For a Socialist Architecture 3. Part 2: Economic Practices

I want to begin with the diagram with which we ended Part 1 of this presentation, which illustrates the connections between the social, the environmental and the economic dimensions of architecture. The terms ‘ecology’, meaning the study of the relationship between organisms and the environment, and ‘economy’, meaning household management, both derive from the same root, ‘eco’. This comes from the Greek oikos, which means ‘household’, so both terms are linked to the concept of the home. But the home is more than simply a financial investment. Home is a place where we engage with the world socially, and where existences other than humans live. The economy, therefore, means something far bigger than just financial costs, as it does in capitalist architecture. For a socialist architecture, the economy is where all elements relate and co-exist in a sustainable whole.

Having said that, it’s important to understand that the simplistic and reductive ways in which global systems are discussed in terms of small-scale household management is not an accurate description of our housing economy. This has been the basis to the imposition on capitalist economies over the past decade of the fiscal policies of austerity, which have justified drastic cuts to state spending by arguing that the UK household has to balance its payments against the profligacy of the pre-financial crisis. But the global economy of the financialised property market and its effect on UK housing cannot be reduced to paying household rent and bills. In order to find ways to engage with and disrupt the existing system and its systemic failure to meet housing need we have to understand how that system operates.

The economy of a development extends from the macro context to the micro scale of a particular project and community. The direct costs of a scheme are those expended directly by the developer, contractor or client on a project, and these are the only ones typically considered as part of a project budget. The capitalist system is interested in minimising immediate financial costs in order to generate the greatest possible profit for investors in the present. Indirect costs, in contrast, are those that are one step removed from the present and, as a result, are not accounted for by a capitalist architecture. Under capitalism, an individual project is not responsible for costs incurred to anyone other than the client, such as the health, social and financial costs to the existing residents or environment. These indirect costs will instead eventually be shouldered by the state and future generations. This is a hidden debt, a deep debt. And as we have experienced in the UK through this past decade of living under austerity, this debt is born by those who can least afford to pay for it. In contrast to this deferral, a socialist architecture must anticipate, expose, account for and mitigate these debts.

Interestingly in this respect, in 2015 the Welsh National Assembly passed the Well-being of Future Generations Act (Wales). This ‘requires public bodies in Wales to think about the long-term impact of their decisions, to work better with people, communities and each other, and to prevent persistent problems such as poverty, health inequalities and climate change’. Unfortunately, this Act is unique to Wales, and it’s hard to imagine the UK Parliament passing similarly progressive legislation, or of turning this requirement to ‘think about’ the negative impact of their decisions into an obligation to do something about it; but it shows that there is some recognition of the gap between what our capitalist system is able to produce and what is needed. This is legislation that is demanding local authorities to think beyond the financial gains from a project to its social, environmental and economic impact.

1. West Kensington and Gibbs Green Estates

I’m now going to introduce some of the projects ASH has worked on, and extract some of the economic practices of a socialist architecture we have learned from this work.

The West Kensington and Gibbs Green estates in West London, which contain 760 existing homes on council-owned land, is currently threatened with demolition and redevelopment primarily as market-sale homes by a developer called Capco. ASH identified the possibility for 327 new homes on the estate without demolition, making a 45 per cent increase in housing capacity. Our proposals (above) include roof extensions (indicated in pink in the drawing) and infill housing (indicated in yellow); the refurbishment of all the existing homes; as well as improvements to the landscape and communal facilities on both estates.

In our previous presentations we looked at the social and environmental costs of these demolition and redevelopment schemes; but now I want to focus on the cost benefits from refurbishing these estates. Through external insulation and winter gardens (below) we can reduce energy costs and reduce fuel poverty, which is an increasing problem in the UK.

In addition, we looked at the distribution of residents across the homes, which since the estates were completed 50-odd years ago has left some under-occupied and others over-occupied. Under current council policy, there is no mechanism for addressing this issue, which has been quoted by Hammersmith and Fulham council as a justification for demolishing the estates. By building new housing, we enable elderly residents currently paying to heat rooms they don’t use to move to a new, single-storey, 1-bedroom dwelling on the estate, rather than being forced away from their support networks. This would in turn free up these larger homes for currently overcrowded families. This method of housing redistribution and provision of 1-bedroom residencies would also address the bedroom tax, according to which, under the Welfare Reform Act 2012, a parent claiming housing benefit on a multi-bedroom flat whose child leaves home has their benefit payments reduced, placing a greater burden on their finances.

Finally, our proposals looked at re-purposing existing unused garages (below), many of which are too small for current-sized cars. We proposed turning these into low-cost workshops or not-for-profit workspaces to support small resident-run businesses.

1504_05_Ivatt Place copy

So how would we finance this? At present, residents on the West Kensington and Gibbs Green estates are applying to the Secretary of State for the Right to Transfer both the land and homes into their own ownership as a Community Land Trust. ASH’s design proposals were part of the residents’ business plan, demonstrating that the refurbishment and development of the estates is financially viable and has their support. At present, however, there is no government funding for refurbishment, and Value Added Tax (VAT) on refurbishment has been set by the government at 20 per cent, compared with 0 per cent on new-build development, further disincentivising refurbishment. So although cross-subsidisation is not an ideal solution, the market sale or rent of around half the new dwellings would pay for the construction of all new dwellings, the other of which would be for social rent, as well as for the cost of refurbishment and improvements to the rest of the estates.

Following the Right to Buy council homes at a state subsidised discount — a scheme that was introduced in 1980 — around a third of homes on estates in Inner London are now owned by leaseholders. At around £50,000 per home to bring the estate up to the Decent Homes Standard plus, the funding of refurbishment on leaseholder homes presents a problem. Our solution is that their share of the refurbishment costs would be funded by the CLT as equity, and be repayable by the leaseholder only at the time of sale. Funding would be raised from long-term, ethical investor partners, as well as from existing government subsidies for new-build affordable housing. It’s difficult, but it’s not impossible, and the results are infinitely preferable to the economic costs of demolition and redevelopment to councils, leaseholders and tenants.

2. Brixton Gardens Community Land Trust

This next project, Brixton Gardens, which is on a smaller scale, was a collaboration between Architects for Social Housing and the Brixton Housing Co-operative. This was to establish a Community Land Trust that was founded by housing co-operatives, including Co-ops for London. Interestingly, while in Vancouver we met with the Co-operative Housing Federation of British Columbia, which has already put into practice what we were trying to do in the UK. In response to a small site in Streatham, South London being made available by Transport for London for a community-led, affordable housing development, our proposal was to take the land off the market and placing into a Community Land Trust called Brixton gardens. In the UK, however, housing built on a CLT is traditionally for shared ownership, with the homeowner having to raise a mortgage. It therefore doesn’t address the real housing need in the UK, which is for homes for social rent. In contrast to which, the co-operative model has traditionally been for low-cost renting. The co-operative model also offers a management model that is more socialist, rather than the current failed models of either council managed housing or outsourced private management companies. This, to us, seemed a way to take the positive aspects of co-operative management and apply them to a Community Land Trust model of ownership.

Using this model, we proposed to build 22 new homes at social-rent levels to be co-operatively managed. Dwellings of varied sizes to support inter-generational and diverse communities, plus communal facilities and workshops. We explored two options for construction, traditional and modular, self-build techniques. The latter not only saved £2 million on construction costs, bringing them down from £5.8 million to £3.8 million, but would also provide skills and training to local communities.

The Greater London Authority had secured over £1 million of funding towards the project, with an additional £50,000 for every affordable home provided. In addition, the Brixton Housing Co-operative, which has considerable equity locked into its existing housing stock, proposed to borrow against its assets to buy the land and develop it as a Community Land Trust. Brixton Gardens CLT would then lease the properties to other housing co-operatives who were members of the CLT, including the Sanford and Westminster housing co-operatives.

ASH, Brixton Gardens, architectural rendering by Leonie Weber

Unfortunately, despite being both financially viable and socially beneficial, our bid was rejected in favour of an alternative bid that proposed building 100 per cent properties for shared ownership. The price of these properties will be set according to average incomes rather than market rate, and the individual owner must sell according to the same principle. But this came nowhere near to meeting either the local council’s target of building 70 per cent homes for social rent on all new developments, or the financial means and housing needs of the more than 27,000 people on Lambeth council’s housing waiting list. However, by proposing residential properties our competitors were able to offer more for the land; and, as it turned out, this was the deciding factor in awarding the lease.

Under European Union competition law banning what it calls ‘State Aid’, which is the Neo-liberal term for ‘investment’, Transport for London, as a public body, is compelled to sell its land at the market price, which is established by the highest bidder. The social value of what the land will be used for — which in our case was to meet local housing need — is deemed irrelevant. This raises the question of how, under capitalism, a socialist architecture can quantify other values than the financial profit of the landowner and developer, and instead arrive at an assessment of the total economic cost and value of a housing proposal.

3. The Drive Housing Co-operative

And finally, my last example is The Drive housing co-operative in Walthamstow, North-east London. This is a private co-op of 10 houses that owns its own land and wants to double the housing capacity. At present the rents the residents have to pay in order to pay back their mortgage are too high. By increasing the co-ops’ housing capacity they want to reduce housing costs to social-rent levels, while also providing housing for residents on disability allowances who can’t meet the current rental rates. The co-op also wants to reduce energy and running costs by improving insulation and thermal performance of the homes. They also want to reduce the increasing maintenance costs to the existing property, which is around 150 years old, and to extend and expand the lifespan of the co-operative.

As we said in Part 1 of this presentation, refurbishment, as a principle, must be the default option of a socialist architecture. But that doesn’t mean it is the only option. In this case, we produced several options (above) that the residents have narrowed down to two. The first option is for the refurbishment of the existing building and the development of additional new-build housing in the garden, which could accommodate around 8-10 new residents. The second option is for the full demolition of the existing building, with current residents moving into the new garden development, and the existing building being redeveloped. For a house of this age requiring a high level of refurbishment, it may be more financially viable and socially beneficial to demolish and redevelop it. At present we’re looking into the relative costs of the two options. But, importantly, this decision will be made by the existing residents once they have all the information about the options, and not, as is the case with estate demolition schemes, made either unilaterally by the council or by residents without such information, which is withheld by councils either on the grounds that it is ‘commercially sensitive’ or because the ballot is taken before that information can be produced with any accuracy.

So, how does this work in terms of design (above)? Through co-housing, two groups of 10 people in each building means fewer bathrooms and shared kitchens and other facilities. This equates to the more efficient use of resources and the reduction of energy costs. It also has huge benefits in terms of the sharing of space, with opportunities for multi-purpose and mixed-use rooms dedicated to a wide range of activities. The other consideration when thinking about economy in design is long-term thinking. By designing flexible spaces and structures we can accommodate changes in their use over a period of time. To this end, we haven’t proposed load-bearing internal walls that would restrict change in the layout in the future. At the same time, solid foundations on the new development would accommodate future increase of housing capacity on the roof by an additional two floors. We’ve also proposed re-cycling materials from the existing building, using locally-sourced materials, and applying passive-design strategies that maximise solar gain and reduce energy use (below).

In terms of funding options, residents have approached the Ecology Building Society, an ethical funder, for a loan at lower interest rates. We’ve also looked at co-operative loan stock, which is co-operative organisations lending money to each other. In Germany the Mietshäuser Syndikat shares co-operative loan stock, and this is a model that could be imported into the UK. We’ve also looked at community shares. In South London there is an organisation called the Rural Urban Synthesis Society (RUSS), a Community Land Trust that provides loans and grants to members. We’ve also looked at long-term, low-risk investors such as pension funds. As we said in Part 1 of this presentation, social housing is a secure and profitable investment over the long term. And finally, there are still some government grants for affordable housing and community-led projects.

Finally, we’ve looked at how to bring the cost of construction down. In Part 1 we looked at the enormous costs of construction in the UK being a barrier to the provision of social housing. What’s the incentive for the landlord, developer and architect to undertake a refurbishment and infill scheme that retains and increases the stock of social housing over a demolition and redevelopment scheme that realises greater profit for the investors and contractors? Negotiated tender, which is a collaborative rather than competitive process, and profit share, which redistributes profit at the end of the project, are two ways to motivate lower construction costs from contractors and consultants. Phased construction, which allows residents to remain on site throughout construction, removes the costs of decanting and rehousing them during refurbishment or redevelopment. And self-build could save 20-30 per cent on construction costs in so-called ‘sweat equity’. This adds time and complexity to the project, and is not suitable for every scheme; but in the case of The Drive could act as a means of involving new residents in the co-operative and making them feel properly included in its future. These are incremental cost savings, but on a small project like The Drive they can make or break the financial viability of the scheme.

4. Economic Practices of a Socialist Architecture

So, how do we extract from ASH’s work on these and other projects the practices that will guide and implement the economic principles of a socialist architecture? This is what we’ve come up with.

  • A socialist architecture must be not-for-profit.
  • A socialist architecture must make the most economical use of the existing land, materials and resources, through re-using, refurbishing, improving, recycling and extending what is already there.
  • A socialist architecture must utilise and support local community funding networks, and be funded by low-interest, ethical investment partners.
  • A socialist architecture must adopt a transparent financial viability, procurement and management process that is overseen by the community.
  • A socialist architecture must maximise the number of homes for ‘social rent’ to meet existing housing need.
  • A socialist architecture must explore low-cost construction methods and practices, but not at the expense of long-term economic, environmental or social costs.
  • A socialist architecture must be low-cost to maintain and low-cost to run, and minimise the project’s whole-life costs, including the cycle of maintenance, dismantling and re-use.
  • A socialist architecture must design for the long term, be resilient and flexible, and accommodate change in its use over time.

5. Questions in need of Answers

To address the housing crisis with any chance of success we need to understand what’s happening in the UK property market. It’s important that we begin by countering the myths that surround the economics of housing provision under capitalism, some of which we exposed in Part 1 of this presentation. For example, we need to challenge the so-called law of supply and demand that has no descriptive purchase on the global property market, yet is the basis to housing policy not only in the UK but across the capitalist world. We also need to break the capitalist cycle of extraction, consumption and waste and replace it with a socialist cycle of state investment and de-growth. We can start this process by asking some questions about the policies of Neo-liberal economics.

  • Why do our house prices keep going up when workers’ wages are falling?
  • Why is the UK government bent on subsidising our mortgages when we can’t afford to pay rents?
  • Why are interest rates so low and yet land so expensive?
  • Why will banks lend money to offshore investors but the government won’t tax them?
  • Why are developers that have increased their profits eight-fold in six years being subsidised with public money, yet there’s no government funding for refurbishment or investment in social housing?
  • Why is the UK economy founded on owning property and selling debt?
  • Why are our councils intent on demolishing every housing estate in London and handing the land over to the hedge-fund managers of global capital?

And then ask how we can go about changing the effects of these policies in both perception and practice.

  • What are the specific economic conditions pertaining to the housing crisis in a given city, region or country?
  • To what extent are these conditions the manifestation of the global crisis of capitalism, and to what extent are they particular to the legislation and policies of the government, municipal and local authorities?
  • How can we bring about a more equitable distribution of land and access to housing?
  • How can we implement solutions to the housing crisis that disrupt its economic causes in speculation and investment in the property market?
  • How do we change legislation and policy that allows, encourages and funds that disruption?

As Alain Badiou wrote in our epigraph to this presentation, the financial crisis of 2007 was essentially the housing crisis with which we continue to live, and both originated in our global banking system. As a result of the collapse of the sub-prime mortgage bubble in 2007, $5 trillion in pension funds and property value vanished overnight in the USA, 8 million people lost their jobs and 6 million people lost their houses; yet not a single banker went to jail. In the UK, banks that had spent the last forty years arguing for the removal of all state intervention were bailed out by the British taxpayer to the tune of £850 billion courtesy of the UK government; yet 10 years after the financial crisis, £10 billion out of the £19 billion in bonuses handed out across the country in 2017 went to those working in financial services. Meanwhile, the rest of us are still living under austerity cuts. The UK has the lowest share of public sector spending of any major capitalist nation except the USA; the impact of changes to taxation and benefits has hit, and will continue to hit, the poorest harder, with 14.2 million people, over a fifth of the UK population, currently living in poverty; and 80 per cent of the gains from cuts to income tax go to the wealthiest half of households, while the poorest third will shoulder two-thirds of the government’s cuts to benefits.

We might be forgiven for expressing confusion at such obvious economic injustice — if that’s the phrase we should be using to describe the systemic exploitation and expanding inequality produced and reproduced by capitalism. But, in reality, it’s simple. The current stage in the historical development of capitalism is designated by the term ‘monopoly capitalism’ not because it creates the greatest wealth for the largest number of people — as capitalists keep repeating against all the evidence to the contrary — but because it accumulates an exponentially greater portion of that wealth in a decreasing number of hands. And as the aftermath of the greatest threat to capitalism since the stock-market crash of 1929 has demonstrated to those burdened with the historical task of paying for it, nothing in our existing structures of political government and civil society can do anything to stop it.

In our next and final presentation, on the political dimension of a socialist architecture, we’ll be looking at how its agents can act to overcome this impasse.

Architects for Social Housing

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