jobs in their spare time for the community as a whole. Each family is responsible for maintaining the home allocated to it, but all are jointly responsible for the upkeep of halls, corridors and stairways or the gardens, playing fields or avenues which usually surround co-operative housing projects. A case in point is the Lublin Housing Co-operative which, although only founded in 1957, is now one of the biggest in Poland. This cooperative, which includes professional as well as factory and railway workers among its members, has built a number of co-operative housing estates with every modern convenience and amenity and has managed to turn them into genuine co-operative communities as well. Members begin to work together from the time they come into contact with the co-operative, long before they settle into their new homes. Some of them look after the lawns or flower-beds, others plant trees or build roads. It is the practice for the families in each building to take it in turns to clean the stairways and other parts of the building used by all the residents. This is done for two reasons: it cuts down the monthly payment made by the residents, and it has been realised that, when the residents themselves are personally responsible for the cleanliness and upkeep of communal facilities, they take a greater interest in keeping them neat and tidy.1 1 See "The Lublin Housing and Building Society", in Polish Co-operative Review, Dec. 1961, pp. 41-44. 84 HOUSING CO-OPERATIVES Once members have settled in their homes they appoint a management committee which, apart from its administrative duties, undertakes various educational functions so as to foster the co-operative spirit among neighbours. For example it organises special programmes for residents on certain traditional occasions such as the New Year, and takes special care of the children. In Poland co-operative societies do not build kindergartens, because these are provided by the local authorities together with schools. In planning their schemes, co-operatives try to make their members' savings go as far as possible, but although the flats they build may be fairly small they are so arranged as to provide the air and space needed for healthy family life. They are also equipped with such services as electricity, gas, running water, rubbish chutes and central heating. All co-operatives try to provide shopping facilities for the benefit of their residents in addition to the usual amenities. Many societies have their own lecture halls and centres for the hire of equipment or machinery for use in the home, and some have their own artistic clubs. In short, the Polish co-operative housing movement has done much to raise the living standards of a large section of the population. The Polish Government has shown that it favours this type of co-operation, which benefits the national housing programme by stimulating popular interest and promoting members' participation in the construction of their homes. CHAPTER Vili SPAIN HISTORICAL BACKGROUND The origins of the Spanish co-operative movement go back to the end of the nineteenth century, a period which was marked by internal upheavals, economic instability and considerable social unrest, all of which to a large extent reflected the initial impact of the industrial revolution. However, the roots of the Spanish co-operative movement go deeper than this, for they can be found in the fishermen's associations, communal barns, and other social and economic patterns of the Middle Ages. Two different ideologies, the one social Catholic and the other socialist, underlay the Spanish co-operative movement in its early days. The former encouraged farm and rural credit co-operatives, while the latter formed consumer co-operatives and to some extent paved the way for the organisation of industrial co-operation. This was the position of the Spanish co-operative movement at the beginning of the present century, when the first housing co-operatives were set up as specialised off-shoots of the consumer societies in a further attempt to protect consumers in the most thickly populated areas where the housing shortage was becoming steadily more acute. As a result, by 1930 even before the law had recognised co-operatives as associations with their own distinctive features, there were some 40 housing associations with 2,500 families living in the homes they had provided. On the basis of this early experience in housing co-operatives, a number of new societies were set up, such as La Propiedad Cooperativa, founded in 1912, La Madrileña de Casas Baratas y Económicas, founded in 1925, and El Viso, founded in 1930. These co-operatives alone built several hundred single-family homes in Madrid for members and their families, who in most cases are still living in them. SOCIAL HOUSING POLICY In order to appreciate the growth of this form of co-operation in Spain and the great scope still open to it in the immediate future, it is 86 HOUSING CO-OPERATIVES necessary to have some knowledge of the general trend of Government social policy in Spain with regard to the housing problem. The housing shortage in Spain is not entirely due to the destruction caused by the Civil War or to the consequences of the Second World War. It had been steadily worsening over the years because of a number of other factors, such as the growth of the population and the influx into the big industrial towns. In order to overcome this shortage, which was particularly serious among the lower income groups, the Government passed a Protected Housing Act in 1939, which was followed by a Controlled Rents Act in 1954 and a Subsidised Housing Act in 1957. In accordance with the policy laid down in these enactments, the Government launched its first five-year housing programme in 1955. The number of houses built under this programme (in which the cooperatives participated) with direct or indirect Government financial assistance totalled 550,000, i.e. 110,000 per year. Taking advantage of the experience acquired during this five-year plan, a second national housing plan was launched in 1961 which will continue until 1976 and has a target of 3,713,000 homes. Three different types of dwelling are being built to cater for the varyingfinancialcircumstances of residents. Housing co-operatives play a leading part among the organisations responsible for building homes for ownership by salaried and manual workers, and are entitled to various forms of aid under the State-sponsored programme. According to estimates by the National Housing Directorate, the demand for dwellings over the years 1961-76 will be as follows: Estimated deficit on 1 January 1961 . . . . Need caused by population growth . . . . Need caused by internal migration Need caused by demolition of old housing . 1,000,000 1,550,828 252,000 911,072 The total number of homes needed thus corresponds to the target mentioned earlier for the current national housing plan. It is calculated that the plan will involve State investment of the order of 551,000 million pesetas. ORGANISATION The new trend, which emerges very clearly from the conclusions of the National Co-operative Assembly held in Madrid in November 1961 under official auspices, is for housing co-operatives (which were originally regarded simply as off-shoots of the consumer societies) to seek recognition as a distinctive type of society which in addition to the general SPAIN 87 principles and practices of any co-operative organisation has aims, features, problems and methods which are peculiar to it and distinguish it from other co-operatives. But despite the fact that there are now about 800 housing co-operatives in Spain which have enabled some 50,000 families to obtain their homes on exceptionally easy terms, it cannot be said as yet that the Spanish housing co-operatives constitute a genuine national movement, even though the trend in this direction is quickening. In the past, and even in recent years, housing co-operatives have each acted independently and have tackled their technical and financial problems entirely on their own, without any national organisation to supply them with common services, co-ordinate their work and resources or safeguard their interests. It is true that there are associations of housing co-operatives which are known as " area unions " and comprise the societies in each district or province. These unions do supply them with certain common services, but it would appear that, being formed compulsorily, they do not meet the wishes of the co-operatives themselves and merely increase their awareness of the need to belong to a national federated body. In addition to these area co-operative organisations, there are a number of bodies which have responsibilities under the Act of 2 January 1942 in thefieldof co-operation. In descending order, these bodies make up what might be called the legal framework of the whole Spanish cooperative movement, viz. : the Ministry of Labour, the National Trade Union Organisation, the Central Co-operative Council, and the Trade Union Co-operative Department. The functions assigned by the Act to these bodies as regards cooperatives are as follows. The Ministry of Labour supervises the cooperative movement through the registration and inspection of societies. The National Trade Union Delegate is responsible for the guidance and general policy of the Trade Union Co-operative Department and for supervising its social welfare activities. The main task of the Central Co-operative Council is to advise the Trade Union Co-operative Department on its function of giving encouragement, guidance and technical aid to co-operatives, especially as regards the interpretation of the relevant legislation and relations between different types of co-operatives. The Trade Union Co-operative Department supplies guidance and advice to co-operatives, supervises their operation and safeguards the general interests of the co-operative movement against third parties and even, if necessary, against the State. At the present time the Spanish Cortes has before it a new Bill on co-operatives which relaxes controls over their internal organisation and regional and national federations. The co-operative movement is 88 HOUSING CO-OPERATIVES waiting for this measure to be passed in order to set up its own nationwide organisation. To sum up, Spanish co-operatives have, by and large, followed the traditional practice of confining themselves to building homes to meet the needs of their members. Once built, ownership of the homes has been transferred to the individual occupiers, and the societies have then been wound up or have limited their activities to providing a few communal services for their members or simply managing the housing estates. Nevertheless, the new Bill on co-operatives defines housing co-operatives as bodies " established with the aim of providing housing and ancillary buildings for their members under any legal system of construction, acquisition or method of use " and adds that " such co-operatives may include among their activities the maintenance and management of communal facilities and the provision of services for the purpose of community development and may be established solely for that purpose ".1 This approach was welcomed by the National Co-operative Assembly and suggests that the Spanish co-operatives are now interested in expanding the scope of their housing movement by introducing systems other than the traditional practice of building homes exclusively for individual ownership by their members. It should also be noted that the Spanish co-operative movement has assisted the Government in tackling the housing shortage not only through societies formed to enable their members to acquire homes, but also through another type of co-operative undertaking, the industrial building co-operative, consisting of workers from various building trades. Some are labour co-operatives which concentrate on building houses, especially for other co-operatives or non-profit housing associations, while others are societies made up of workers with special skills in the production of particular types of building materials. According to figures supplied by the Spanish Trade Union Organisation, 65 industrial cooperatives were in operation in Spain in July 1962. There are also other specialised types of co-operatives, such as consumer and credit societies which help to alleviate the housing shortage by carrying out their own building programmes for their members. FINANCING Usually co-operative housing schemes in Spain are financed out of contributions by the co-operative and the State, supplemented by loans 1 See José Luis del ARCO ALVAREZ: Bases del futuro ordenamiento jurídico y régimen fiscal de las cooperativas (Madrid, Asamblea Nacional de Cooperativas, 1961), p. 24. SPAIN 89 from other institutions. To start with, the co-operative carrying out the project contributes a cash sum of not less than 10 per cent, of the total cost of the scheme. Thereupon the National Housing Institute (subject to the Ministry of Housing) grants an interest-free loan based on the area of the site; this loan usually covers between 33 and 75 per cent, of the total cost. Additional loans are then secured from bodies such as the National Credit Institute for National Reconstruction, the Marine Welfare Institute, the Mortgage Bank, the workers' mutual benefit societies, and the savings funds. These institutions grant loans which are repayable over a period of anything from 10 to 50 years and cover the remainder of the cost of the scheme. In the case of subsidised housing, the Government also makes a grant of 30,000 pesetas per dwelling over and above the foregoing loans based on the site area. Each member is required to make a down payment in respect of his own home, and a monthly repayment (usually very low) of the supplementary loans. This charge also covers allocations to the reserve fund, the contingency charge, common administrative costs and welfare expenses. In theory this down payment should be made out of members' own savings, but almost all the co-operatives—which, as was explained earlier, are independent of one another—have special arrangements to help their members to find the money for this initial outlay. The practical and convenient way in which the financial plans of the Spanish co-operatives work can best be appreciated from a few actual cases of housing co-operatives in different parts of the country: " Virgen del Carmen " Co-operative at Sanlúcar de Barrameda, Cadiz The " Virgen del Carmen " Co-operative was founded in October 1960 and began to build in August 1961. Its first scheme comprises 322 homes forming part of a subsidised housing programme and containing three types of dwelling as follows: First Type. Three bedrooms, living-dining room, kitchen, toilet and drying room. The buildings consist of four-storey blocks of flats with shops on the ground floor and balconies in front. Behind, a large area amounting to 4,000 m2 has been set aside for schools, gardens and other communal facilities. The flats include a few with four bedrooms for large families. Second Type. These have a floor space of 47 m2, together with a courtyard at the back. They consist of three bedrooms, living-dining room, kitchen and toilet. Third Type. Basically these flats also consist of three bedrooms, living-dining room, kitchen and toilet. They are built, however, in groups of four, with two on the ground floor and two above, but each with its own independent entrance and private garden in front. 90 HOUSING CO-OPERATIVES The contributions (in pesetas) required of members for these three types are as follows: Down payment First type Monthly contribution 4,000 100 Second type . . . . 21,500 300 Third type . . . . 45,000 375 " Viviendas para Todos " Co-operative, Murcia The system of financing applied by the " Viviendas para Todos " Cooperative serves as a good example of the methods used in rural areas. Out of a total building cost of 52,000 pesetas, members pay 22,000 pesetas in three contributions (3,000, 4,000 and 15,000 pesetas respectively) and the Ministry of Housing provides a subsidy of 30,000 pesetas. Cooperativa Central del Ahorro Popular The Cooperativa Central del Ahorro Popular is a loan society in Madrid which decided to finance a house-building programme for its members. It contracted out the building of the estate (4,500 homes) to a non-profit concern. As a result of a poll among future residents, three types of homes were built— two with two bedrooms and one with three. All have living-dining rooms, kitchens, bathrooms and terraces. The homes are financed as follows: First type Second type (two bedrooms) Third type (three bedrooms) Pesetas 16,480.00 19,480.00 20,720.00 784.09 841.07 969.74 101.23 30,000.00 102.05 30.000.00 117.66 30,000.00 Monthly contribution by member during first five Monthly contribution for next 25 years Government subsidy . . The sources of members' initial contributions included the following: 28 per cent, from their own savings; 34 per cent, from ten-year 3 percent, loans from a workers' mutual benefit society; 9 percent, advanced by their employers for varying periods without interest; 23 per cent, in the form of loans from the co-operative society for periods ranging from one to five years (depending on members' financial circumstances) and bearing a rate of interest of 5 per cent. SOCIAL SIGNIFICANCE Although Spanish housing co-operatives do not as yet constitute a genuine national movement with common technical services and the financial resources to open its own components factories so as to cut SPAIN 91 costs through standardisation and greater volume, the movement is nevertheless playing a leading part in the national drive to build cheaper housing for the lower income groups. This is all the more important because of the rapid rate of population growth in Spain and the generally low level of workers' wages, which means that they could not otherwise hope to afford adequate accommodation for their families. Naturally the overriding task of the housing co-operatives has been to help the middle and working classes to acquire properly designed homes of their own, and the achievements of the co-operative housing movement have been in those parts of the country that are most thickly populated and heavily industrialised. But they have gone further. Not only are they laying out estates, building schools and parks for the children of members and setting up consumer co-operatives for residents, but they are also fostering a new type of community in which neighbours can get to know one another better by working together as members of the same society. e PART IV NORTH AMERICA CHAPTER IX CANADA HISTORICAL BACKGROUND The co-operative housing movement in Canada is a recent development, the first attempts dating from the end of 1936. Since that first experiment co-operative house-building groups have increased considerably in numbers, particularly in certain provinces, but it could not be said that this form of co-operation has so far played a really outstanding role. Nevertheless, the successful experiments which have been made in various parts of the country, and in particular the special characteristics which mark co-operative housing in Canada, merit careful study, since they have worth-while and positive features which could be turned to advantage by developing countries in their efforts to solve their housing problems. The provinces in which this type of co-operative has thrived and has played a significant part in the national campaign to provide people with their own homes are Nova Scotia, Quebec, Ontario and Newfoundland. It is interesting to note that the co-operative housing movement was initiated by manual workers in the most unfavourable financial circumstances, with the encouragement and help of Catholic priests who gave them spiritual guidance. It all began in a small mining town, Reserve Mines, in Nova Scotia, a province which has gained international renown in the co-operative world for its great achievements in the field of co-operation, backed by the St. Francis Xavier University in Antigonish. The idea was born in the autumn of 1936, when ten miners in Reserve Mines formed a study club to see what could be done to provide decent housing for their families within their limited resources. This initiative led to the foundation of a co-operative which built a new community, completed early in 1939, which was given the name of Tompkinsville in honour of the Rev. J. J. Tompkins of the Extension Department of St. Francis Xavier University, who was the guiding spirit of the project. Following the success of this first attempt at co-operative housing the idea 96 HOUSING CO-OPERATIVES spread rapidly throughout the area. By 1959 there were already 86 co-operatives of this type in normal operation and obtaining very satisfactory results.1 Independently of these achievements in Nova Scotia, a new co-operative movement of the same type was founded in the province of Quebec in 1942. This also had its beginnings in a small mining town, Asbestos, and spread rapidly throughout the province. The table below, which is based on the 50 replies to a questionnaire sent to the 90 co-operatives existing in 1950, illustrates the expansion of housing co-operatives in the province of Quebec during the seven years immediately following the foundation of the first co-operative in Asbestos. Year Number of co-operatives founded Membership 1943 1944 1945 1946 1947 1948 1949 2 6 4 2 4 20 12 131 508 267 238 590 1,813 475 Total . . . 50 4,022 Source : Ensemble (Quebec, Central Council for Co-operation and Canadian Council for Co-operation), June-July 1950, pp. 14-15. According to the inquiry carried out by Ensemble, of the 50 cooperatives which replied 39 were actually engaged in construction during this period. The table on the following page shows the considerable increase in the number of societies engaged in building operations and the number of houses built. To appreciate these figures it should be borne in mind that in Canada, as a general rule, housing co-operatives do not begin building immediately they are founded, but only after a period of study and accumulation of funds which may last as long as two years. Particularly in the early days of the movement a co-operative founded to build houses for a specific group of families would suspend building activities after completing that task. In Ontario the original inspiration, co-ordination of activities and technical assistance which brought co-operative housing into existence came from the Institute of Social Action of St. Patrick's College in Ottawa. 1 CO-OPERATIVE UNION OF CANADA: Co-operative Housing in Canada (Ottawa, Nov. 1959; mimeographed), p. 2. 97 CANADA Year Co-operatives engaged in building during the year 1943 1944 1945 1946 1947 1948 1949 0 5 9 8 9 14 37 Total . . . Houses constructed 0 34 65 45 65 288 704 1,201 Source : See previous table. A team of experts from the Institute investigated the housing problem and came to the conclusion that the co-operative system should be tried as one possible solution. Not wishing to confine itself to mere theorising, the Institute sponsored a pilot project in which a co-operative was founded and, after nine months' study and saving, began to build homes for its members in June 1953, in the western suburbs of Ottawa, under the name of the Marrocco Home Building Co-operative Society. This name was chosen in honour of Father Marrocco, who was the prime mover behind the Institute's efforts to find a solution to the housing problem. The satisfactory results achieved in this first experiment led to the foundation of similar associations in different parts of the province in the next few years. By 1960, in a matter of seven years, the number had already reached 45.1 In Newfoundland the first step was the founding of the Humber Housing Co-operative Society in 1944, which began to construct houses for its members the next year. But this type of co-operation, which has made a profound impact on the housing campaign of this province, did not really begin to boom until 1950. The main factor to which the expansion of housing co-operatives in this part of the country can be attributed seems to have been Newfoundland's union with Canada in 1949 2, which enabled it to take advantage of the financial facilities offered under national legislation for the construction of new homes. Profiting from the experience of the Humber Housing Co-operative Society, up to 31 July 1960 a total of 36 new housing co-operatives had been established in Newfoundland, and had already built several hundred comfortable and up-to-date houses. 1 See INSTITUTE OF SOCIAL ACTION (St. Patrick's College): Guide to Co-operative Housing, edited by Gerald E. CLARKE (Ottawa, second edition, 1960), p. 95. 2 GOVERNMENT OF NEWFOUNDLAND : Co-operative Housing ; Origin and Outline of Present Plan (1961; mimeographed), p. 1. 98 HOUSING CO-OPERATIVES ORGANISATION The organisation of Canadian co-operative housing does not follow a uniform pattern; it has entirely distinct methods and features in Nova Scotia, Quebec and Ontario, for example. Nova Scotia The pattern of co-operation in Nova Scotia continues to stem from discussion in the study groups organised by the Extension Department of St. Francis Xavier University. Each co-operative thus set up by such a group is a small unit which constructs houses for its members, generally numbering between 10 and 14. All members are required to work personally on the project for at least four hours a day. The group of members is really a team of workers under the leadership of a foreman chosen by the members from among themselves. In each co-operative project construction of all the houses goes at the same pace. For certain specialised jobs skilled workers are hired if they are not to be found within the group. As a general rule, the time taken by these co-operatives to complete their houses varies from 14 to 18 months. Each co-operative handles the entire financing of the project through the Nova Scotia Housing Commission, and retains collective ownership of the homes until the mortgage loan has been paid off in full. Each member is allowed shares in the co-operative worth $1,500 in return for his labour on the project. Additional shares are usually issued for improvements made by a member to his home. If a member wishes to withdraw from his association he must give notice to this effect, whereupon the co-operative will select a new member in accordance with its by-laws. It is generally recommended by the co-operatives that each member should have an insurance policy in an amount sufficient to cover his mortgage so as to safeguard his family in the event of his death before the loan is paid off in full.1 Quebec The beginnings of co-operative housing in Quebec were very similar to those of the movement in Nova Scotia, though without the guidance, co-ordination and assistance of a body such as St. Francis Xavier University in Antigonish. Small groups were formed which, after studying the problems of construction for some time, set to work to build their houses, limiting the project to satisfying the needs of the members of 1 See Joe LABEN: Co-operative Housing Manual (Antigonish, Extension Department, St. Francis Xavier University, 1958), p. 37. CANADA 99 the association. In this way small co-operative units of 20, 30 or 40 members mushroomed all over the province, particularly between 1946 and 1950. This meant that there were often four, six or seven different co-operatives in one town. During this period various methods of construction were tried out and there is no doubt that the results, on the whole, were satisfactory, although quite a number of these groups had to suspend their activities after building only a few houses. These attempts at co-operation, independent and scattered, brought home the fact that if the co-operative system was to make a really significant contribution towards solving the housing problem in Quebec the societies would have to use new methods and adopt some of the operational processes employed by the large building firms. That was how the Drummondville co-operative was born. The purpose of the Drummondville co-operative was not exclusively to satisfy the housing needs of the restricted group of its founder members but to open its doors to all families who wanted a home of their own and preferred the co-operative system, and its foundation marked the beginning of a new era in the history of co-operative housing in Quebec. Following in the footsteps of the Drummondville co-operative there was founded shortly afterwards the Coopérative d'Habitation de Montréal, which started off by tackling the task of building 400 homes and equipping its own workshops. The city of Quebec did not lag behind, and the scattered co-operative groups operating in the metropolitan area were amalgamated into the Coopérative d'Habitation du Québec Métropolitain, which set up its own subsidiary construction enterprises and began to build at the rate of 100 to 125 homes a year. The example set by the big cities was followed elsewhere, although the smaller towns and villages could not profit from the concentration of effort and resources which was producing such good results in the large centres. So a step forward was taken in the organisation of cooperative housing in the province with the founding of the Fédération de Coopératives d'Habitation, which was able to co-ordinate the activities of the small co-operatives and give them any technical assistance they needed, as well as the benefit of the experience acquired by the societies operating in the large centres.1 According to its by-laws, the general aim of the Fédération des Coopératives d'Habitation is to make known the great social advantage that a family can derive from persuading its members to co-operate 1 Albert CÔTÉ : " Les coopératives d'habitation dans les grandes et moyennes villes ", in Ensemble (Quebec, Central Council for Co-operation and Canadian Council for Co-operation), No. 16, 21 Oct. 1959. 100 HOUSING CO-OPERATIVES in the campaign for the safeguarding of family financial and social interests, and, most important of all, to make it easier for the members of its affiliated co-operatives to acquire homes of their own with decent standards of comfort and hygiene. The main functions of this federation, the headquarters of which are in Montreal, are as follows : (a) to study and propagate co-operative principles and methods, particularly as concerns housing; (b) to advise its affiliated societies on legal and technical as well as co-operative matters; (c) to supervise, through its inspectors, all the activities of its member co-operatives and approve their construction programmes and their accounts ; (d) to present a united front in defence of their interests against third parties, including the public authorities, where this proves to be necessary; (e) to buy, sell, hire, store or manufacture such building materials or equipment as are needed, and provide rechnical services requested by affiliated co-operatives. Ontario Co-operative housing in Ontario is based on the " St. Patrick's Plan ", being guided, co-ordinated and assisted by the Institute of Social Action of St. Patrick's College. The St. Patrick's Plan, like the Antigonish movement, maintains that in co-operatives—particularly housing co-operatives—the education of the members should come before construction. Hence in this province, as in Nova Scotia, the study club is the nucleus of the housing co-operative. In Ontario, however, these study clubs are generally larger than those in Nova Scotia, each group consisting of from 20 to 40 families. Furthermore, each study group does not necessarily form a co-operative of its own, since it frequently happens that all the families interested in solving their housing problem by co-operative means in a given town organise themselves into separate study groups and later link up into one single co-operative enterprise in order to make the most of the concentration of effort and resources. The programme for the housing co-operatives following the St. Patrick's Plan consists of three phases: education, organisation, and construction. CANADA 101 Education. The first step is to endeavour to instil the true co-operative spirit into the future members, acquainting them with co-operative principles, methods and practices. Then they must study in broad outline relevant legislation and the various aspects of the venture on which they are preparing to embark, such as sites, finance, house plans, materials and labour. To carry out these studies more efficiently and give people a chance to specialise, the members of each group are divided up into special committees each dealing specifically with one of the major aspects of the housing problem mentioned above. Finally, the future members have an opportunity in these study clubs to familiarise themselves with building terminology and acquire the rudiments of the trade in order to equip themselves for the work they must do later. Organisation. This is the time for decisions. The group, already well informed as to the problems it will have to cope with and the best methods to adopt, applies for legal incorporation as a co-operative and takes its decisions as to the most suitable sites on which to build, the type of housing to be erected, the kind of materials to be employed, the financial plan to be followed, the personal contribution to be made by members and the date on which construction is to begin. Construction. Here, as in Nova Scotia, it is the custom in the co-operatives following the St. Patrick's Plan for each member to contribute his own labour to the building work. In each group members can generally be found with different skills or trades, so that each can be given work adapted to his capabilities. Every member is required, however, to work a minimum number of hours. In view of the need to divide up the work, some are given responsibility for the direction and administration of the project while others work as labourers, but of course all enjoy equal membership rights and privileges. The individual tasks to be performed are allocated in advance, each member being generally called upon to spend from 20 to 25 hours a week working on the project. A member who is unable to work the minimum number of hours required of him must pay cash compensation for the hours he has not worked in accordance with the internal rules. As regards the technical supervision of the project, if there is nobody within the group sufficiently competent and familiar with all the aspects and problems of the building industry a fully qualified building superintendent must be hired. Skilled workers are also taken on as and when needed to supplement members' personal labour. 102 HOUSING CO-OPERATIVES New Trends At the present time the following trends are noted in co-operative housing in Canada, with particular reference to the province of Quebec. Desire for Continuity. One great step forward as compared with the past, when nearly all co-operatives were wound up on completion of the building project for which they had been created, is the new trend in recent years towards maintaining the co-operative in existence after construction is completed and the mortgages paid off. The effect of this trend is that co-operatives can continue to function by providing specific services for the communities they have created, and this, in addition, opens up possibilities of attracting new members and embarking on new building projects. Preference for Amalgamation. The tendency now is to found societies larger than the early associations, or to merge existing small scattered groups into medium-sized units, the reason being that these co-operative enterprises are then in a position to compete in the building industry at least on equal terms, thus ensuring the best facilities for their members. Introduction of Collective Ownership. In an attempt to make a fresh contribution towards solving the housing problem, co-operatives have begun to try out the system of collective ownership, whereby the society retains the ownership of the buildings it constructs, allocating dwellings to its members for indefinite occupancy so long as they comply with the rules. The introduction of this system, which is a common feature of co-operative housing in Europe, particularly in the Scandinavian countries, was fully debated at the Cooperative Housing Congress held in Quebec in May 1959. It was stressed on that occasion that the mass construction of groups of large blocks for these co-operative communities could be helpful in cutting down production costs, as well as bringing decent homes of their own within the reach of the mass of the people. FINANCING Generally speaking, the Canadian co-operative movement has grown and prospered without having to seek special financial assistance from the public authorities. The housing co-operatives have also endeavoured, as far as possible, to find the funds for their own programmes within the CANADA 103 movement itself without seeking credit from outside. An example of their efforts is the project successfully completed in 1959 by a housing cooperative in the township of South Nelson, New Brunswick. This cooperative financed and constructed a group of ten houses of modern style and standards of comfort, at a cost 27 per cent, below the average for the area, without seeking help from any body or agency outside the co-operative movement. The initial loan came from the local credit union, the mortgage was arranged by a life assurance co-operative, and the purchase of materials at wholesale prices was made through the regional consumer co-operatives' federation.1 But this experiment was only possible because the project was a small one. If the Canadian cooperatives were to decide to build only such houses as it was possible for them to finance out of the still limited resources of the national co-operative system, the pace of construction could not be other than very slow, and their contribution towards the solution of so important a problem would be insignificant. Therefore, Canadian housing co-operatives, in addition to drawing on funds available in other co-operative bodies, have not hesitated to apply for assistance from the authorities under both national and provincial schemes, and particularly on a long-term basis, in order to provide the finance for projects whose cost goes far beyond members' modest resources. In Nova Scotia co-operatives have always been able to finance their building operations under arrangements laid down in the province's legislation on the subject. These make it possible for the Nova Scotia Housing Commission, the agency responsible for implementing the province's housing policy, to grant loans equivalent to 75 per cent, of the estimated value of the houses, repayable over a 25-year period at an interest rate of 3]/2 per cent, of the balance outstanding.2 Having obtained such a loan, the member is then left to provide the remaining 25 per cent., which can take the form either of land on which to build or of personal labour during construction. In this way, with the help of an additional loan from the local credit co-operative, members have been able to buy the sites for their homes and take part in the co-operative programme. From data covering the first ten years of co-operative building activity in this province it can be seen that, thanks to the purchase of materials at wholesale prices and effective team work, it was possible to build houses worth $6,000 on the commercial market for between $3,500 and $4,000. The monthly payments which members had to make in order to pay off the mortgage averaged $30, inclusive of interest and taxes. 1 CO-OPERATIVE UNION OF CANADA: Co-operative Housing in Canada, op. cit., p . 3. 2 LABEN: op. cit., p. 8. 104 HOUSING CO-OPERATIVES In 1954 the Canadian Parliament approved a new national housing policy, making it possible to finance building operations with a single mortgage. To encourage finance houses to grant such mortgages the State guarantees repayment of the loan through a special form of insurance. Under this new policy members of co-operatives are required to put down only 5 per cent, of the cost of their houses, in the form of either cash or land. 1 Under the 1954 legislation advances may be made on a mortgage loan while construction is in progress, but 20 per cent, is always held in reserve to provide against any liens registered by third parties and is not paid over until approximately one month after construction is completed. The result of this lien holdback is thai co-operatives must arrange additional interim financing for the equivalent of this 20 per cent. By furnishing short-term credit for this purpose the Canadian co-operative credit unions have played a very significant role in bringing homes to the masses. With perhaps the sole exception of the people's funds in Quebec, co-operative credit unions in Canada do not yet appear to be sufficiently strong to take on long-term mortgage lending, but as far as short-term loans are concerned they have furnished and are continuing to furnish valuable collaboration in the financing of co-operative housing programmes. Co-operative insurance companies have also begun to collaborate in these financial arrangements. To help members to collect the down payment, and at the same time stimulate their interest in the project, co-operatives generally organise their own savings scheme right from the time a study group is formed. In the province of Newfoundland, for example, each member is required from the beginning to deposit monthly savings of $20. This savings programme is carried through until the homes have been completed or until each member has saved approximately $500. This amount together with the labour contributed by a member represents the required down payment.2 Furthermore, the accumulated savings of members enable a co-operative to take the first steps towards the realisation of the project and can be drawn on to meet expenses which cannot properly be classified as building costs but are rather indirect costs which have to be met, as for instance in respect of building permits, incorporation as a co-operative, other legal matters, fire insurance, mortgage applications, plans, the purchase of equipment or interest on short-term loans. 'INSTITUTE OF SOCIAL ACTION (St. Patrick's College): Guide to Co-operative Housing, op. cit., pp. 26 ff. 2 GOVERNMENT OF NEWFOUNDLAND: Co-operative Housing ; Origin and Outline of Present Plan, op. cit., p. 6. CANADA 105 In 1955 the Co-operative Housing Federation of the province of Quebec launched a workers' housing programme which usefully illustrates how Canadian co-operatives have encouraged the participation of workers with slender financial resources by making it easier for them to provide their financial contribution. In order to carry out this programme the workers were grouped into sections of 300 members, each member being asked to make an initial deposit of $100 and a weekly contribution of $2 until he took possession of his new home. He would then have to pay only $48 monthly for 20 years to cover mortgage repayments, insurance and taxes. The Federation obtained the necessary funds through a million-dollar loan extended by the Société des Artisans de Montréal. The type of house selected for this project contains three bedrooms, living room, kitchen-dining room and bathroom, the floor space measuring 50 by 84 feet. SOCIAL SIGNIFICANCE Although great progress has been made, especially in the last 14 y ears towards solving the housing problem, there is no doubt that the problem still exists and gives cause for concern to the public authorities and to national opinion. At the end of the Second World War it was estimated that at least 700,000 homes would have to be built if the housing needs of the population were to be adequately met. This situation has been aggravated not only by immigration but also by a considerable rise in the population and by the high proportion of rural dwellers who have gone into the towns, so that the industrial centres become more and more overcrowded and decent housing for workers and their families becomes increasingly scarce. Faced with this problem the co-operative movement, which has made use of its own organisational structure to satisfy the country's needs in other fields such as agriculture, credit or consumption, has once again tried to play its part by promoting the construction of housing for the people. However, co-operative housing in Canada has not yet reached the same stage of development as other sectors of the national co-operative movement. Taking not just three or four particular provinces but the country as a whole, bearing in mind the extent of the housing problem in the entire national territory and noting the size of the Canadian building industry, it must be agreed that the contribution made by co-operative housing on a national scale is still very modest. On the other hand, what has been done, mainly in the provinces of Nova Scotia, Quebec, Ontario and Newfoundland, means that co-operative housing is to be recommended as a method of assisting low-income 106 HOUSING CO-OPERATIVES families to acquire decent accommodation. The various successful experiments show that co-operatives have been able to help their members to buy land on better terms ; to eliminate a whole series of middlemen in the purchase of building materials; to obtain the necessary financial backing more easily; to create a spirit of collaboration and mutual aid among future neighbours; and considerably to reduce building costs through the mass production of materials, through working on a number of buildings at the same time, and through the personal effort put in by the prospective home owners. Even the partial setbacks met with in the early days by small co-operative groups in some parts of the country have helped subsequent co-operative enterprises to profit from such experience, and to organise on sounder lines. Other provinces have shown great interest in the co-operative system as a means of solving the housing problem, and, in response to this interest, literature has been published and courses, seminars and conferences organised. There is also another important factor which has to be borne in mind when reviewing the prospects of co-operative housing in Canada : as the Co-operative Union of Canada noted in a document on the subject in 1959, it is the rural population which is the most familiar with co-operative principles, methods and practices and whose societies are well organised in the agricultural areas, and hence the hundreds of thousands who in the past few years have migrated and continue to migrate to the cities give evidence of being anxious to continue to enjoy the benefits of co-operation as a means of satisfying their needs, one of the most important of which is accommodation in which they can settle in decent conditions near the industrial centres where they have chosen to work.1 In this way the social impact of Canadian co-operative housing is growing every day, since today it no longer consists solely of scattered societies but is an organised movement; nor does it confine itself to small undertakings, but tackles large projects such as the one initiated in 1961 in the suburbs of Winnipeg, in the province of Manitoba, to provide housing for 4,300 families. With regard to this endeavour the Urban Renewal Board told Winnipeg City Council that the project provided the cheapest method by private enterprise to give low-cost housing on a major scale in that city.2 1 CO-OPERATIVE UNION OF CANADA: Co-operative Housing in Canada, op. cit., pp. 4-5. 2 " Co-op Housing Project Set Up for Winnipeg ", in The Manitoba Co-operator (Winnipeg, Manitoba Pool Elevators), 2 Feb. 1961. CHAPTER X UNITED STATES HISTORICAL BACKGROUND In so highly industrialised an economy as the United States, the co-operative movement might well appear to be of minor importance as compared with other sectors. None the less, the co-operatives are a lively and powerful force, and, though overshadowed by other branches of the American economy, their achievements have placed them in the forefront of the co-operative movements of the world. Co-operative housing does not date back very far in the United States. Without detracting from the merits of some earlier more or less sporadic experiments, its modern co-operative housing has evolved in three distinct phases, beginning in 1926, 1950 and 1960 respectively. As in other countries, the fathers of the movement were trade unionists. In the years immediately following the First World War, although the country had not suffered any destruction, the virtual standstill of activities in the building industry during the war years had considerably aggravated the shortage of accommodation, particularly in the large cities, and rents had steadily risen. A group of workers belonging to a New York trade union, the Amalgamated Clothing Workers, decided to turn to co-operative methods. At first it seemed as though their venture was an unattainable dream, since they were simple labourers who belonged to a credit union operating within their trade union but had no resources of their own other than their wages to cover their needs and those of their families. Moreover, the economic situation during those early post-war years did not make it any easier to tackle such a mammoth task without personal capital. However, having complied with the legal requirements, and after three years of struggle, a housing co-operative was founded as the result of this initiative. Backed in the main by the direct or indirect financial assistance of the trade union, it began to build in November 1926, and only a year later 303 families were already occupying new homes built under this first co-operative project. 108 HOUSING CO-OPERATIVES The success of this enterprise caught the attention of the public. Not only had homes been provided for several hundred families, but the results achieved by this first co-operative project showed that it had been possible to reduce building costs appreciably, while ensuring that each dwelling was comfortable, modern and equipped with full sanitary facilities. Furthermore, this co-operative estate in the centre of New York signified the creation of a new non-profit community with its own shops, day nurseries, recreation rooms and assembly hall, library and transport facilities. As the papers said at the time, this experiment was the starting point of a new era in the solution of the housing problem. This first experiment in co-operative housing was followed by a number of others, particularly in New York. It was not, however, until after the Second World War that the co-operative system became really widespread, particularly in New York City, as a method of dealing with the housing problem. The second phase—expansion on a nation-wide scale—began in 1950 when Congress amplified and amended federal housing policy, laying the legal foundations which have since then facilitated thefinancingof co-operative building all over the country. Not all the societies which were founded at that time, however, were true co-operatives from either the economic or the social point of view. In some cases families needing accommodation readily allowed themse ves to be organised into so-called co-operatives on the initiative of builders who saw the co-operative structure purely as a means of obtaining the benefit of the legislative amendments favouring this type of society. Thus a number of co-operatives were born whose members had not been trained in the true spirit of co-operation and did not know what their obligations and responsibilities as co-operative owners entailed.1 Even those societies, however, accomplished a social mission by at least enabling many families to acquire decent accommodation. The pace at which co-operative housing spread during this second phase may be assessed from the fact that 45,000 new co-operative dwellings were constructed in the eight years following the legislative reform of 1950 under the federal programme of financial aid to nonprofit housing alone.3 | | | T h e development of co-operative housing during this period brought the need for a national co-operative body to unite the movement, coordinate its activities, give technical assistance to existing co-operatives and encourage the setting up of new ones. 1 Jerry VOORHIS : American Cooperatives (New York, Harper & Brothers, 1961 ), p. 49. 2 INTERNATIONAL HOUSING SERVICE, Housing and Home Finance Agency: Co- operative Housing in the United States (Washington, D.C., 1958), p. 8. UNITED STATES 109 However, although all the societies were in agreement on the need to get together to form a central body, divergences of opinion among the existing co-operatives led during this second phase to the forming, not of one, but of three groups. The first group, which grew out of the co-operative founded in 1926 by the workers of the Amalgamated Clothing Workers' Union and the societies established shortly afterwards as a result of this experiment in various districts of New York, formed a body known as the United Housing Foundation. A feature of this group was its burning desire to preserve the purity of the co-operative principles and methods tried and tested with satisfactory results in its own projects. Other powerful trade unions such as the International Ladies' Garment Workers supported this group. The second group was formed not only with the backing of a number of religious and educational institutions but with the financial assistance of the credit unions in the city and state of New York. It founded a new agency under the name of the Middle Income Housing Corporation. A third group, sponsored primarily by insurance companies with a co-operative outlook, set up the Foundation for Cooperative Housing. This body also established its headquarters in New York City, but devoted itself in particular to promoting the formation of housing co-operatives throughout the country. Although the Foundation for Cooperative Housing did a most worth-while job assisting co-operative projects in a vast sphere of action, it has been reproached for not placing enough emphasis on the true co-operative spirit among member families.1 Faced with this situation where the co-operative housing movement had great possibilities opening up before it but was divided into three independent groups, the Cooperative League, which is a national organisation whose activities are primarily directed towards welfare and education, and may be said, broadly speaking, to represent the country's co-operative movement as a whole, endeavoured to unite the housing co-operatives in a single plan of action. With this aim in view it convened the first national conference on co-operative housing in Washington in 1958. The Cooperative League finally succeeded in reconciling the divergent views and created a new superstructure, the National Association of Housing Cooperatives. The founding of this body in May 1960 marked the beginning of the third phase in the development of cooperative housing in the United States. 1 See VOORHIS: op. cit., p. 48. 110 HOUSING COOPERATIVES ORGANISATION As regards the legal framework within which co-operatives operate in the United States, there is no uniformity. Generally speaking, in the absence of any federal legislation on the subject, the early co-operatives adopted the legal forms most in keeping with their own individual characteristics according to the legislation of the different states. In some states housing co-operatives were organised along the Unes laid down by legislation governing consumer co-operatives if such provisions were broad enough to cover co-operative enterprises for the construction and administration of dwellings. In other states co-operatives have operated under laws concerning the construction of low-rent housing or slum clearance in the large cities. As regards the actual way in which they are formed, while some cooperatives have been founded as the outcome of discussions among the people with a housing problem to solve, it is far more frequent for the first move to come from some public or private institution which is interested in this field and decides either directly or indirectly to sponsor a project. The creation of Rochdale Village on Long Island, New York provides a typical illustration.1 Early in 1960 the United Housing Foundation decided to embark upon a new co-operative housing project, to be named Rochdale Village in honour of the fathers of the co-operative movement, and designed for families in need of homes who were ready to join a new community in a particular part of New York City. The scheme was announced by the Governor of the state, who gave an approximate idea of the plans for financing it, and hence of the initial payment which members would be expected to make. Within 24 hours of his announcement 2,000 applications for membership had already been received. A programme was then started for the education of the future residents in co-operative principles, and work began on what was intended to be a new self-sufficient neighbourhood with a highly developed community spirit, made up of families who a short while before had not even known one another. There are two main types of housing co-operative in the United States: (a) those acting as co-operatives only for one or two of the phases involved in the process, such as the purchase and development of land,financing,or the building of the houses; and (b) those which assume full responsibility, where it is necessary to do so, for the purchase and development of land, financing, construction, administration, and provision of additional amenities for the new community. As a general rule societies of the first type allow members to become owners in their own 1 See VOORHIS: op. cit., p . 42. UNITED STATES 111 right, while those of the second type retain ownership of the property and grant their members privileged rights of tenure of the dwellings allocated to them. It follows that co-operatives of the first type are generally wound up on completion of the phase or phases for which the form of a co-operative was adopted; co-operatives of the second type, on the contrary, do not go into liquidation, and hence, after construction is completed and the homes allocated, the members continue to be bound together in a co-operative community with joint administration, services and facilities. In New York, which has been the nerve centre for this type of cooperation in the United States, the most noteworthy housing projects undertaken have been groups of large blocks for the modernisation of the older parts of the town. Following the demolition of slums, apartments with modern facilities are put up, and the new occupants form co-operative communities. These projects fall into the second category described above. In addition a third type of co-operative has come into being. Buildings financed and constructed by the Government, especially during the Second World War, were then offered for sale to the occupants. Seizing this opportunity, co-operative associations were set up which have come to be known as mutual housing associations. The usual way in which these societies are formed is as follows. Where residents in a project vote for mutual ownership a corporation is formed which takes over the operation of the project for a transitional period of two years, with an option to purchase at the end of that time. If this association then exercises its option, a purchase agreement is drawn up. In such cases, the sale price having been fixed by joint appraisal by representatives of the selling organisation and of the purchasing association, the latter takes over ownership of the buildings and is given 45 years in which to pay off the agreed price by regular monthly instalments including 3 per cent, interest on the balance outstanding. The co-operative gives the tenant-member a contract entitling him to perpetual use of the dwelling allocated to him; he makes a monthly payment to the association covering his share of the total purchase price. In order to provide a reserve cushion from which the association can buy up the share paid by members having to withdraw and can assist members over periods of hardship, the members are expected to pay off their debt over a shorter period— generally 30 years—and at a somewhat higher rate of interest than that paid by the association.1 Although the residents in some of these projects 1 UNITED STATES DEPARTMENT OF LABOR, Bureau of Labor Statistics: Organiza- tion and Management of Cooperative and Mutual Housing Associations (Washington, D.C., U.S. Government Printing Office, 1946), p. 14. 112 HOUSING CO-OPERATIVES who organised themselves along co-operative lines during the Second World War were prevented for various reasons from drawing up a purchase agreement, they none the less performed a satisfactory social function by assuming responsibility for the administration of their projects on behalf of the Federal Government. Although it is not so frequent or so characteristic as in Canada for members themselves to help to build their homes, this type of cooperative does none the less exist in the United States. An example is the Penn-Craft Community experiment, sponsored by a private nonprofit body, the American Friends' Service Committee, and launched in 1937 for a group of industrial workers in a mining district. The aim of the project was not only to provide housing but also to give members greater financial security and a more pleasant social life. To facilitate personal ownership the American Friends' Service Committee assumed responsibility for surveying, technical services and installation, for the management and supervision of the building operations and for the financial arrangements. Each member was required to make a down payment of S500, and the Committee arranged for a loan, repayable over a 20-year period at an interest rate of only 2 per cent. This project consisted of individual houses each with its own garden. Members had to promise to devote their spare time to working either on their own homes or on those of their fellow members. Under the Penn-Craft Community building programme, as soon as a member finished paying off his loan he was granted ownership of his dwelling. FINANCING A feature of American housing co-operatives has been their tendency to seek financial aid for building projects from private bodies in the first instance. Families joining a co-operative are naturally required to contribute individually towards the financing of their future homes, and are encouraged to save towards the down payment. However, since members' contributions can only go a small way towards what is needed for the purchase of land and the construction of co-operative projects as big as those which have been tackled, for instance, in New York City, the co-operatives have to seek financial help from outside. The large trade unions, particularly in New York, have played an important part indirectly by procuring loans, offering the security of their own sponsorship of the project. This early method of financing had satisfactory results in specific instances, as evidenced by what was achieved in New York from 1926 onwards. But it placed a very heavy burden on the promoters of the UNITED STATES 113 projects, especially in the early days when banks, insurance companies and other sources of finance were not yet familiar with the technique and characteristics of the co-operative system. In addition it was necessary to explore the possibilities of financing on a nation-wide scale with a view to promoting the founding of housing co-operatives all over the country. In 1939, in its desire to reduce building costs for the benefit of the middle income group, and in particular for families in more modest circumstances, New York became the first state to authorise the use of public funds for loans, and to grant tax exemption, to non-profit organisations engaged in building operations, among which co-operatives already occupied an important place. But the deciding factor which provided fresh impetus for the country's co-operative housing movement was the institution of special financial arrangements by the Federal Government in 1950. Congress amended the Federal Housing Act to bring co-operatives into the federal programme for the insurance of loans, thus making it much easier for them to obtain credit, though still relying on private institutions as their main source of funds. Under this and subsequent amendments to the Housing Act, the Federal Housing Administration (F.H.A.) insures mortgage loans granted to housing co-operatives for up to 90 per cent, of the assessed value of the property—or up to 95 per cent, if at least half the members are war veterans. The repayment period covered by such insurance may be as long as 40 years, this being the maximum period permitted by law. According to official figures, during the first three years of operation of this mortgage insurance scheme the F.H.A. had already guaranteed $211 million worth of private loans granted for the financing of 22,625 co-operative dwellings. An Act passed in 1956 served as a further spur to co-operative housing. It allows sponsoring bodies to obtain loans for up to 85 per cent, of the estimated building costs and start constructing even before the actual society itself is formed. In January 1958 the sphere of action of housing co-operatives was widened still more when they were also granted permission to apply for federal loan insurance under the slum-clearance programme. Legislation in New York State already enabled housing co-operatives to take advantage of the financial facilities offered to companies demolishing old buildings and constructing new blocks conforming to prescribed standards. Under these provisions a number of co-operatives were formed in New York City even before 1950, some of them being financed, at least in part, by trade union pension funds. The land for 114 HOUSING CO-OPERATIVES such projects is generally made available by the city authorities, which prohibit the occupancy of buildings which do not satisfy public health requirements. New construction work is financed through private institutions, such as banks or insurance companies, the city authorities granting the societies a 25-year exemption from the usual tax on new buildings in order to bring down construction costs. In the case of co-operative associations of the mutual home ownership type, whose members are for the most part residents of Governmentbuilt estates and which have been formed in order to take over and administer the buildings they occupy, financing is much simpler. A member's down payment giving entitlement to a dwelling amounts to only 5 per cent, of the cost of constructing that dwelling1, and the main technical and financial problems which beset other types of co-operative do not occur. In these cases it is another body (generally a federal agency) which prepares the plans, finances the project and builds the houses. For these reasons this type of co-operative has attracted much interest from the workers' movement, which considers it to be a good formula for enabling workers to acquire homes. Associations in which members' personal labour is a fundamental element, and it is therefore more difficult, as a general rule, to obtain financial help from outside, frequently adopt the following system: (1) they collect all the money that members have saved; (2) they construct a limited number of dwellings to the extent that such savings allow; (3) the first houses are mortgaged as soon as they are completed, and the funds thus made available are used to begin the construction of a fresh batch of dwellings, and so on. Individual members joining a co-operative for the purpose of acquiring a home in a specific project are normally expected to pay an admission fee and make a down payment sufficient to cover at least part of the initial building costs, as well as paying a monthly rental which goes to pay off the loan and meet administrative and insurance expenses plus some service charges. The revenue from admission fees is used in the main to cover the expenses of forming and incorporating the society. The fee is usually quite low, varying between $50 and $100. The down payment, generally made at the time when construction begins, varies greatly according to the building costs involved in the different projects, which may consist of individual houses or of large blocks of flats for hundreds of families. In most cases it is equivalent to 10 per cent, of the total cost of constructing the particular dwelling. 1 UNITED STATES DEPARTMENT OF LABOR: Organization and Management operative and Mutual Housing Associations, op. cit., p. 15. of Co- UNITED STATES 115 In assessing the cost of each dwelling unit account is taken of a variety of factors including floor space, number of rooms and quality of materials and labour. The monthly rental to be paid once a member has moved into his home also depends on a number of factors such as the sale price of the dwelling, the length of time he has been given to pay off the loan, the interest charged on the loan, the cost of insurance and the property tax he is required to pay. In societies which deal with only one or two of the phases of the co-operative housing process and are then dissolved, the monthly payment is generally agreed on the basis of the individual contract signed by the member and the financing agency which has arranged the mortgage. In the case of housing co-operatives in the proper sense of the term, the monthly payment is generally sufficient to cover both administrative expenses and the cost of services supplied through the society for the benefit of the community. The charges for such services are agreed upon by a majority vote of the resident members at the general meeting. In 1949 in the mutual home ownership corporations formed to acquire projects constructed by the Federal Government the monthly payment which residents had to make ranged between $31.41 and $70.54. In the other type of society, which deals with all the phases of co-operative housing from the acquisition of the land to the administration of the project and the organisation of communal services, the monthly payment in New York City amounted to Î90 in 1949. This type of co-operative society generally signs a collective contract for certain services such as water, electricity and gas, which it then supplies to residents, thereby considerably reducing the cost. For example the Amalgamated Cooperative Apartments in New York arranged with the Edison Company to have one central electric meter for the families on its estate. The same co-operative arranged for bulk purchase of milk, eggs and other basic commodities for sale to resident members at wholesale prices. To make it easier for members to keep up the payments on their homes co-operative housing promoters have spared no effort to stimulate savings. A significant role has been played here by the credit unions, which have special arrangements for the financing of house building. In Michigan, for example, families interested in acquiring a home by co-operative means first of all enrol in a savings scheme, which means that the promoters of co-operative housing there are either the credit unions themselves or their members. The way in which housing co-operatives are financed in the United States is illustrated by the experiment carried out in New York with Amalgamated Cooperative Apartments, which has served as a model for societies subse- 116 HOUSING CO-OPERATIVES quently formed. The initial funds to cover the cost of land and building, amounting to 11,400,000, were obtained through prospective residents' down payments and short-term loans arranged with private institutions. Members' contributions totalled $479,000; $250,000 was lent by The Jewish Daily Forward; $172,000 came from a first bank mortgage on land already acquired, and the rest also came in the form of a loan, from six subsidiary organisations of the trade union which inspired and sponsored the project, the Amalgamated Clothing Workers' Union, which also guaranteed these loans on behalf of the co-operative. When construction was completed the Metropolitan Life Insurance Company arranged a mortgage which covered the total cost of construction, thus making it possible to pay off the short-term loans which had provided the original funds for the project. Once this preliminary stage offinancingwas over, to meet the cost of mortgage payments, interest, land tax (under New York State housing policy the society was granted a 20-year exemption from the tax imposed on real estate), insurance, the administration of the project and certain services such as electricity and heating, the co-operative calculated that each member would need to pay a monthly sum of $10.75 per room until the mortgage was paid off, but decided to charge $11 so as to leave a small reserve margin which could be drawn on in any emergency. This sum was lower than that normally paid by ordinary tenants for a flat in any of the city's modern blocks.1 In 1961, taking a further step towards self-sufficiency, the United Housing Foundation, which has provided housing through its projects for over 20,000 families, inaugurated its own insurance scheme for affiliated co-operatives, the Community Insurance Exchange.2 SOCIAL SIGNIFICANCE One of the outstanding merits of the American co-operative housing movement is that, without having to call on the Government for direct aid through subsidies, it places decent accommodation within the reach of thousands of families who would otherwise not have been able to obtain it. As President Kennedy put it when opening a new co-operative estate for 2,820 families in New York in May 1962, co-operative housing is a programme which helps people to help themselves to solve their own problem. As a testimonial to the solidarity of the co-operative housing organisations it is worth recording that the 13 big co-operative projects constructed during the first phase by the United Housing Foundation were able to survive the years of world economic crisis without having to seek a new method of financing and without the members being forced to leave their homes. One of the positive factors underlying these satisfactory results is 1 Co-operation (New York, The Cooperative League), Vol. XIV, No. 2, Feb. 1928, pp. 23-24. 2 Co-operative News Service (London, International Co-operative Alliance), No. 14, Dec. 1961. UNITED STATES 117 that the residents organised on co-operative lines have been able to hold the costs of administering their projects at a lower level than is possible under programmes where the housing is constructed, financed and administered by public bodies. In this respect testimony before the Senate Subcommittee on Housing indicated monthly per-dwelling operating costs of $5.14 and $5.19 in two mutual housing projects, as against $10 in a nearby public housing project.1 The co-operatives covering all phases from the selection of the site to the administration of the project and the provision of complementary services have not merely helped their members to acquire decent accommodation. The same goes for the mutual home ownership corporations which have acquired property constructed by the Government. They have gone much further, creating a new type of community where neighbours can get to know one another better, since they all have a common interest and participate on equal terms in the financial and social activities organised by the co-operative. Co-operatives of this comprehensive type organise retail shops and day nurseries, as well as libraries, recreation rooms and playing fields, discussion and study clubs, art groups, dances, etc. But one of the most significant social contributions made by cooperatives towards solving the housing problem has been the beneficial influence on family life. Not only have they stimulated the founding of new homes by facilitating the acquisition of decent accommodation, but they have created an environment which favours the development of family life. This is true not only of relatively smaller cities, as exemplified by the Dallas Park Cooperative Housing Association which was able to announce at the end of its first ten years of existence that there had not been a single case of juvenile delinquency within the community and that divorces were few and far between2, but also in cities like New York. The co-operative established in 1926 in Van Cortlandt Park, which is in fact one of the most overpopulated districts of New York, announced that in more than 30 years of existence there had yet to be recorded a single case of serious juvenile delinquency among the hundreds of families living in that development. It is also worth noting that 75 per cent, of the families now residing there are either the same families who founded the co-operative or their descendants.3 Although the most notable achievements of co-operative housing in the United States have been brought to fruition in the country's largest 1 UNITED STATES DEPARTMENT OF LABOR: Organization and Management operative and Mutual Housing Associations, op. cit., p. 15, footnote 13. 2 The Cooperative Builder (Superior, Wisconsin), 19 May 1949. " V O O R H I S : op. cit., p . 45. of Co- 118 HOUSING CO-OPERATIVES city, this does not mean that the co-operative approach to the housing problem has been adopted exclusively in the great urban centres. Of course, no large-scale projects have been carried out in rural areas : the trend has been towards small projects, which have achieved satisfactory results and have signposted the way in which the rural population may be helped to acquire better accommodation on favourable terms. An example of how co-operative energy and methods can be used to aid housing development in rural areas may be taken from an experiment in Oklahoma. This venture had its beginnings in eight villages in the western part of the state under the auspices of the American Legion, a non-profit organisation which is active all over the country, and with the financial backing of the Federal Housing Administration. The great point about this experiment is that it applied to small rural communities methods such as mass production which it had been believed until then could only be used in urban centres. While a project of this type may seem insignificant when compared with the great urban developments (the largest of the 1952 projects consisted of only 50 units and the smallest of 12), they are great and remarkable achievements to the small communities and to the families to whom they render real service. The number of families who obtained homes of their own as a result of these first attempts at co-operation in Oklahoma was 514. Since then further projects of this type have been undertaken in different parts of rural America.1 Although remaining on a minor scale compared with the advanced stage of development in the nation's building industry, co-operative housing today plays an important part in the country's housing policy, and there is every prospect of a steady increase in its contribution towards solving the accommodation problem. Among the positive factors making for the promotion of co-operative housing the following may be mentioned: the growing stimulus and assistance given by the Federal Government to non-profit housing projects, including those organised on co-operative lines 2 ; the continued interest and financial support from workers' organisations 3 ; and the plans to encourage the conversion of municipal housing estates into co-operative mutual housing associations, as has been done in New York City.4 1 Howard Leland SMITH: The Oklahoma Cooperative Housing Story (Washington, D.C., Federal Housing Administration, Cooperative Housing Division, 1952). 2 International Housing Bulletin, No. 6, June 1961, pp. 112-113. 3 Ibid., No. 4, Apr. 1961, p. 79. •VOORHIS: op. cit., p. 51. PART V DEVELOPING COUNTRIES CHAPTER XI COLOMBIA HISTORICAL BACKGROUND Although the co-operative housing movement in Colombia began only a short time before the Second World War, it is one of the most advanced in Latin America. It owed its origins not to any special encouragement by the State but to private initiative by groups of poorly paid clerical workers. In 1936 the country had still not recovered from the effects of the slump which began in 1929. Wage and salary earners alike faced real hardship because of their low earnings and the chronic shortage of housing, which became steadily worse with the virtual standstill in the building industry. It was financially impossible for anyone depending on a small wage or salary to contemplate building his own home, and this gave a group of office workers in the town of Medellin the idea of setting up a housing co-operative as one way of obtaining decent housing for their families. Investigation of the idea began in 1936, and in 1939 the first experiment was launched. ORGANISATION General Characteristics The Colombian co-operative housing movement has the following characteristics: as in Spain and almost all the Latin American countries, it started as an offshoot of the consumer co-operative movement; it caters almost entirely for the middle class; it is an urban movement; and its membership is highly individualistic. At first there were no housing co-operatives as such and departments were set up under existing credit or consumer co-operatives to build houses for members. Houses were looked upon simply as consumer goods as far as co-operative organisation was concerned. Production co-operatives formed by building workers were not successful. The enormous gulf observed in most parts of Latin America between the haves and the have-nots exists in Colombia also. However, the 122 HOUSING CO-OPERATIVES Colombian housing co-operatives draw their members not so much from among the poorest classes as from the middle classes: craftsmen, office workers, teachers, artists, etc. This is not a matter of deliberate choice but reflects the fact that educational standards in the middle class have always been higher while at the same time such persons have not been able to benefit so much from public housing schemes. The Medellin scheme was quickly followed by clerical workers in Bogotá, Cali and Barranquilla and later spread elsewhere. The movement did not, however, cater solely for clerical workers, and successful cooperatives for manual workers were also organised in various parts of the country. Especially at first, housing co-operatives, like most co-operatives in Colombia, were mainly an urban phenomenon, although the bulk of the country's population is rural. It is true that at various times after the passing of the General Co-operatives Act in 1931 isolated attempts were made to organise co-operatives in the rural areas, but it is only in quite recent years that a genuine agricultural co-operative movement has been launched. Plans are now being made to use this as a starting point for a rural co-operative housing movement. In Colombia there have never been any housing co-operatives of the type that is characteristic of the Scandinavian countries and has prospered elsewhere in Europe, as well as in the United States. The general preference of Colombian co-operators is for individually owned houses rather than for projects composed of large numbers of flats. Characteristic Type of Housing Co-operative The usual type of housing co-operative in Colombia caters for future individual owners. Societies generally buy large areas of building land on reasonable terms near the towns and assume responsibility for development (with the help of the local authorities) and for dividing up the site into plots for single-family homes. The co-operative also arranges the necessary loans and awards contracts for the building. In this way cooperatives have constructed a number of residential districts which are among the most attractive in Medellin and a number of other towns. Not all of these schemes have remained co-operative in character. Some societies have been wound up as soon as the building has been completed and the title deeds handed over, the members themselves becoming individually responsible for discharging any outstanding financial obligations. There is then the danger that homes built as part of co-operative schemes may later be sold for speculative purposes on the open market without any control. COLOMBIA 123 In other cases, however, the society remains responsible for managing the estate and retains ownership of the facilities provided for the convenience of the residents, e.g. schools, shops, sports fields, parks. In addition, although the members personally own their homes, they agree at a general meeting on certain rules which they undertake to observe; for example, in no circumstances may dwellings be used except as homes, and it is forbidden to use a dwelling or part of it as a store, workshop or place of entertainment; usually dwellings may not be let, and if they are the co-operative itself must make the necessary arrangements ; and in order to preserve visual unity, no home may be altered without the approval of the co-operative. If the co-operative continues to be responsible for the management it tries to provide various additional services. One of the first ways in which a co-operative helps a member after he has been assigned his house is to advise him on interior decoration or furnishing. Mutual-Help Co-operatives Societies based on mutual help are not very common in Colombia, although experiments along these lines have been made. A good example is the " La Providencia " workers' co-operative in the town of Pereira. The members, most of them skilled building workers, spent three or four hours a day working on the co-operative project after working hours and also gave up free time at week-ends. They were divided into teams according to their trades and could be assigned to work on any house without knowing beforehand which would be allocated to them. It was only after the whole project was completed that allocation was made in accordance with a specially devised system. In this way the co-operative built a modern working-class housing estate for several hundred families. Colombian Federation of Housing Co-operatives Although co-operative housing schemes have been in operation in Colombia for more than 20 years, an organised movement cannot be said to have been in existence for the same length of time, starting as it did as an offshoot of other co-operative movements. According to the official figures, out of 485 co-operatives of all classes in existence in Colombia on 31 December 1950, 253 had rules establishing housing departments. 1 Moreover, the few societies solely concerned with housing which were 1 Sergio CARVALLO HEDERRA: Cooperativas de Habitaciones (Washington, D.C., Pan-American Union, 1952), p. 90. 124 HOUSING CO-OPERATIVES established at a later date began to function as isolated units and neither pooled their resources nor benefited by one another's experience. Gradually, however, the co-operatives felt the need to co-ordinate their work and combine their efforts. After several national conferences on technical subjects, a Colombian federation of housing co-operatives was formed in February 1962. FINANCING As in any other country, the co-operatives are based in principle on the savings which members contribute towards the cost of their housing. In some societies the members make a good deal of their contribution in labour rather than in cash. Nevertheless, since the purchase and preparation of sites and the building of the homes themselves are expensive and members' savings usually very limited, the main source of finance for co-operative housing in Colombia, as elsewhere, consists of long-term loans against mortgages of the property. Credit for housing in Colombia is insufficient for the lower income groups. Whereas in other countries such as Sweden it is possible to obtain mortgage loans covering up to 95 per cent, of the value of the property, so that a member only has to find the remaining 5 per cent. himself, it is common in Colombia for a member to have to find up to 45 per cent, of the total cost. There are two main publicly financed bodies with specific responsibility for financing co-operative housing projects : the Central Mortgage Bank and the National Credit Institute. The Central Mortgage Bank has financed a number of co-operative schemes but its terms are far too stringent for families of moderate means since usually it only lends up to 60 per cent, of the value of the dwelling. It makes these loans not in cash but in warrants or bonds which are subject to 15 per cent, discount. It also takes over the management of the property under mortgage and its interest rates are high while repayment periods are fairly short.1 The National Credit Institute is the body with official responsibility for dealing with housing matters. By law it is required to earmark not less than 20 per cent, of its resources for co-operative housing programmes, but in actual fact few societies have been able to finance their schemes in this way because of the terms demanded by the Institute. 1 Francisco Luis JIMÉNEZ: Estudio General de la Situación Económico-Social de las Cooperativas de Vivienda en Colombia (Medellín, Federación de Cooperativas de Habitaciones de Colombia, 1962; mimeographed document). COLOMBIA 125 This does not mean that the State is unaware of the seriousness of the housing position or is not determined to remedy it. The Government has, for example, made efforts to encourage the private building industry, but this has not been very effective in the case of housing for the lower income groups, which is not profitable. The Government has also launched house-building programmes through the National Credit Institute, which is divided into two departments, dealing respectively with urban and rural housing. The commercial banks usually supply co-operatives with interim short-term loans to finance their building, while final loans are granted against a mortgage. Some co-operatives also have their own credit schemes to finance housing for their members. Thus the Agrarian Credit Fund Employees' Co-operative grants loans to its members against a first, second or third mortgage to finance the purchase, construction or repair of a dwelling or the payment of debts incurred for that purpose. These loans are repayable over a period not exceeding four years. 1 Other occasional sources of finance are local authorities, various private companies which help to finance housing schemes for their workers, and certain insurance companies. To sum up, housing co-operatives in Colombia lack an established system which can supply the credit at low rates of interest and on easy repayment terms which is needed to encourage participation by families of moderate means and make it possible to plan on a comprehensive, long-term basis. SOCIAL SIGNIFICANCE Despite the restrictions, especially of a financial character, which have held back the growth of this type of co-operative in Colombia, the movement's contribution towards solving the housing shortage has been appreciable and is an example of what can be done in this field even with the limited technical and financial resources available in the developing countries. According to the figures for March 1962, there were at that date 60 housing co-operatives in Colombia including several multi-purpose societies which were also carrying out large-scale housing schemes. It is regrettable that many societies, including those which met a great social need by building pleasant residential districts for middle-class families, have been wound up as soon as the building was finished. 1 Orientación Cooperativa (Bogotá, Cooperativa de Empleados de la Caja de Crédito Agrario, Feb. 1962). 126 HOUSING CO-OPERATIVES Co-operatives in Colombia had sufficient land on 31 March 1962 for no fewer than 22,000 homes which were due to be built over the following two years.1 About 30 per cent, of these sites had already been prepared by the co-operatives; a further 30 per cent, were being prepared and the remaining 40 per cent, had still not yet been developed. 1 See JIMÉNEZ: op. cit. CHAPTER XIT INDIA HISTORICAL BACKGROUND Despite the efforts made by the Government of India since independence to tackle the country's housing problem, the shortage of adequate housing for the lower income groups in both towns and villages is still acute, and in relative terms it has even become worse. There are a number of explanations for this deterioration in recent years. In the first place, although India was not in the zone of operations during the Second World War, virtually the whole building industry was paralysed for a long period. Other causes include the refugee problem caused by the partition of the country, the increase in the population, the growing industrial development in the towns, the legitimate desire for better housing among the poor sections of the community as their living standards rise, and the increase in prices of building materials and labour since the war. The Government is relying heavily on the cooperative method in implementing its policy of trying to provide adequate housing for a large section of the population. The use of co-operative methods to provide housing is not, however, new in India, since the earliest society of this type was estabUshed nearly half a century ago in Bombay with such success that it has served as a model and an inspiration for later co-operatives. Despite this, the co-operative housing movement did not manage to develop sufficiently to play a significant part in solving housing problems during the 35 years which followed the founding of the first society. It was only from 1950 onwards that co-operative housing began to develop under the influence of the first two five-year plans. Table V shows the progress of housing co-operatives in India during part of this period. ORGANISATION The development of the movement has not been uniform. The former state of Bombay (now divided into Maharashtra and Gujarat) has 128 HOUSING CO-OPERATIVES TABLE V. INDIA: DEVELOPMENT OF HOUSING CO-OPERATIVES, 1957-60 Year Co-operatives Membership Housing units built Value in thousands of rupees 1957-58 1958-59 1959-60 4,177 4,744 5,563 249,302 281,642 322,000 44,345 44,721 45,675 342,670 331,682 384,100 Source: INTERNATIONAL CO-OPERATIVE ALLIANCE: Statistics of Affiliated Building and Housing Cooperatives (London, 1962; mimeographed document). taken the lead, with 48 per cent, of the total, and the other regions in order of importance are Madras, Andhra Pradesh, Mysore, Punjab and West Bengal. There are four main types of housing co-operative: (i) societies organised by building workers for the purpose of building homes for sale on the housing market; (ii) societies specialising in supplying loans to finance house building. These are, in fact, housing credit co-operatives; (iii) societies established to acquire sites for members' future homes. It sometimes happens that these societies also help their members over other phases of the building process, e.g. site preparation, finance or technical matters; (iv) societies which retain ownership of the property. These co-operatives assign dwellings to their members as if they were their own, but members can only dispose of them subject to certain restrictions laid down in the rules in order to prevent possible speculative selling. Co-operative communities of this sort have provided such facilities as electricity, roads, schools, hospitals, sports fields and sewers. In other states housing co-operatives have been organised for particular sections of the population. For example, in Maharashtra, Madras and Gujarat societies have been set up for industrial workers, poorly paid clerical workers, backward sections of the population and persons made homeless by floods. In Andhra Pradesh, Madras, Punjab and Madhya Pradesh societies have been formed for civil servants, and in West Bengal this method has been used to help large numbers of refugees to acquire new homes. Of the different types of housing co-operatives encountered in India, the most widespread is the fourth. Although there are a number of variations on this model, most of the societies formed in recent years, especially in Maharashtra, consist of individual co-operative projects for communities or estates along the lines of garden cities with all the INDIA 129 necessary services. By and large, the pattern of organisation is akin to that of some of the European and North American housing co-operatives described earlier. The co-operative itself retains ownership of the property, installations and surrounding land. Each member lives in his home as if it were his own and makes a down payment in the form of share certificates, followed by monthly payments which include repayment of such loans as he may have needed. A Co-operative Housing Federation was founded at Bombay in 1948 with the following objectives: to acquire land, houses and property, both movable and immovable, for the benefit of the Federation or its members and to expend money as may be deemed necessary in cultivation and development; to take steps for procurement of building materials by member societies ; to advise, guide, assist and inspect member societies and arrange for efficient and regular supervision; to assist member societies in obtaining loans ; to convene periodical meetings and conferences.1 Since then other states have set up similar federations as the first step towards the formation of a nation-wide confederation covering and serving all the housing co-operatives in the country. FINANCING The cost of co-operative housing schemes in India is largely met by financial aid from the Central Government under its national housing plan, supplemented by special schemes by a number of states to help particular sections of the population. This does not mean that members are not asked and encouraged to contribute towards the cost of their own homes, but, as noted earlier, even in the most highly industrialised countries the cost of building is such that societies of this type have to rely to a large extent on external sources of finance. Although in India, as everywhere else, the movement relies heavily on these outside sources, there is no change in the essential co-operative principle that success depends on an initial contribution from each member followed by regular repayments of the mortgage loans. Financial and other assistance from the Central Government to co-operatives of this type is given as part of the national housing policy, which in turn is dovetailed into the country's general economic development in accordance with the five-year plans. 1 UNITED NATIONS: Housing through Non-Profit Organizations, op. cit., p. 113. 130 HOUSING CO-OPERATIVES The main schemes by which co-operatives can benefit under the Government of India's housing policy are as follows: Subsidised Industrial Housing Scheme The scheme for subsidised industrial housing, which was started in 1952, recognises the great importance of housing co-operatives. During the secondfive-yearplan some changes were fnade in the terms on which loans and subsidies are provided. At present the Central Government lends co-operatives up to 65 per cent, of the estimated cost of a house or housing scheme for industrial workers, and also grants a subsidy equal to 25 per cent, of the building cost. Industrial workers who are members of a co-operative can obtain a further advance—which is not repayable— from their society's welfare fund. This advance may be up to 10 per cent. of the building cost, so that the scheme meets the whole cost of housing for eligible workers. Low Income Group Housing Scheme Under a scheme started in 1954 persons whose annual personal income does not exceed 6,000 rupees can obtain a loan which may cover up to 80 per cent, of the cost of their dwelling, including the land. Generally speaking, the cost of building a house under this scheme may not exceed 10,000 rupees, so that the maximum loan granted under it may not normally exceed 8,000 rupees. Under the third five-year plan, which is now in operation, at least a third of the money made available under this scheme must be used to finance the purchase of adequate housing for the worst-off sections of the community whose annual incomes do not exceed 1,800 rupees. These loans are not usually made direct to individuals, however, but to non-profit organisations, to be channelled where possible through co-operatives specially set up to serve these sections of the population. Normally, loans given under this scheme are charged at 5 per cent, interest and are repayable over periods of up to 30 years. Middle Income Group Housing Scheme The middle income group is here defined as the section of the population in which annual family incomes are higher than 6,000 rupees but lower than 15,000. Loans can be made covering up to 80 per cent, of the cost of building (including the land), subject to a loan ceiling of 20,000 rupees; the cost of a house built under the scheme may not normally exceed 25,000 rupees (excluding the value of the land). Loans are INDIA 131 repayable over 25 years, and the interest rate is 5 ]/2 per cent. The states obtain the necessary funds to finance the scheme from the Life Insurance Corporation. As a rule, financial arrangements for these loans are not made with individual borrowers but with co-operatives set up to carry out housing projects for the middle income groups. Village Housing Projects Scheme Housing co-operatives consisting of individuals living in certain rural areas are given financial aid in the form of loans which may cover up to two-thirds of the cost of construction. Normally, houses built under the scheme may not cost more than 5,000 rupees, since these co-operatives require members to build their own homes. A period of up to 20 years is allowed for repayment of the loans, and interest is charged at the rate of 5 per cent. Although financial assistance is provided for purchasing the land needed for streets and communal buildings, the scheme is based on mutual aid by the members themselves.1 The national housing policy of the Central Government is normally supplemented by the state governments, which have their own co-operative departments to help in forming societies among the sections of the population that such schemes are designed to benefit. In addition the state governments assist co-operatives in purchasing and developing building sites, drawing up the plans, obtaining materials and estimating costs. Some states also have their own housing schemes, which are largely based on a co-operative form of organisation, and have even set up their own financial agencies to help finance the national schemes or to finance local schemes designed to help a particular section of the state's population. Thus in Maharashtra State the Government, through the welfare department, has granted loans and subsidies to finance the co-operative housing of sweepers. In the Bombay metropolitan district it is also helping, through the Maharashtra Housing Finance Society, to finance co-operatives covered by national low income group housing schemes. In Madras the Government has not confined itself to granting loans but has helped housing co-operatives as well by giving them advice on technical matters and preferential treatment in the purchasing of land 1 H. D. NARGOLWALA: "Co-operative Housing—Problems and Perspectives", in All India Co-operative Review (New Delhi, National Co-operative Union of India), Vol. XXVII, No. 6, Sep. 1961, p. 382. 132 HOUSING CO-OPERATIVES and materials. The state of Madras has also launched a scheme to clear the overcrowded city centres by organising co-operative communities in satellite cities equipped with all the necessary services.1 As the great majority of families seeking decent housing cannot afford a substantial down payment towards the cost of their homes and since financial institutions in the developing countries are not usually in a position to make low interest loans to co-operators for this purpose, it is quite common in India for members of co-operatives to supply their labour instead of a cash contribution. Under the third five-year plan a major effort is being prepared to foster credit co-operatives with the aim of encouraging small personal savings and using them to finance housing schemes. SOCIAL SIGNIFICANCE When related to the magnitude of the housing problem affecting large sections of the population, or compared with the total number of dwellings built in India from 1950 to 1960, the number of houses built by co-operatives in those years appears at first sight to be an insignificant contribution towards solving the problem. Although the Government of India has, especially since the achievement of independence, carried out some impressive housing projects and used the opportunity to encourage co-operative organisation, this type of co-operative does not yet appear sufficiently mature in India, nor is it yet established on a nation-wide scale. This goes to explain why the movement has not made the fullest use of the facilities made available to it under the schemes launched in recent years as part of the Government's housing programme. Nevertheless, co-operatives have begun to make a definite contribution towards easing the housing shortage. The number of housing co-operatives doubled between 1955 and 1960, and both their membership and their registered capital showed marked increases. Bearing in mind, therefore, the difficulties occurring in the developing countries, it can be said that in recent years the Indian co-operative housing movement has made significant progress. Housing co-operatives have made no mean contribution within the limitations imposed by their resources, and they have been of special assistance to the low income groups in towns and villages alike, but above all to the industrial workers in the big cities. 1 UNITED NATIONS: Housing through Non-Profit Organizations, op. cit., p. 113. CHAPTER XIII UNITED ARAB REPUBLIC HISTORICAL BACKGROUND The history of the Egyptian co-operative movement falls into three periods, beginning in 1908, 1923 and 1953 respectively. The first period was composed entirely of private efforts, without any official backing. A number of experiments were made in both the towns and the villages, especially in the field of consumer co-operation, but no attempt was made to use this method as a way of tackling the housing problem. In 1923 the Government began to take an interest in the movement and passed the first enactment on the subject which has since been amended a number of times. The passing of this Act marked the beginning of the second stage in the development of the movement, during which a number of efforts were made by members of the public to organise co-operatives of various types for different economic or social purposes. These were for the most part farming and consumer societies. The modern Egyptian co-operative movement, however, only began in 1953, which marked the start of the third period in the movement's history. One very important factor in its development during recent years has been the fact that the Government has shown growing appreciation of the social and economic advantages afforded by co-operation and has therefore made provision for the movement in its economic development plans. Housing co-operatives only date from the beginning of the third stage in 1953. ORGANISATION Like the other types of society, Egyptian housing co-operatives have only sprung up in the past decade as a result of Government encouragement under the national housing plan; this encouragement was given legislative expression in Acts Nos. 317 of 1956, 267 of 1960 and 319 of 1961. In 1961 the Government set up a special body, the Egyptian 134 HOUSING CO-OPERATIVES Organisation for Co-operative Housing, to provide technical and financial assistance to this type of society. Co-operative housing in Egypt has been mainly a middle-class movement. Originally it consisted of local societies which subsequently formed regional federations. A number of the local co-operatives are formed by persons in the same occupation, e.g. army officers, university teachers, officials of the judiciary, police officers. In accordance with their members' wishes, Egyptian housing cooperatives have concentrated on building single-family homes for their members, but in recent years they have also put up large modern blocks of flats surrounded by gardens and equipped with efficient communal facilities. These co-operatives do not themselves normally engage in house building for their members. In most cases they use private subcontractors, either direct or through the General Organisation of Contracts. There are also a few Egyptian co-operatives consisting of building workers which provide employment for their members and help to deal with the housing problem by carrying out the various building operations involved in housing projects. Farming co-operatives, most of which are multi-purpose societies, usually have their own departments specialising in building homes for their members, in most cases as part of the National Land Reform Programme. Self- or mutual-help house-building schemes are not unknown in Egypt either, but have mainly been used in rural areas, hitherto only on an experimental scale. Nevertheless, the success achieved in the few cases where the technique has been used suggests that it might help to solve the housing problem in the rural areas if organised along cooperative lines. Some Egyptian co-operatives transfer ownership to their members as soon as their financial obligations are paid off, while others retain ownership of the property and allow their members to become privileged users. FINANCING There is no co-operative in Egypt with sufficient resources to finance its own house-building programmes and, as almost everywhere else in the world, the movement depends to a large extent on outside funds, mainly from the Government. The Government recognises the important part that co-operation can play in overcoming the housing shortage, which is particularly acute for UNITED ARAB REPUBLIC 135 families in the lower income groups, and finance is made available to the movement as part of the national housing programme. At first, Government aid, which could amount to 60 per cent, of the total cost of a project, consisted mainly of loans which the Government paid direct to the bank to finance the building operations. These loans bore a low rate of interest (3 per cent.) and were repayable over 20 years. Nowadays, financial aid made available by the Government through the Egyptian Organisation for Co-operative Housing may amount to 70 per cent, of the cost. The interest rate remains at 3 per cent., and the repayment period is still 20 years. Another official step to help the financing of co-operatives has been to entitle co-operatives to acquire publicly owned land at cost for use as building sites. Apart from the Government, there are a number of other financial institutions which make funds available for building co-operatives. These include the commercial banks, insurance companies, the postal savings scheme, the co-operative social security scheme, the savings funds and a number of private firms which contribute towards the cost of homes for their workers. Their loans usually cover up to 60 per cent, of the building cost and bear an interest rate of between 5 and 6 per cent. Naturally, the members themselves must, in accordance with cooperative principles, contribute something towards the cost of their homes, although the amount required depends on the type of scheme. In the case of homes which will become their personal property, members must put down at least 30 per cent, of the total cost and pay off the remainder in monthly instalments. On the other hand, in the case of large blocks of flats or housing estates which remain the property of the co-operative and in which the residents are simply privileged users, members need only purchase five share certificates for each room in their dwelling, in addition to which they must also pay a small monthly charge by way of rent for the accommodation allocated to them. In some cases, Government aid for housing for wage and salary earners of moderate means has been somewhat more generous. For example, when a co-operative estate of 300 houses was built near the Dokki Agricultural Museum, the manual and clerical workers who received homes under the scheme were only required to make a down payment equal to 10 per cent, of the total cost, i.e. between E £400 and 600. The Government loan financing the remainder was divided into monthly instalments which in no case exceeded the rents payable in the district for similar housing, the big difference being that in this case the residents became owners of their homes after 15 years. 136 HOUSING CO-OPERATIVES SOCIAL SIGNIFICANCE Between 1953 and 1963 Egyptian housing co-operatives built about 4,000 homes and established a number of new communities with all modern services (except schools and hospitals, which are provided by the local authorities). Encouraged by this success and the financial facilities offered by the Government, public opinion in Egypt has shown a marked interest in co-operation as a way of dealing with the housing problem. In 1954 the Government launched a six-month campaign to call the public's attention to co-operation as a way of providing houses, but since then the pressure to start co-operative building schemes has come from the public itself. In recognition of this, the Government established the Egyptian Organisation for Co-operative Housing and started a five-year cooperative housing plan (1960-65), for which it earmarked a sum of E £15 million, with an intermediate target of 5,000 completed homes by the end of 1963.1 1 Information provided by the Egyptian Organisation for Co-operative Housing. PART VI CO-OPERATION AND THE HOUSING PROBLEM IN THE DEVELOPING COUNTRIES CHAPTER XIV SUGGESTIONS FOR ADAPTATION OF THE CO-OPERATIVE FORMULA IN DEVELOPING COUNTRIES Shortage of housing is not a problem which affects only the developing countries. Broadly speaking, there is not a single country where shortages of decent accommodation do not present a serious problem, but the experience gained in the more industrialised countries may be useful to those in the course of development. Co-operative methods have been shown to have real advantages in helping to solve the housing problem. The preceding chapters give an account of what has already been done in some countries. Without in any way suggesting that the developing countries should blindly follow patterns that have been tried out in more industrialised countries, it may be said that the co-operative principle of encouraging people to help themselves is likely to be of particular value for developing countries. It would be utterly wrong to treat the co-operative formula as a panacea, however; it is not the only way of solving the housing problem; nor is it the easiest or the quickest. Even in industrialised countries where great co-operative enterprises are now flourishing, many of the earlier attempts met with failure, although not because co-operative methods were used but owing to the way in which the co-operative formula was applied to deal with a particular situation. Moreover, the lesson of these setbacks has helped the societies founded subsequently to avoid making the same mistakes. Organisation THE THREE BASIC FORMS In housing co-operatives, as in other types of co-operative, the members are the foundation on which the organisation is built up. The descriptions given in the preceding chapters show that there are three main ways in which families needing accommodation may unite to form a co-operative. These three forms differ in the degree of active participation required of members in founding and operating a society. 140 HOUSING CO-OPERATIVES (1) The form which demands most direct participation by members is undoubtedly the self-help type of co-operative, of which examples are given in Chapter IX. Those interested first form a group to discuss their housing needs and possible ways of satisfying them, and only later do they found a society and begin construction, in which all members participate directly through their personal labour. It is a very simple and practical form of organisation which may be useful in dealing with housing problems in areas which are mainly rural, with settlements or small towns. (2) The characteristic feature of the second form is that there is a promoting body—generally another non-profit organisation—which conceives the project, buys the land, takes the first steps towards executing the plan, and contacts persons interested in acquiring a home by participating in a particular co-operative programme. This system has been followed in various countries, particularly in urban areas. The role of the members in this case, especially as far as the actual building is concerned, is more passive and indirect. The main danger is that societies may be formed which are co-operatives in name only. Nevertheless, where efforts have been made from the outset to see that the prospective residents are educated in co-operative principles, and there has been a central co-operative body to co-ordinate such activities and promote the purposes of the movement, this method has resulted in the establishment of successful co-operative communities. (3) In the third form, instead of having an outside sponsoring body, there are " mother " societies engaged in house construction in one area or another all the time, and individuals frequently join them without reference to any particular building project. As soon as he joins, a member begins to participate actively in the affairs of the society, and prepares to form part of a " daughter " co-operative to comprise all the future residents in a new project. There is a central body for the whole country, with " mother " societies in all the larger towns and " daughter " co-operatives for each housing project. The whole system is run by the members through their representative authorities. Despite its apparent complexity, this form of organisation contains valuable and positive features which could be adapted to less industrialised countries. SELECTION OF THE TYPE OF CO-OPERATIVE As shown in the previous chapters, co-operative housing can be organised in a number of different ways. Methods which have been highly successful in one country have often been less effective when transplanted to another environment. The following remarks about the SUGGESTIONS FOR THE DEVELOPING COUNTRIES 141 main types of housing co-operatives mentioned in this study may be helpful in selecting the features that can be adapted to local conditions to foster co-operative housing in the developing countries. Comprehensive Housing Co-operatives Experience shows that a society which retains ownership of the property (while treating its members as privileged users) can do most to create a co-operative spirit. Where a permanent relationship exists, many community facilities can be provided (e.g. kindergartens, recreation rooms, playing fields, libraries, shops). These are housing co-operatives in the proper sense of the term. Their features include the following: (i) They make better use of the building land available. This is an important advantage in the case of projects near big towns, since the housing problem is tending to be aggravated by such factors as the rise in population, higher living standards, a higher marriage rate, greater economic independence for young people, higher expectation of life and an influx of people from the rural areas in search of better jobs in the towns. This argues in favour of larger projects, especially since in a few years' time it will undoubtedly be difficult to find land for building in many towns in a number of countries. (ii) It creates a joint interest in the upkeep of the building or group of buildings in the project, while individual members who have the same security of tenure as if they personally owned their dwellings tend to take more interest in the care and decoration of their homes. (iii) It eliminates any possibility of speculative selling. Not only are members unable to speculate at all during the stages preceding completion of the project, but they are not allowed to sublet except subject to certain conditions which are laid down in the rules specifically to prevent any transactions for profit. (iv) It makes it easier to move to a new home on the same project if family circumstances change, e.g. as more children are born. (v) It offers scope, especially on big housing schemes for several hundred families, for employing co-operative techniques to maintain quality and cut costs, as compared with the open building market. (vi) It acts as a practical school of democracy, creating close links between families, who learn to live together in a community by taking an active part in the management of their project and making use of the same communal services. 142 HOUSING CO-OPERATIVES Personal Mutual-Help Co-operatives In order to encourage wage earners in the lower income groups or rural dwellers to acquire adequate housing, the developing countries might consider adapting the type of personal mutual help co-operative described in Chapter IX. These societies are remarkable for the practical way in which they tackle their difficulties, and for their small-scale but effective achievements in cases where large-scale projects are out of the question. Another advantage of this type of co-operative is that, by allowing members to contribute their own labour, it stimulates their initiative and attaches them to their new homes, as well as creating close community links among the group as a whole. It is easier to provide adequate housing for families of limited means in this way because members are able to contribute their own labour to make up for not having the money needed to finance any other type of construction. At the same time this reduces the amount of capital and interest to be paid off. In planning mutual-help schemes, it is advisable to draw on the experience of other countries in this field (examples being given in Chapter IX) and to begin by organising a campaign to inform and educate members so that they can play the most active part in the project. The next step is to enlist the interest of central governments and local authorities so that they can make the necessary arrangements to provide finance, as well as to secure the collaboration of universities, trade unions and other non-profit bodies operating in the same field. Logically the resources of the separate groups should then be combined by forming a regional or national federation which can teach them to make better use of co-operative techniques. In 1956 the Sixth Conference of American States Members of the International Labour Organisation stated in paragraph 26 of the general resolution concerning co-operatives— Where housebuilding schemes are being developed through non-profit institutions or aided self-help schemes, consideration should be given to introducing into them some of the techniques of co-operative organisation, notably those designed to secure and retain the interest of occupiers in property maintenance and management, as well as to secure the advantages of joint purchase and ownership of land and bulk procurement of supplies and materials.1 Co-operatives of Future Owners The comprehensive form has not always been accepted in some countries, where members either insist that their homes should become 1 Official Bulletin, Vol. XXXIX, 1956, No. 8, p. 465. SUGGESTIONS FOR THE DEVELOPING COUNTRIES 143 their personal property or national legislation requires a co-operative to hand over the title deeds to its members once construction is completed. When, for legal or financial reasons or because of members' own preferences, a co-operative hands over the title deeds, it should in all cases take adequate precautions to forestall speculation. The following measures can be recommended : The co-operative should be given a preferential purchase option. It should be agreed that no dwelhng can be sold to a third party except with the consent of the management committee and at a specified price based on an agreed estimate. The member should undertake not to let or sublet any part of his dwelling except with the prior consent of the management committee and even then only temporarily and subject to certain conditions. The member should agree, in the event of the winding-up of the society, to sell the whole of his property through the co-operative, any surplus over the original investment being shared out, but only after making due allowance for depreciation so as to ensure that members do not make a profit. Any balance then outstanding could be used to promote this type of co-operation or to help any other non-profit body. Management Co-operatives In the case of co-operatives for future owners, it is quite common in some countries for societies to be wound up as soon as the building is completed, and sometimes even beforehand. In other words, the cooperative system is only used in the stages involving building, land purchase, site preparation and finance. But in many countries cooperatives remain in existence and take over the management of their projects, or alternatively new societies may be established for the purpose. As a rule, the members of these management co-operatives individually assume a proportionate share of the obligations incurred, and a cooperative form of organisation is used for the actual management of the project and the provision and operation of any extra services for the community as a whole. Although it is common for co-operatives which retain the ownership of property to continue to manage it as well, there are some countries where the usual practice once the building is completed is to form a new society consisting of the privileged users of the housing. This new co-operative takes over the management of the project and the obligations in the form of mortgage loans. 144 HOUSING CO-OPERATIVES The co-operative management of housing schemes by the residents themselves has usually led to high standards of maintenance, not only of the buildings themselves, but also of the streets, avenues, gardens and communal services which are usually part of the purpose of co-operative housing schemes. Local urban authorities faced with the need to find the money for large housing schemes for families in the lower income groups might therefore consider the advisability of forming management co-operatives to enlist the residents' interest in matters affecting their own housing. They would thereby relieve themselves at the same time of the tedious responsibilities of property management and ensure that the houses and services themselves are well maintained. They might also consider whether it would not be better to transfer ownership of the property to the residents organised in a mutual ownership association, which could take over the management and financial obligations. Moreover, maintenance and administrative costs are usually lower in co-operatives than on municipal estates, where the residents have less incentive to look for ways of saving money. Tenants'" Co-operatives The system of tenants' co-operatives is also worth study because by eliminating the initial payment it makes it far easier for many families of moderate means to acquire decent housing. Governments might encourage schemes of this kind by giving existing co-operatives facilities for obtaining additional finance for the purpose. Such a scheme, on the lines discussed in Chapter V, could be launched in countries where there is already a soundly based co-operative movement which is in a position to benefit from experience in this field. Building Workers' Co-operatives Another form of co-operative organisation which has not yet been widely used in many countries as a means of overcoming the housing shortage is the co-operative formed of building workers. This type of society has done much to bring about high standards of housing and has made it possible for thousands of families in the lower income groups to acquire their own homes. It has a variety of useful features which are worth examining with a view to their introduction in less industrialised countries. SUGGESTIONS FOR THE DEVELOPING COUNTRIES 145 Certain Essential Requirements CO-OPERATIVE EDUCATION AND TRAINING Experience in countries with a long history of co-operation has shown that, whatever the problems involved in finance, land purchase and development or actual building, the first essential is a true co-operative spirit, and this is something frequently lacking among prospective co-operative dwellers. Before the actual societies are formed, an educational campaign is likely to be required which is by no means confined to the four walls of the schoolroom, in order to provide a new concept of community life and encourage active participation. At the same time competent leaders can be trained to run the future undertakings, and basic instruction can be given in the building trades. The study group method described in Chapter IX could be of particular value for self-help co-operatives. Experience in countries where the co-operative movement is highly developed has shown that educational programmes must be designed for both members and employees, providing a systematic series of courses and a good information service. It has been found that, even after the educational courses have been completed, large societies must encourage personal contact between leaders and members, and among the members themselves, for the purpose of discussing the problems of their future housing programme. To supplement the formal co-operative training in this way regular informal family meetings are organised, particularly on traditional festive occasions, so as to maintain members' interest and enthusiasm. It is therefore very important that, wherever it is intended to adopt the co-operative system as a means of solving the housing problem, thought should be given first of all to the planning of a good educational programme geared to the particular situation of the country. Many people join a co-operative simply because they need a home and feel that an organisation of this type may offer greater financial facilities, but they do not know, and often do not want to know, anything about the principles and methods of co-operation. An educational campaign of the type suggested might be centred around study groups, lectures, discussions and publications, and help might be sought from workers' organisations, adult education centres or other institutions in the country.1 1 Realising the importance of co-operative education and training, the I.L.O. has issued the following publications: An Introduction to Co-operative Practice, Studies and Reports, New Series, No. 32 (Geneva, 1952) ; Co-operative Management and Administration, same series, No. 57 (Geneva, 1960); Co-operation, a workers' education manual (Geneva, 1956). 146 HOUSING COOPERATIVES FEDERATION OF SOCIETIES A national federation can be of great value in co-ordinating activities and providing technical and legal facilities. What frequently happens in some countries is that isolated societies are formed which have to embark upon a venture fraught with problems as regards organisation, financing, technical surveys, the supply of materials, construction and project administration without being able to draw on collective experience, both good and bad. If co-operation is to make a significant contribution towards solving a country's housing problem it is strongly recommended either that a central body should be set up or that the existing co-operatives should co-ordinate their efforts through a national federation. Owing to the volume of its operations on behalf of its affiliated societies, such a body would be able to reduce building costs by applying co-operative methods on a national scale, purchasing materials and equipment wholesale and even entering the field of production. It could also provide the services of architects, lawyers, auditors or draughtsmen, whom it would be very difficult, if not impossible, for local co-operatives on their own to engage. Once the federation was established it could also assume responsibility for promoting the formation of new housing co-operatives in the country, in the light of national needs and in accordance with a plan of action previously drawn up as part of the government's social policy. RELATIONS BETWEEN CO-OPERATIVES The co-operative movement comprises a number of branches catering for different needs, but the basic organisational principles and the ultimate purposes are always the same, because co-operation is a single movement even though the industrial developments of modern times have led to specialisation, the division of responsibilities and the restriction of functions to certain clearly defined social objectives. There is, therefore, a natural tendency for branches of the co-operative movement to complement each other, and advantage should be taken of this fact in carrying out any type of co-operative programme. Thus, co-operative building schemes should be supported by savings, credit or insurance co-operatives and by consumer and industrial production societies such as building workers' co-operatives or associations of handicraft workers that might be set up under the same auspices. When establishing housing cooperatives in the developing countries, it is important to maintain contact with other sections of the movement, not only locally but nationally and internationally as well. SUGGESTIONS FOR THE DEVELOPING COUNTRIES 147 ECONOMIC ORGANISATION While there is no doubt that co-operative methods can permit considerable savings in the acquisition of land, the purchase or manufacture of materials, building and maintenance, the success of a housing co-operative depends on thorough preliminary study, a true co-operative effort on the part of the members, and able and informed leadership. NORMAL MARKET PRICES One of the most significant contributions of co-operative housing is to reduce building costs through joint effort. However, this legitimate interest in bringing down costs so as to make it possible for a greater number of people with low incomes to acquire homes through cooperative projects should not lead co-operatives to calculate the financial contribution to be made by members on the basis of actual costs, as this would expose them to a grave risk. Co-operatives can bring down costs by eliminating speculation, purchasing materials wholesale or going in for production themselves, but it is sound financial practice, and in line with the original Rochdale principles, for the members' contribution towards costs to be based on normal market prices. This practice is generally followed by consumer societies, and it can also be applied by housing co-operatives, which thus have a buffer against any possible contingency. The co-operative usually returns any surplus to its members at the end of the financial year, once all the costs of amortisation, interest, management, taxes and services have been met. National Housing Policy The housing problem in any one country cannot be considered in isolation from the economy as a whole and must be related to the whole process of economic development. In this connection the International Labour Conference stated in the Workers' Housing Recommendation, 1961 that— Housing policy should be co-ordinated with general social and economic policy, so that workers' housing may be given a degree of priority which takes into account both the need therefor and the requirements of balanced economic development.1 1 The full text of the Recommendation is given in the Official Bulletin, Vol. XL1V, 1961, No. 1, p. 4. 148 HOUSING CO-OPERATIVES Co-operation as one of the methods of tackling the housing problem will develop on a larger scale if a country possesses a national policy defining the legal position of housing co-operatives, the measures that can be taken to encourage them and their position in the over-all housing and town-planning programme. SPECIAL LEGISLATION Experience shows that co-operatives function more smoothly and efficiently if the legal framework within which they operate is clearly defined. In many countries the co-operative housing movement at first had to adjust itself to earlier legislation governing associations of other types. But it is very difficult to adapt general company law to the complicated forms of organisation and operation peculiar to housing co-operatives. In other words, a country wishing to encourage cooperative organisation in housing should have special legislation which recognises the distinctive characteristics of this type of society, protects its organisation and operation, and makes provision for technical and financial aid.1 HOUSING AGENCY One of the first steps required to implement a national housing policy is the appointment of a central agency to co-ordinate the various activities in this field. Such an agency should have a section with responsibility for encouraging the formation of co-operatives and power to give them technical and financial help. Especially in the developing countries, where co-operatives are not sufficiently well established to be able to provide their own central research and technical help facilities, it would be advisable for governments themselves to set up authorities to provide these services on a nation-wide scale. Even in highly industrialised countries where co-operation has a long history and other branches of the movement are strongly organised, it has been found worth while to establish a central body "of this type. The International Labour Conference expressed this view in Paragraph 8 of the Workers' Housing Recommendation, 1961— The competent national authorities, having due regard to the constitutional structure of the country concerned, should set up a central body with which should be associated all public authorities having some responsibility relating to housing. 1 Specific legislation is desirable not only for housing co-operatives but also for other co-operatives, and for the same reasons. Thus general legislation should include special provision for the distinctive features and needs of housing co-operatives. SUGGESTIONS FOR THE DEVELOPING COUNTRIES 149 BUILDING SITES One of the factors which do most to push up the cost of housing is speculation in building land. It would be a sensible step for governments to encourage local authorities to take suitable measures to eliminate or curtail speculation in land suitable for building schemes, especially on the outskirts of major industrial towns. The local authorities could then make this land available at cost or on long-term renewable leases to co-operatives or other non-profit bodies concerned with house building. CREDIT FACILITIES For reasons stated below in connection with financing it is important that the national housing policy of countries wishing to promote this type of co-operation should provide for adequate credit facilities in the form of long-term repayment periods and low interest rates to enable co-operatives to discharge their social functions. Another measure that could be taken in some countries as part of a financial aid scheme would be to guarantee mortgage loans to families of moderate means. An arrangement of this type, which reduces any element of risk, has the further advantage of attracting private capital into co-operative housing programmes. This is in accordance with the proposal in Paragraph 16 of the Workers' Housing Recommendation, 1961, that— National mortgage insurance systems or public guarantees of private mortgages should be established as a means of promoting the building of workers' housing in countries where a sound credit market exists and where such systems are considered appropriate. STABLE INTEREST RATES In order to prevent delay in launching large-scale housing schemes for families in the lower income groups, another measure that could be taken to provide cheap finance is to stabilise interest charges for housebuilding schemes by co-operatives and other non-profit organisations. These interest rates should be at a reasonable level, since otherwise the reduction in building costs brought about by the use of co-operative techniques, however substantial, may be cancelled out by higher interest charges. SUBSIDIES This is not the place to consider whether or not developing countries would be well advised to introduce a system of subsidies, to offset the 150 HOUSING CO-OPERATIVES rising cost of building, reduce co-operative residents' monthly payments equivalent to rent or help to meet the cost of special housing schemes for large families or the elderly. Nevertheless, various economic factors make it impossible to leave the provision of adequate housing for large families in the lower income groups entirely to co-operative efforts and even less to the building industry. There is undoubtedly a case for government subsidies to help individuals who otherwise could not afford to do so to join co-operative housing schemes. In modern society adequate housing is a social and economic necessity and, as long as incomes of the worst-off section of the population do not increase, some form or other of subsidies would appear to be fully warranted. AGENTS OF SOCIAL POLICY In principle, and according to the theory of co-operation, co-operatives are autonomous private societies, but in many countries they have acted as agents of government social policy in the field of low-cost housing. This has come about because they have shown that, in addition to being technically and socially qualified private bodies, they are also responsible and easily controlled by governments wishing to ensure that public funds are well used and members' interests properly safeguarded. The developing countries would therefore do very well to consider the great opportunities afforded by the co-operative method in carrying out a national housing policy. This presupposes mutual benefits and responsibilities. In such cases it is reasonable that a government department should approve a co-operative's rules and supervise its operations in order to protect members' interests and the taxpayers' money and to prevent possible speculation, although it should refrain from interfering in the internal organisation of societies or handicapping their operations with too much red tape. An unduly prolonged policy of official paternalism may destroy the most significant contribution that co-operation has to make, for it must always be borne in mind that co-operatives are not a ready-made benefit but are evidence of people's own efforts to promote the common good. Financing In principle, co-operatives are able to carry out their own programmes without outside help, and they should in fact aim at being financially self-supporting by use of their own resources and characteristic methods. In the developing countries, however, if co-operatives really want to make a significant contribution towards solving the housing problem SUGGESTIONS FOR THE DEVELOPING COUNTRIES 151 they will need financial help from outside, as wages are generally too low for building operations to befinancedby members' savings. Since co-operatives are non-profit bodies, private investors are not normally interested, since they do not expect to receive an adequate return for their money and may even fear its loss. Hence the principal source of finance is the State, through its special banks or credit institutions. If co-operatives are held to fulfil an important social function, there is every justification for the State to help low-income families by investing public funds in programmes that cannot but be expensive. And co-operative housing schemes can relieve the State of having to carry the whole burden of a popular housing programme. Naturally, the general principle must be observed that members make some financial contribution, even limited, in order that operations may begin. The most common forms of such contribution are the payment of an admission fee and the purchase of membership shares to enable the society to build up capital. Since neither of these methods can go the whole way, additional funds have to be obtained in some way. In countries with a long history of co-operative activity members have always been required to save every week until they have accumulated sufficient to serve as a down payment on their homes. Saving has always been encouraged by such co-operatives and is now even an integral part of their building programmes. Elsewhere modern savings and credit unions help low-income families to pool their savings in order to finance house building. This system, which is very simple to organise, serves not only to collect members' savings but also to obtain additional resources through provision of ordinary credit. In recent years this type of co-operative has financed interesting co-operative housing projects with satisfactory results in developing countries.1 The purpose of saving in this way is to enable the member to meet the down payment, equal to a given percentage of the cost of constructing the dwelling allocated to him, the balance being paid in regular monthly instalments to amortise the mortgage loan. For long-termfinancingthe mortgage loan is definitely the system to be preferred, whether on an individual or—as is more common—a collective basis. It frequently happens, however, that, until building is completed and the co-operative can obtain a proper mortgage loan, it needs to be tided over by means of short-term loans. If a country really 1 The Workers' Housing Recommendation, 1961 states in Paragraphs 14 and 16 that governments and employers' and workers' organisations should stimulate the creation of co-operatives and other non-profit associations and take appropriate action to ensure that savings of both individuals and co-operatives may be used to finance workers' housing projects. 152 HOUSING CO-OPERATIVES wants to promote co-operative housing it would be well advised to channel private funds earmarked for social purposes into short-term housing loans. Such funds may come from unemployment insurance or pension funds, provident or welfare schemes, either those of trade unions or other non-profit organisations or those set up by public or private undertakings for the benefit of their employees. The same funds might also provide short-term loans to place the down payment within the reach of many families who would otherwise find it impossible to participate in co-operative programmes. As regards the long-term financing, the co-operative must arrange a mortgage on thè buildings concerned, but it might do well to consider a system to examine members' financial situation, except in small communities where all the members know one another well. In the same way, to provide against the possibility of economic crisis or heavy unemployment in certain industries, it would be wise to ensure that the residents in a particular project are not all employed in the same industry. The experience of co-operative associations which found a large proportion of their members unable to meet their commitments during the depressed years of the 1930s is a lesson to be remembered. Housing Co-operatives and the Building Industry In the countries where co-operation is most highly developed societies have grown from small-scale associations of individuals, who pooled their scanty resources to acquire adequate housing for their families, into large central organisations with their own subsidiaries and a considerable influence on the building industry as a whole. If, therefore, the developing countries wish to encourage co-operative organisation as a way of speeding up the rate at which the demand for housing is met, they should take steps, such as passing special legislation and making credit facilities available, to enable housing co-operatives to make the most efficient use of the resources of the building and allied industries. In the first place, although all housing co-operatives do not have to be organised in the same way, any co-operative must have a clearly defined, though not necessarily inflexible, structure. While a co-operative society is an association of individuals, all of whom have the same duties and the same rights, it is also an economic undertaking and must be organised and managed as such. Moreover, if co-operatives are to compete successfully with big contracting firms they must not only develop better building techniques but—as has been emphasised earlier— SUGGESTIONS FOR THE DEVELOPING COUNTRIES 153 they must form nation-wide organisations to co-ordinate their activities, pool their resources, help member societies to benefit by each other's experience and carry out bulk purchases, produce the materials they need (depending on local circumstances), set up research centres and laboratories to test materials and methods, and supply technical and legal aid to member societies. In addition, suitable measures must be taken as part of national housing policies to put a stop to any restrictive practices by certain building contractors, materials suppliers and other sections of the building industry. Where there is a shortage of building materials, tools and equipment, it would be as well to consider granting co-operatives priority in building factories to produce the articles in short supply and in importing any equipment that may be necessary for the purpose. In countries where there are already building co-operatives and building workers' co-operatives, the two types of organisation should co-ordinate their activities and even make joint arrangements to test new building methods and materials. This in turn would lead to better planning and organisation, greater standardisation of materials and simplification of traditional working methods. Housing co-operatives in the developing countries should also organise training in the building trades. Building workers' co-operatives have particular interest in providing programmes for skilled and semiskilled grades such as managers, architects, engineers and supervisors. One major achievement of the co-operative movement in general —and one which should be borne in mind in establishing or overhauling a country's housing policy—is that it has taken the lead in setting minimum standards for the housing of its members and their families and, in the process, so far from increasing has actually reduced building costs. Co-operatives in developing countries have been noteworthy for their insistence on providing such essential services as running water, sanitary facilities and sewerage in low-income family projects. Model Urban and Rural Neighbourhood Communities In formulating their national housing policies, governments should bear in mind that co-operation is not simply a way of helping members to acquire new homes, but is also a movement with a programme which ranges from teaching members to make good use of their homes to founding communities with all the services they need. Co-operatives are in the best position to build model housing estates and neighbourhood communities. Co-operative building is the product 154 HOUSING CO-OPERATIVES of teamwork, in which the future residents are able to incorporate their ideals and desires. As a result, such housing schemes usually not only form a well-planned whole, but constitute neighbourhoods with their own community spirit, fostered by constant social contacts made in the course of co-operative activities. Even in the large cities co-operatives can serve as a nucleus for a new community spirit. The social life they organise among members, and the ancillary services which are usually provided on housing projects, such as consumer and credit co-operatives, kindergartens, schools, public transport, playing fields, recreation rooms and lecture halls, can all serve as a nucleus for a new pattern of society, as the projects described in Chapter X so clearly show. Another role that can be played by co-operatives is to help in the resettlement of refugees by building projects near workplaces, as described in Chapter VI. Although housing co-operatives have tended to be most popular in urban areas, their methods and principles are also applicable, at least to a large extent, in rural districts, especially when small isolated associations of farmers federate to form a central body which can give them efficient technical and financial services. Within the broader national perspective two primary considerations should guide the planning and construction of large-scale housing projects. Firstly, major housing schemes should normally be sited fairly close to places of employment. If communal services are not already available in the district, provision must be made for schools, shopping centres, recreation facilities for residents of all ages, places of worship and medical services, enabling workers and their families to live in welllaid-out residential districts. Secondly, the need to relieve congestion in the cities calls for a policy of urban decentralisation involving the construction of satellite or new towns, which can attract some sections of industry and commerce out of the large cities. In planning and carrying out programmes of this type the co-operative movement's great fund of experience can be adapted to local conditions for the benefit of the developing countries.