Cooperative government

On policy and legal frameworks:
back to the cooperative roots of the government

Anybody who ever wondered about the origins of the word ‘gemeente’ may have read on the respective Wikipedia page that it comes from the Medieval (12th century) word ‘meent’.  Meenten were communal farm- or pasturelands which required some form of collective governance. A group of farmers using such a piece of land had to work together setting rules for its utilization and maintenance. This is the earliest version of collective governance on communal cases in The Netherlands.

During these times neither governments nor capitalistic economies existed. You could say that the cooperative movement and what would later be called ‘gemeente’ -local executive organs with large powers and financial resources- were then one and the same thing.

Nowadays there is a considerable difference between the cooperative domain and the municipal administrative body. The local, communal rules from back in the days have made place for an enormous, often anonymous bureaucracy operating on a certain distance from society instead of being a part of it. The governmental body in Amsterdam alone, for example, consists of roughly 16.000 officials, spread out over 5 clusters, tens of managements, hundreds of departments and even more teams. All these ‘professionals’ do not necessarily know the dynamics and needs of the city they make policy for.

The question is: how can it be better? Is there a type of government possible that narrows the gap with the citizens and serves the cooperative sector? Which good examples of legislation and policies supporting citizens collectives are there? And what else is needed?

The cooperative movement
Certainly, there is no lack of initiatives to support. Call it a movement or a sector, many kinds of collective initiatives have woven themselves through society over the past twenty years, driven by economic inequality, and factors of the social-cultural (the reinvention of citizenship and collectivity) and political (neoliberalism and withdrawal of government) kind. On top of this, there is a growing political interest in the role that citizen collectives can take in society.

On top of this, there is a growing political interest in the role that citizen collectives can take in society

The cooperative movement crosses all the societal domains one can think of: there are healthcare collectives, energy cooperations, platform cooperations concerning transport and technology, food collectives, community gardens and naturally living communities and cooperations. The latter, here, will function as example, because collective property in general and the living cooperation specifically is claiming a more serious position within the debate on social housing.  

Alas, the ideal of a cooperative government tracing its own roots and serving this upcoming sector is one far from reality. That goes for all the domains mentioned above. Cooperations, collectives and citizen initiatives are wrestling with the multi-headed monster ‘de gemeente’, that spits out a big muck of services, licensing regulations and subsidy rules.  

The most important reason governments do not work with -or rather against- the people has an ideological character. The neoliberal paradigm has changed the way societies and their governmental bodies are thinking about housing problems. Over the past thirty years, the public dossier ‘social housing’ has transformed into the profit-oriented theme ‘housing market’. This is why we are in a housing crisis today.

Making collective property and housing cooperatives possible could be a way to get out of this rampant crisis. How does the municipality contribute to this, and how does she not? What do lawful and policy landscapes look like? And how can it all become much better?

Approved Institution
Historically, The Netherlands has known a sharp divide between the public and private part of the housing problem. On the side of the public, housing corporations have long been the only recognized player -approved institution in the law-, while on the private side the market parties dominated. These parties were primarily individual landlords, but as the ‘housing market’ kept on deregulating, real estate companies and speculators gradually came to play a bigger role.

In 2015, this division changed by law, as the housing cooperative was included in the Woningwet. The mid-2023 deceased and former PvdA senator Adri Duijvesteijn made the case for this addition. This recognition is a first step in the direction of a detailed legal framework providing a cooperative movement hands and feet, comparable to the Danish Law on Housing Corporations.

When we look back further into Dutch history, we see the public and cooperative domain coincide again. Namely, the precedents of many of the current housing corporations were cooperatieve woningbouwverenigingen (corporative housing associations), groups of renters who, collectively owned the houses they rented. The Amsterdam Rochdale, par example, started off as such a corporation.

The Woningwet of 1901 did not facilitate collective property of houses. This meant a first blow for the cooperative idea of social housing. Housing associations were, up until the seventies, of crucial importance building up the relatively large Dutch social renting domain. During the neoliberal 1980’s and -90’s the social housing associations were crumbling down to the isolated, bureaucratic ‘corporations’ of today, a process including the conversion to foundations during the ‘grossing up’ operations in 1995.

Under the market price
According to the Woningwet of 2015, a housing cooperative is a complete legally recognized third option, next to buying a house or renting one from a housing corporation or a commercial landlord. The law explicitly supplies the transfer of houses from a housing corporation to a housing cooperative and stipulates the possibility of substantial discounts towards market prices (up to fifty percent)

Despite this development, the sector has not been able to create momentum in the past few years. For comparison: in The Netherlands a total of around 1500 houses are in collective property, while in Germany this number goes over 2 million. Sweden is far ahead as well, with almost a quarter of the housing stock in collective property.

The question is: how can the Dutch national politics and local governments stimulate collective property?

It is not as if nothing is happening, and we can learn a lot from the existing approaches. There have been several successful operations that came about with the help of municipalities and corporations. One of the most well-known examples in this regard is the corporation Roggeveenstraat in The Hague. In 2014 a group of citizens bought a row of social rental houses from corporation Haag Wonen, that agreed with the sale for half of the market price. Precisely how the Woningwet prescribes it.  

However, this appears to be a rare case. Housing corporations sell houses from their stock on a regular basis, but remarkably enough, it’s often real estate companies and other market parties on the buying side of things, and barely ever citizen collectives. Therefore, a logical route to more collective property would be: forcing corporations to pass on a part of their stock to society.   

Collective housing production
Cooperations can take over houses from housing corporations, but they can also build them on their own, like it has been happening in Amsterdam more often. In 2020, the municipality has, based on her intentions in the coalition agreement Amsterdams Akkoord, made 13 free building plots available for cooperations. On a few of them future residents are busy building houses, like Bajesdorp on the place of the demolished ‘Bijlmerbajes’. In other areas, such as cooperation De Warren on IJburg, houses have already been constructed.

In addition to a lot arrangement, a municipal loan fund has been in existence for two years now. This fund enables cooperatives to claim a financing of collective self-building projects. Following the fund’s point of departure, the bank provides around seventy per cent of the building costs, the cooperation five, and the municipality the rest, with a maximum of 50.000 euro per house.

Also the Utrecht municipality has assigned the first collective self-buid plot, and summarized her vision in the Actieplan Utrechtse Wooncooperaties. These are important steps towards more collective property of houses. Municipalities throughout The Netherlands can follow these examples.

But, we’re not there yet. Financing is a major challenge, even with the current policy running. The case of the housing cooperation De Nieuwe Meent (DNM) illustrates this. DNM had been assigned a plot in the Archimedesplantsoen in Amsterdam-East, but during the first half of 2023, the matter was in a deadlock, specifically with regard to the financing promised by the municipality.

One of the most important reasons for this impasse was the running time of the loan: twenty years instead of thirty, as is common with private mortgages. This point rings through in the general criticism of the loan fund, which wields a loan term of only fifteen years, unnecessarily increasing the pressure on the initiative.

No borrow but guarantee
A loan fund is something different than a guarantee fund. The latter exists on a national level, stimulating banks and investors to provide loans to housing corporations by depositing them. A similar fund could work for collective property and cooperations. The Stichting Waarborgfonds Sociale Woningbouw (WSW) deposits loans that housing corporations make to finance services of general economic interest. In practice, these are loans for the purchase, construction or maintenance of social houses. When a housing corporation cannot meet the interest- or refund obligations, the WSW will take over its responsibility. If even the WSW lacks the adequate resources, there is always the guarantee of the municipality and the national government helping out. This is the so-called ‘achtervang’ of the whole regulation.

The premise is: banks finance social housing, not because they find affordable housing important, but because the loans -and the interest-revenues on those loans- are backed up by the government.

This ‘achtervang’ is something the cooperative sector can use very well. If local governments as well as the national government guarantee citizen collectives, the risk of banks, which are now only sporadically finance cooperatives, diminishes significantly.

Banks finance social housing, not because they find affordable housing important, but because the loans -and the interest-revenues on those loans- are backed up by the government.

Still a detour
Yet, a guarantee fund is still a detour. Banks and governments may as well concentrate on housing cooperations specifically, financing them directly. There are many examples to be found in German speaking Europe: Germany, Austria and Switzerland. Here, collective property takes up respectively 8,7 percent, 26,4 percent and 8,5 percent of the total housing stock.

You can think of a bank without profit motives, particularly serving communal matters and collective property. Such a bank exists in Germany with the cooperative Gemeinschaftsbank für Leihen und Schenken (GLS). The fact that Dutch cooperatives Bajesdorp and Ecodorp Boekel resorted to the GLS is a writing on the wall for the lack of opportunities within the Dutch borders.

When it comes to the support on governmental level, Austria is one of the forerunners. The most important source of finance Austrian housing cooperatives utilize are the nine regional subsidy programs. Within the framework of these programs, public institutions offer building- or lease plots to cooperatives. Factually, this is a risk-free measure: if cooperatives for whatever reason do not reach the finish line, the plot is still there and could still get assigned a new destination.

The regional programs also provide loans that cover between twenty and sixty percent of the building costs of collective building projects, against low interests.

In Switzerland, a similar instrument is in place, only here directed from the federal government. The so-called revolving fund makes long-term loans (25 years) possible, specifically for gemeinnützige Wohnbauträger, standing for all housing projects without profit aims, targeting lower income groups.

What exactly is it
The problem in The Netherlands has to do with the confusion around housing cooperatives. Institutes such as banks, corporations and municipalities don’t know how to deal with housing cooperatives. Are they to be approached as private parties, companies, social initiatives or a new generation of corporations?

For example, the Amsterdam municipality, in their Actieprogramma Wooncooperaties, emphasizes the non-commercial character of the cooperation, while De Belastingdienst explicitly sees them as companies. Moreover, the legal form of the cooperative is an alternative for the association that makes it possible to achieve profit.

This confusion could lead to housing cooperatives being assessed for corporate income tax purposes, which in turn makes banks -taking cooperatives for companies too- finance a maximum of seventy percent of the building costs, instead of the hundred that is common for a private mortgage.  

Once more, inspiration can be found at our German neighbours. In most of the countries mentioned above, cooperatives are being legally judged as a separate category, based on the observation that they are a serious instrument for making affordable housing possible.

The challenge
Perhaps, this is the biggest challenge: taking citizen collectives serious and recognizing cooperatives as an undeniable part of the solution of the housing crisis; as an antonym of investing funds or landlords and collective counterpart of a profit-driven ‘housing market’.

Housing cooperatives are in the law now, but dream bigger: coming November, a speech by the just elected minister-president, doing away with all the confusion by pointing out the value of collective property and underlining fair public housing. That, in combination with a powerful citizen movement helping to sketch the political routes, can make for a comeback to the cooperative roots of governments, big and small. Not only in terms of social housing, but all matters where cooperative movements are active. If we achieve that, the funds and regulations will follow automatically.