The next phase of the Preston Model is the Public-Commons Partnership

The famous bus station in Preston, an obligatory inclusion in all stories about the Preston model. Image: Getty

With the erosion of NHS hospitals, G4S’s disastrous private prison scandal, and the collapse of Carrillion, the funeral for Public-Private Partnerships (PPPs) is long overdue.

So, what’s next? Building on the Preston model, we need local solutions of ownership and governance that can be both more democratic, easily scaled up, and effectively scaled out.

That’s what we’ve proposed in a new report on collective ownership and local governance for Common Wealth. “A joint enterprise structure that involves unions, social movements, and local government offers an incredibly useful institutional framework,” explains Preston Cllr Matthew Brown. “Public-Common Partnerships present an opportunity for local people to have a stake in how economic decisions are made in their area.”

A left-institutional turn needs a collective approach to decision-making for local energy systems, large-scale public housing, and infrastructure such as water, transport and food production and distribution. We’ve developed the idea of Public-Common Partnerships (PCPs) to address this need while linking local wealth-building ownership initiatives across the UK. 

This is how it would work: at the centre of a PCP is the Commons Association made up of citizen-owners. The Commoners Association would govern the PCP jointly with state government of the appropriate level, in partnership with a third group – a project-specific coalition of experts and stakeholders, from unions to experts in the field.

Like the procurement policy in Preston, PCPs reinvest gains back into the community, taking a substantial proportion of the surplus generated for its own growth, while the rest goes to capitalize other collective ownership schemes. 

Take, for example, the proposed Greater Manchester Energy Company. Called for by mayor Andy Burnham and developed by the GM Low Carbon Hub, local interpretations of economic and political risk are serving to lance any more ambitious and innovative models of ownership and governance.


An alternative solution would be a collectively owned energy company, co-governed by local residents in a commoners association, the Greater Manchester Combined Authority, and a stakeholders panel made up of energy and environmental experts, along with local trade unions representing energy workers. The company could reinvest surpluses in other climate mitigating Public-Common Partnerships building the kind of self-expanding circuit that problems the size of climate change demand.

This isn’t a model of top-down centralized State ownership – the Commons Associations are at the helm. Neither is it completely novel. One model to look at is BEG Wolfhagen, a German energy cooperative owned by citizens in a small town in the region of Hesse. These citizens get an annual dividend and make the decisions about how profits from the energy company are reinvested.

Although they all differ in reality, there are a wealth of examples – from Eau de Paris, the Parisian water company that was brought back into public control in 2010, to the Sacramento Municipal Utility District – that challenge conventional thinking and practices of how to successfully govern major utilities. 

Cooperatives are a time-tested governance structure. What makes PCPs different is the way they actively work to definancialise initiatives by creating a self-expansive circuit of PCPs across the country, bypassing reliance on the financial system and more equitably distributing wealth across the country. Unlike a PPP run by say, Carrillion, profit isn’t the driving force. Instead of a financialised system with off-balance sheet liabilities and value syphoned off by corporate investors, equity and democratic control would be held by local people.  

The times require a fundamental challenge to the dominant assumptions about how our infrastructure should run, and how our towns and cities should grow. Building on experiments in collective ownership and governance, such as those found in the Preston model, we believe PCPs can be a load-star for progressive bottom-up planning. Collective ownership in a co-governance structure offers a training in democracy, where residents get to decide the metrics of success in their own communities.

With calls to ditch GDP as a measurement of growth, we can reorient our economic thinking towards determining the common values upon which people wish to organise their lives. In this manner we can reach a situation where people can really ask themselves what sort of lives they wish to live.

Bertie Russell is a Research Associate at Sheffield Urban Institute. Keir Milburn is a lecturer in political economy and organisation at the University of Leicester, and author of Generation Left. You can read the full report here.

 
 
 
 

The hypocrisy of Europe's big corporate landlords

Somerford Grove resident Jordan Osserman speaks at anti-eviction demonstration in east London. (Matthew Ponsford for CityMetric)

Across Europe, as eviction bans lift, tidal waves of homelessness threaten to devastate cities. While leaders in the UK, Ireland and elsewhere have appealed to private landlord’s compassion to find common ground with tenants during the pandemic, many are already ensuring that the “new normal” doesn’t threaten their bottom line.

In the UK – where the government last week offered last minute a stay of execution, extending an eviction moratorium until 20 September – only 7% of renters who turned to their landlord for a reduction in rents during the crisis managed to agree on a lasting deal, according to tenants group Generation Rent. Even among billionaire landlords who spent lockdown performing well-publicised charitable deeds, the return to form has been startling.

In the five months since pandemic-related restrictions began, 75,000 care packages have been hand-delivered to homeless and struggling families across England by local sporting legends including Manchester-born boxing champion Ricky Hatton and Liverpool FC’s Jamie Carragher. On social media and in videos, many of the celebrity gift-givers personally thanked John Christodoulou, the British property entrepreneur who funded the parcels through his personal foundation. In a post on 3 June, Christodoulou, who selected handout locations in the neighbourhoods of his hotels and property developments, expressed “the need to stand together for the greater good” with the hashtag #InThisTogether.

The same day, the tenants of 170 privately rented apartments in a former factory building on Somerford Grove in Hackney, east London, began being served eviction notices on behalf of their landlord, a nondescript corporate entity titled Simpson House 3 Limited. From online sleuthing, curious tenants identified the man behind the entity as a Monaco-based billionaire named Yiannakis Theophani Christodoulou – John’s birth name – whose Yianis Group lists the building among its portfolio. 

Under UK law, “no-fault” evictions allow private landlords to turf-out tenants with no justification, but Philip Glanville, the mayor of Hackney, suspects another motive. He called them “revenge evictions”, targeting tenants who had the audacity to organise a joint letter, signed by over 100 residents of the block in April, requesting meetings to discuss rent decreases for people hard hit by pandemic-related job losses and lost earnings. (The eviction notices – which would only be enforceable after the moratorium has ended – called it a “business decision”. The Yianis Group and letting agents Tower Quay were contacted by email and phone calls but did not respond to questions related to this article.)

The situation at Somerford Grove, whose owner is at the same moment handing out care packages and eviction notices, spotlights the double-lives of some billionaire landlords.

Back in April, Stephen Schwarzman, the CEO of Blackstone, by many counts the world's biggest private landlord, concluded a call with investors by touting the private equity giant's $15 million in donations to New York’s first-responders and the city’s homeless population. But Blackstone, which has around 20,000 homes under management in Spain, has also used lockdown to push ahead with rate hikes at previously rent-controlled housing in Torrejón de Ardoz, a suburb to the north of Madrid, to bring payments abruptly up to market levels. In some cases, that meant nearly doubling the rent.

Similarly, in Berlin, the multinational Akelius announced its intention to begin gradually selling off rental housing in booming city centre locations, as it has done over years in Hamburg. It's also continued its programme of churning home renovations, even as families are trapped in homes with children. These home improvements allow the landlord, which rents more than 40,000 properties worldwide, to exploit a legal loophole by raising rents despite restrictions.

These renovations were criticised by then-UN Special Rapporteur on the Right to Housing, Leilani Farha, for creating “a hostile environment”. In an arrangement that is unusual even among the often-opaque legal structures employed by corporate landlords, Akelius Residential is majority-owned by the Akelius Foundation, a Bahamas-based charitable foundation that bankrolls SOS Children’s Villages, an NGO best known for building homes for orphaned children.

Farha, now global director of The Shift, an NGO aiming to secure the human right to housing, says lawmakers need to understand the challenges posed by this rising form of faceless corporate landlord, and not be blinded by charitable giving.


Signs in Madrid protest rent hikes imposed by Fidere, the Spain-based subsidiary of Blackstone. (Courtesy the Sindicato de Inquilinas e Inquilinos de Madrid)

An increasing share of the rental market

Large-scale, corporate landlords have boomed worldwide since the 2008 financial crash. In Spain, financial giants such as Blackstone and Goldman Sachs snapped up tens of thousands of apartments and homes after the cash-strapped government launched a fire sale of social housing and properties mortgaged by collapsed banks. Big corporate landlords have long held a large portion of Berlin’s rental properties, and three giants – Deutsche Wohnen, Vonovia and Akelius – combined now own more than 200,000 homes in the city. Across Britain, more than one-in-ten privately rented homes are now let by corporate landlords, according to estate agents Hamptons International.

“The fact that some of these institutional investors in residential real estate engage in charitable acts that even touch on aspects of housing – like supporting people in homelessness or building homes for children in the Global South – it highlights their failure to understand that housing is actually a human right,” says Farha.

Fidere, Blackstone’s Spanish rental company, emphasises that it is acting within the law in Madrid, where tenants’ rent-controlled contracts expired in August 2019. In Torrejon, at the height of lockdown, the landlord surprised residents by refunding months of rent paid at the rate on their previous contracts. While the Madrid Tenants Union has claimed this was an attempt to "create a false situation of non-payment, and thus be able to file lawsuits to evict us”, a spokesperson for Fidere said the refund was made in order to comply with the law, which does not allow them to accept payments for homes that lack a tenancy contract.

Fidere says it has negotiated new rents closer to market rates with the majority of tenants, while also allowing them to delay rent payments during the pandemic. But José Moreno, a tenant who lives in an apartment in Torrejon de Ardoz, says he will be unable to stay under the terms offered to him. “Fidere don't want to negotiate with me. They only want me to pay their new rate. That, in my case, is 80% more. I am now paying €700 a month and Fidere would increase it to €1200 a month. That's crazy,” he says.


Back in Berlin, Akelius rejected Farha’s report, which detailed a severe degradation of housing conditions, higher rents and mounting threat of eviction, as hearsay. Jordan Milewicz, CEO of Akelius Germany, says the company buys homes in need of renovations and addressing backlogs of maintenance results in noise, dust, and dirt – “that is simply a fact”.

“We fundamentally try to keep disturbances to our tenants as a result of construction to a minimum," he says. "We would also like to point out that Akelius is generally careful and cautious regarding modernisation. We implement rental price increases following modernisations very scrupulously,” says Milewicz.

Conny, an Akelius tenant (who declined to share his full name for fear of reprisal from their landlord), acknowledges the charitable giving. But he asks for the firm to engage with the tenants’ concerns detailed in Farha’s report, of “living in unsafe, construction sites for months and sometimes without running water and central heating,” as well as their new fears about the future of their tenure.

Tenants view Akelius' charity elsewhere as arch hypocrisy, which did not begin with the pandemic, says Conny. “You can't hand out money for a good cause with both hands and, at the same time, trample on human rights with your business that makes that money in the first place.”

The UK has so far refused to offer funding for Covid-19-related housing debts or deliver the government’s pre-election promise to end the practice of “no-fault” evictions, of the sort used against Somerford Grove residents.

The mayor of London, Sadiq Khan, posted a tweet in support of the tenants: “This is a prime example of how unrealistic it is to expect landlords & tenants to sort difficulties out amongst themselves.” Khan has set himself at odds with the UK government, twice calling on UK housing secretary Robert Jenrick to fund shortfalls in rent due to the pandemic and ban evictions caused by Covid-related arrears.

Farha argues that governments must guarantee the rights of tenants in conflict with powerful corporate landlords specifically. But many measures proposed to protect them are actually policies that would protect all renters.

In Berlin, devolved powers allow the city government to intervene more – including a rent cap which went into force in February, and froze or lowered rents on 1.5 million apartments for five years. Conny hopes the cap – if upheld after legal challenges – will do much to undermine the profit-maximising business model of firms like Akelius. But local governments should be given more powers to counteract corporate landlords’ tactics, he says.

“For example, there is right now a proposal for legislation regarding the transformation of rental houses into condominiums”, which would safeguard more affordable homes from being turned into luxury apartments, he says. “This is the legislation that needs to be introduced on a national level.”

Spain, under Socialist Prime Minister Pedro Sánchez, is moving to introduce rent controls on a national scale. A ban on evictions from 1 April will remain until six months after the crisis ends. 

Yet tenants have demanded more. A nationwide rent strike currently claims more than 15,000 participants, demanding no rent or mortgage payments for anyone for the duration of the crisis. That's just one of a list of demands designed to shift the perception of housing, from an asset for wealthy landlords to govern as they please, to a right guaranteed for all.

Ultimately, such bold rethinking will be necessary, says Farha, to address problems that did not begin with Covid-19, but far earlier, when governments began treating housing as a responsibility of markets and charities, rather than the duty of the state.

“Charitable acts are nice. But once you engage in the area of housing, you've entered a human rights domain, and there's actually accountability that attaches to you, to your actions," says Farha. "You can't get out of that accountability."

Matthew Ponsford is a London-based journalist specialising in cities, housing and environments. Follow him on Twitter