It is a co-operative enterprise solution which allows tenants to buy their home one share at a time, while paying a fair and affordable rent. The more shares they own, the less rent to pay.
This enables people on low income or who cannot obtain a loan to begin ownership of their home.
There are over 45,000 households in Scotland that are homeless or living in temporary accommodation.The impact of not having a place to call home can be devastating for individuals, families and communities.
In recent decades the rate of home ownership in Scotland has more than doubled. However, the way the housing market is driven by profit means that large numbers of families and individuals cannot afford to reach the bottom rung of the property ladder. In short it is clear that the current system of housing provision isn’t working.
It is widely accepted that a number of major social problems, from poor health to crime and unemployment, are caused or exacerbated by a lack of quality affordable housing. In 2009-10 there were over 22,000 children living in households accepted as homeless. We think that these numbers are unacceptable.
The situation is going to deteriorate for the foreseeable future due to cuts to public finances. The changes to Housing Benefit will have a particularly negative impact on some of the most vulnerable people in our society.
Given the already depleted level of social housing provision the amount of affordable housing is likely to decline even further. Within the socially rented sector rents have increased by 53 per cent over the past 10 years. At the same time, getting or maintaining a mortgage is becoming increasingly challenging with repossessions set to rise over coming years.
The state of housing provision in Scotland means that thousands of families wake up in Bed and Breakfasts or hostels every morning while hundreds of people sleep rough every night. Something needs to be done. Yet it is clear that neither the state nor the private sector is likely to have the means to fully tackle these issues. A new concept is needed to tackle Scotland’s housing crisis.
Micro Equity Home Ownership
– a co-operative enterprise solution
The housing market needs to adopt radical new ways of working in order to meet the needs of Scottish society. Our framework for debt-free homes will offer people from all walks of life the chance to take the first step towards creating sustainable and secure homes.
Micro Equity Home Ownership (MEHO) is a new method for providing debt-free, affordable housing for people in need. It removes the burden of debt on the individual and creates a structure that allows people to build up ownership of their home by buying shares in it at a rate they can afford. The MEHO framework includes partnership with local housing support charities, debt counselling agencies and befriending organisation to help tenants address their personal housing and debt issues.
Through the promotion of this model the Caledonian Foundation aims to:
• Provide affordable housing for homeless people
• Help those threatened by repossession to retain their homes
• Provide individuals and families with the opportunity to own their own homes for the first time
• Create improved community facilities
Why Micro Equity Home Ownership?
Because this model allows families to gradually build up equity, the many problems associated with debt and high mortgage rates are removed. The model combines the best aspects of ‘shared equity’ and ‘shared ownership’ giving tenants the flexibility to buy their home over a time period that suits their situation, while getting rid of the need for deposits or loans. This opens up the option of home ownership to those on low incomes or people who have difficulties in obtaining a loan. Non-profit making rents and the ability to buy equity shares one at a time hands control back to the tenants allowing them to move from crisis to security. It benefits families, individuals and the housing stock as profits are re-invested in affordable housing. It is good for the wider economy and reduces the burden on the state.
The Caledonian Foundation will create and support self-sustaining community initiatives throughout Scotland. We’ll partner with organisations, communities and local authorities to provide them with the structure and help they need to use Micro Equity Home Ownership to improve the housing stock in their area.
MEHO in action
Each MEHO implementation is a co-operative which will purchase or build properties. Working with partner organisations, it will identify suitable tenants and provide housing support, debt counselling or befriending service as appropriate to help tenants maintain their tenancy.When a tenant has extra cash he/she pays a little more each month which goes towards the purchase of shares in the property. Friends and family can also buy gift shares for the tenant. Because the tenant owns shares in the property, the rent goes down. If the tenant continues to pay the same rent, the proportion of equity increases and the rent continues to decrease. After five years the tenant can sign a new agreement and continue to purchase their home or cash in the shares.
Building a debt-free future
Homelessness is an issue that affects everyone in society. If you share our vision of providing debt-free homes, there are several ways in which you can play a role with us to establish a viable housing future for people throughout Scotland. We want to engage with individuals, families, communities and organisations from a variety of backgrounds to promote and grow the role of debt-free home ownership in Scotland.
Right across Scotland there is a need for good quality housing. We’ll be working at a grassroots level throughout the country and, although there is no upward limit to the size of each project, we know that the model can work with as few as six housing units. We therefore want to hear from
community land trusts, local authorities, housing associations and advocacy groups, about their housing needs and how we can help to address them.
If you want to find out how to use MEHO to provide debt-free homes for your community, then email us at:firstname.lastname@example.org.
Here is a short introductory video on MEHO:
Richard Lo is an entrepreneur with more than 25 years experience in property investment. He has also worked in a homeless hostel as a relief worker which gave him an insight to the challenges associated with homelessness. He is an experienced IT professional with extensive skills in system analysis and solving. He has also worked as an IT Manager for a charity.
Combining his experience in property investment, system analysis and fundraising in the charity sector, he developed the concept of Micro Equity Home Ownership and founded Caledonian Foundation, a registered charity dedicated to providing debt-free housing solutions for communities.