An introduction to the Tenant Syndicate

by Gabi Bohnet

The idea
I am living in northern NSW, in the hills near Mullumbimby and keen establish an affordable group housing project. I am personally interested in an ‘urban living space’ – within one of the local townships in the Byron Bay, Murwillumbah to Lismore region. Living in a walkable, cyclable environment where everything – schools, work, community garden, local shops, and cultural activities are close by seems to make perfect sense to me, especially for reducing the carbon footprint. I like to explore the possibilities to purchase Council land for affordable housing projects as cited in the ‘Affordable Housing Strategy’ of the Byron Shire Council, however I would also be supportive of rural initiatives.

My back ground is in architecture, town planning and sustainable design. I have looked at many communities and housing projects for inspiration. “Why re-invent the wheel?” if we can tap into an existing, functional organisation that is successful and offers support, not only politically, but also practically, legally and financially.

The Tenant Syndicate
The Tenant Syndicate was born in the late 1980s in Germany. Despite increasing economic wealth, or just because of it, there is a growing gap between rich and poor, increasing lack of access to living space. All over the world people long for a secure place to live – beyond the fear of loosing their homes, being pushed out by rising rental prices or property sales.

The overall idea of the Tenant Syndicate is to acquire property – land and buildings, to remove permanently from the speculation market, keeping these places available as affordable rental living space forever. The Tenant Syndicate was formed to be the platform and network to support the wider political struggle for affordable self–managed living spaces with an open and growing number of individual housing projects. In August 2009 the syndicate decided to support projects globally if there is the request for it. What a wonderful opportunity!

Many of us, here in Australia and in other countries, wish to collectively purchase land and dwellings and live in a self-organised, self-determined way. Each group has different ideas on how they wish to live together, however they all share the need for secure and lasting property tenure. This is the fundamental link between the projects, and the goal the Tenant Syndicate set in its statutes from 1992: “To support and politically push for the development of new self-organised house projects: Humane living space, a roof over the head, for everyone.”

How does it work?
On one hand we have autonomous house projects or groups of people who wish to live together. They might know a property or dwelling already, yet they lack the finances and legal expertise to get set up.
On the other hand there is the Tenant Syndicate that has established a legal framework to support and tie the individual projects together. The syndicate is not an umbrella organisation but a member of every house project with each project set up as a legally autonomous “limited liability company” (ltd).

Together with the Syndicate, the future tenants of a House project establish a limited liability company which then buys the property. The tenants pay rent to the company, but are simultaneously responsible for all aspects of running the company, financing the purchase, and administering the building. In this way, affordable living space is preserved, and the building protected from exploitation by real-estate speculators.
The ‘limited liability company’ was chosen for the legal set-up of the Tenant Syndicate as it lends itself to protect the syndicate’s main goal: Keeping affordable rental property perpetually available. Each House project Ltd. is made up of 2 directors: one is the director chosen by House association (all tenants) and the other is chosen by the Tenant Syndicate association. Both directors have exactly one vote. The Syndicate only has a say in fundamental questions, such as the sale of the house, a conversion into condominiums, or changes in the partnership agreement and the sale of shares in the company (no unfriendly take-over by financial investors). Tenants cannot unanimously decide to sell their property for profit. Here, the house association has exactly one vote, but the control organization, too, has exactly one vote. Therefore, in these fundamental questions, a change in the status quo can only be made with the consent of both organisations.
Neither the house association nor the control organisation can be outvoted.
In other matters however, the Syndicate has no input, e.g. the running of the House projects.

The House association carries the sole responsibility for the daily management: Who moves in? How are loans obtained? What modifications are going to be carried out on the house? How high is the rent?
These are things that belong entirely to the self-organised responsibilities of the tenants. The Syndicate has no say in these matters.

In its role as “control organisation,” the Tenant Syndicate is a partner in every individual House Ltd, simultaneously linking together all the House Ltds and maintaining the solidarity network. This set up is indeed solid and enduring, since a limited liability company cannot be dissolved unilaterally by one partner.

Project financing and Solidarity transfer
It seems to be a common thread that the desire to form a house project is combined with poor financial standing of its members.
In regard to the required financial means, the initial capital the various project could raise was of symbolic character at best.
For the purchase of real estate, the house association has to borrow hundreds of thousands of Euros / Dollars. About sixty percent of the purchase price can be borrowed as a loan from the bank. Forty percent however has to be available as equity capital, but often it isn’t. This is in Europe.
Here in Australia we will have to come up with much less, if anything. If this is a good thing is doubtful as in this case the bank loan and interest payments will be much higher.

Establishing a new House Ltd. in Europe requires a nominal capital of 25 000 Euros. The house association’s share is 12 600 Euros and that of the control organization, the Syndicate, is 12 400 Euros, however the size of the capital contingent has no impact on the voting rights.

Membership fee is 250 Euros or more. People become members because they want to support the aims of the Syndicate. This is a one off joining fee with no on-going fees. Each House Ltd is a member as well. The membership fee is like a credit which can be cancelled within the agreed period of notice and returned to the lender, however it is interest free. At the end of 2007 the Syndicate had 270 members and credits of approximately 200 000 Euros. The Syndicate always needs more members in order to be able to take on and financially contribute to new House projects.

Closing the gap between the 25 000 Euros and the 40% equity capital needed, is generally done by means of so-called direct loans: These are loans that come directly from people who find the project worthy of support and who deposit their savings there, without the participation of the bank. For this a contract is agreed upon between the lender and the House Ltd. It specifies the amount of credit (above 500 Euros), the interest rate, which is agreed upon – from 0 to 3 % and the timeframe and the period of notice.
Acquiring these loans is not an easy task. However this has been very successfully organised in all existing 33 house projects.
“….better 1000 friends at your back than one bank at your neck….”

Most projects will require loans of banks as well, and these continually cost money, namely, interest charges, which often amount to more than three-quarters of the rental income. If the rents are supposed to be socially acceptable, the leeway is extremely small. This means that the project can only be financed if the interest rates are low. The initial phase, in which the interest charges are the highest, is like a financial high-wire act for every House project.

However with an overall large number of House projects, they are not all simultaneously in the difficult initial phase. A comparison of the early and late phases led to the idea of creating equalization between the different situations of the various House projects in form of a solidarity fund.
The established projects can transfer their surpluses to help new project initiatives – using their economic leeway ethically instead of for themselves, e.g. for renovations or rent reductions. Through the gradual amortization of their loans, established projects face a considerably lower interest burden than new projects.

Such equalization between house projects with different situations does not come about by itself, it must be organised. Above all, a stable relationship and good communication has to be established between the projects to make the transfer of resources possible. This is mainly done through the structure of the Tenant Syndicate. All members of all House projects make up the Syndicate Association. The solidarity fund is looked after by the Tenant Syndicate. In order to keep it growing every tenant of a new House project pays 10 Euro cents per square metre rental space additionally to their agreed rent into the solidarity fund. This contribution increases up to 25 cents as the mortgages become smaller. The solidarity fund makes it possible the Tenant Syndicate to do publicity work, give political, legal and even financial support to new potential House associations.

This amazing and quite revolutionary idea has been successfully implemented thirty three tangible projects, with another 25 in the process- that’s in Germany alone. They are also developing in Austria, France and Spain, and hopefully one in Australia soon….

Please contact me if you are interested and would like to know more.
Also does anyone have the legal knowledge and would be willing to assist setting up a ‘limited liability company’?

Gabi Bohnet gabi.bohnet@gmail.com ph 6684 0209

Article from http://www.guardian.co.uk/environment/green-living-blog/2010/aug/10/sustainable-housing-environment

From Earthships to underground houses, The Moneyless Man says building low-impact housing for free is theoretically possible

Sustainable and stylish: Moneyless Man says it’s possible to build for free. Photograph: Simon Dale/Lammas

Access to land is one of the key obstacles in our path towards true sustainability, and without a radical shift in land policies, a moneyless society will remain what it is today – a philosophical one.

But if you do want to become communally-sufficient and moneyless, you’ll first need access to a piece of land. While this is not a problem in the Hammersmith of William Morris’s News from Nowhere or Thomas More’sUtopia, within today’s society it usually means the land needs to be bought, even if just as a one-off payment to free a piece of enslaved land from the wage economy. But there are exceptions.

In the 1950s, Vinoba Bhave set up a huge movement called Bhoodan (meaning land-gift) in India, to which ordinary landowners donated 5m acres – an area the size of Wales – to be put back into common ownership so that peasants could live and farm on it. While western culture makes such a movement unlikely, it’s never impossible. For example, Hugh Fearnley Whittingstall’s Landshare project matches those who have land but need help with it with those who can help but have no access to land. And it’s growing rapidly.

So it is obviously difficult, if not impossible, to currently talk about building a home for free. There are huge issues concerning planning permission and council tax. For planning, campaigner Simon Fairlie’s Chapter 7 has tons of great free advice, and eco building organisations such asLammas are a huge source of inspiration. For council tax, work activists such as John Harris and Lawful Rebellion provide a fascinating resource to draw on. Council tax is effectively a tax on being alive – many countries, such as Ireland, use other more equitable systems.

Next, you can then think about building your own low-impact dwelling. Theoretically, this can be done for free using human labour and local materials – like the old thatch, stone and wood cottages of pre-industrialised times – or by utilising the masses of stuff we’ve already produced. Here is a short selection of the many options open to you, some of which can be built without costing any money:

Earthships: The brainchild of Michael Reynolds, these are a type of passive solar home, made from recycled and natural local materials. Earthships can be self-sufficient in food, water and energy. They incorporate fantastic design – glass bottles are even used to create stunning lighting effects – making them visually beautiful to boot.

Underground houses: Subterranean homes maximise space in small areas, the excavated materials can be used in the building and they are wind-, fire- and earthquake-resistant. One of the greatest benefits of underground homes is their energy efficiency, as the mass of soil or rock (the geothermal mass) surrounding the house stores heat and insulates the house, keeping it warm in winter and cool in the summer.

Roundhouses: Circular houses, with a frame of wooden posts covered by wattle-and-daub or cordwood panels finished with cob. Their conical roofs are usually either thatched or have a reciprocal frame green roof.

Straw bale homes: Houses built using straw bales to form the walls of the building. In the UK, the bales can be made of wheat, rye or oat straw. They are also naturally well insulated.

Of course, doing all this completely for free is fairly unrealistic today. But even if you choose the relatively upmarket Earthship on a few acres, it at least means you will only have to spend a fraction of your time in the money economy paying the bank back money.

Ultimately, I believe it is a fundamental human right for every person to have the opportunity to live without money if that is their belief, as stated under Article 9: Freedom of Thought, Conscience and Religion of The European Convention on Human Rights. That’s why I will soon be campaigning with the Freeconomy Community for the right to live moneyless, allowing people to choose to pay their taxes and National insurance contributions from tithes and labour, or whatever alternative legal tender the government decides to offer. Watch this space.

• Mark Boyle is the founder of the Freeconomy Community and has lived moneyless for the last 19 months. His book, The Moneyless Man, is out now, published by Oneworld – sales from the book will go to a charitable trust for the Freeconomy Community. This is the last in the Guardian’s Moneyless Man series