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Co-operative housing project in Croatia: the case of the city of Križevci

Created on 05-09-2024 | Updated on 30-09-2024

Housing affordability is interpreted and measured in different ways, with the EU generally using the relationship between price and income as the main indicator. The affordability of housing is influenced by local housing prices, income levels and interest rates. In Croatia, housing affordability problems exist in both urban and rural areas due to low incomes and high energy inefficiency of houses, particularly for homeowners in the rural areas. Low interest rates have boosted investment in property, driving up prices and contributing to market speculation, especially in tourist areas. The financialization of housing and foreign investment further exacerbate the affordability problem. To overcome these challenges, collaborative housing models, including co-housing and co-operatives, offer potential solutions. These models emphasise user participation, mutual respect and solidarity, often financed through crowdfunding. Housing cooperatives, where members share ownership and control, prevent market speculation and maintain long-term affordability. Croatia is testing this approach through pilot projects, such as in Križevci, which aims to create a framework for cooperative housing. The project involves the conversion of a former military facility into cooperative housing and is supported by the local government and various organisations. This initiative underlines the potential of cooperative housing to provide sustainable, community-oriented solutions to Croatia's overheated housing market.

Instrument
regulation, incentive

Issued (year)
2021

Application period (years)
2021-2023

Scope
local

Target group
young, first-time buyers, elderly

Housing tenure
co-operative housing

Discipline
economics, fiscal policy

Object of study

Description

Housing affordability has many interpretations and definitions. Across the European Union, the most common indicator used to measure housing affordability is the price-to-income ratio. According to Eurostat (2023), if a household spends more than forty percent of its disposable income on housing, the household is overburdened with housing costs. Throughout the EU, from 2010 and 2018, the average rate of housing experiencing overburdening rate is approximately ten per cent, although there are significant fluctuations among Member States.

 

Housing affordability is a complex issue influenced by local housing prices and income levels. It cannot be measured on a national level in absolute terms, given the variation in housing costs and incomes across different localities. For instance, housing may be deemed unaffordable in major Croatian cities, whereas it may be more accessible in smaller mainland towns due to a lower demand. Both homeowners and tenants in Croatia are struggling with an excessive burden of housing costs due to their low income and the low energy efficiency of their homes.

Furthermore, housing prices are influenced not only by housing supply and demand but also by the cost of financial capital, such as the interest rates. When interest rates are lower and financing is more affordable, both individual and institutional investors are incentivized to invest in real estate, particularly in Croatia where the equity market is underdeveloped, and alternative investment options are limited. This phenomenon contributes to market speculation and drives up housing prices, especially for units designated for short-term renting during tourist seasons rather than long-term rentals. As a result, despite an increase in the supply of housing units, there is no corresponding decrease in housing price level.

According to Caturianas et al. (2020), “evidence also shows that secondary property ownership is widely used in many EU Member States as an investment, to supplement absent or low second-tier pension arrangements by those who are inadequately covered by such arrangements.” These developments supported the financialization and commodification of housing markets. What is even more important for countries like Croatia, due to its dependence on tourism, is the following argument: “evidence also shows that foreign investment increases local house prices and reduces the rate of home ownership in the area, especially in places where housing stock reacts more slowly to housing price changes” (Caturianas et al., 2020). The current housing market in Croatia is overheated, as stated by the European Systemic Risk Board (ESRB, 2022). One of the main reasons is the state withdrawal from the housing market, leaving it now subjected to speculative investments. Although this has not yet been addressed in the literature, public discourse in Croatia suggests that the housing units currently on the market are priced unrealistically high by sellers and that a price correction is likely in the near future. Therefore, measures to improve housing affordability should not be universal. For example, increased investment in social or public rental housing in the continent's rural towns would not increase the quality of life of residents, thus other solutions must be sought. Given the lack of national housing strategies and top-down approaches, we examine the emerging bottom-up approach of cooperative housing as a possible solution.

 

Collaborative housing in EU

One possible direction of housing policy development in Croatia could be towards collaborative housing options. Collaborative housing is an umbrella term for various collective self-organised forms of housing, such as co-housing, cooperatives and other collaborative housing forms (Czischke et al., 2020). What these models share is a strong emphasis on user participation, fostering reciprocal relationships among residents, and promoting mutual respect and solidarity within the community. Financing for these forms usually comes from crowdfunding and alternative financing sources. Often, collaborative housing projects have a target group of residents, e.g. young or the elderly (Czischke, 2018).

A housing cooperative is a model where a property is owned and operated by an association, with members of the association residing in it. Members do not own the dwelling outright but instead own a share of the association’s assets and have the right to use one of its properties (Norden, 2024). Usually, the housing cooperatives use resources pooled from future residents and construct housing. In some models, a cooperative owns the buildings, while the land remains under the ownership and oversight of the local government. This arrangement helps prevent market speculation and ensures that the housing units remain affordable over the long term.

In times of housing crisis, countries such as Italy, Switzerland, and France promoted cooperative housing as a housing option, thereby giving it credibility and legitimacy. However, Croatia inherited a negative connotation associated with the term cooperative housing from the socialist era and still needs to break away from this dependence. Compared to Western countries where collaborative housing is emerging, it is not well-developed in Central and South-Eastern European countries. The housing market in these countries is characterised by low quality dwellings and poor energy efficiency, with a 20-30% rate of housing deprivation (Pósfai & Jelinek, 2022). However, Pósfai and Jelinek (2022) identify two specific obstacles hindering progress in the cooperative housing sector: (1) loan maturities are too short, and (2) the underdeveloped financial market does not support the expansion of activities. Thus, one potential solution is catalytic capital that would bridge the gap of missing long-term financing. One form of this type of financing is a complementary loan. The enabling institutions must be intermediary organisations that collect and structure capital, which they then lend to the end user, while also supporting them in utilising the investment more effectively.

The broad target population for collaborative housing in Central and Eastern European countries primarily includes young people seeking to move out of their parents' home, elderly individuals with low income who live alone, single parents, and tenants facing financial difficulties in paying the rent (Pósfai & Jelinek, 2022). On the other hand, the narrow target group consists of “financially relatively stable, but still unable to solve their housing problems. The potential demand of this group signals a niche in the housing finance market” (Pósfai & Jelinek, 2022). The main goal for this target population is not necessarily homeownership but rather securing stability and affordability in housing.

  

Co-operative housing pilot project in Križevci, Croatia

Thus far, the co-operative housing in Croatia is in its infancy, limited to pilot projects aimed at understanding the necessary regulatory and financial frameworks needed for cooperative housing to gain popularity and credibility, particularly within niche markets.

The pilot project in the city of Križevci started in 2021 and is a joint project organised by Open Architecture cooperative, cooperative for Ethical Financing, the European cooperative MOBA housing SCE (European Cooperative Society) and the city of Križevci. Over the past five years, these partner organisations have worked together to find a suitable model for cooperative housing in Croatia. The cooperative model in Križevci involves local governments providing land for long-term use through building rights agreements. The main objective of this initiative is to demonstrate the feasibility and necessity of housing cooperatives in the Croatian context, responding to high demand and growing interest from local governments and citizens alike.

The housing is being developed on former military facilities. In 2003, the military vacated the site, and by 2007, the municipal administration had taken over management of the area. They transformed it into a high school, a retirement home, a municipal library, a technology park, and an observatory.

The city plans to grant the housing cooperative the use of the former barracks for a period of 50-75 years, during which the cooperative will be responsible for investing in its reconstruction. The project aims to provide 36 apartments, 260 metres squared of common areas and 240 metres squared of coworking space.

The project has two main objectives: first, to establish the necessary legal, financial and organisational conditions for housing co-operatives in Croatia; and second, to prepare a cooperative pilot project. Through these efforts, the project aimed to lay a foundation for sustainable and community-oriented housing solutions, rooted in co-operative principles and local development. Moreover, the project team developed a proposal for a general model of cooperative housing in Croatia, laying the groundwork for broader implementation across the country. Below is he list of the most important activities and most valuable outputs that were the result of this project.

The most important activities undertaken during the project included:

- Organising numerous educational events with guests from successful European housing co-operatives

- Hosting public presentations and stands on cooperative housing with local and international speakers in cities such as Zagreb, Karlovac, Pula and Zabok

- Analysing the current residential property market and the current legal frameworks

- Preparing presentation materials outlining the cooperative housing model

- Presenting the cooperative housing model to interested parties in various towns, including Koprivnica, Split, Rovinj, Pazin, Labin, Pula, Zagreb, Prelog and Zabok

These efforts aimed to educate, engage and inspire stakeholders across Croatia about the benefits and feasibility of cooperative housing, promoting a sustainable and community-oriented approach to housing development.

The most important outputs derived from the project were:

- Conducting a feasibility study to explore funding options for the reconstruction of the building.

- Organising educational and participatory events with interested citizens and future tenants, including six workshops on the following topics:

 - Introduction to cooperative housing

 - Establishment and operation of housing co-operatives

 - Defining the statutes for the housing co-operative

 - Participatory design in collaboration with the future tenants and the city in the development of a design and conceptual plan for the residential building

These initiatives aim to ensure the successful establishment and sustainable operation of the housing co-operative and involve the future tenants in the planning and design process to create a community-oriented housing solution.

In an interview with Goran Jeras, the managing director of the Ethical Finance Cooperative in March 2024, we discussed the primary obstacles to establishing a housing co-operative. He highlighted that one of the main challenges is the short-term nature of available loans, typically lasting two to three years, which are designed for financing projects focused on rapid construction and sale of housing units. To facilitate the development of cooperative housing, Jeras emphasized the importance of local governments providing land or buildings for refurbishment. He proposed that improving conditions for cooperative development could involve creating an institution or organization dedicated to managing and overseeing project financing and implementation. Additionally, Jeras suggested a potential solution from a top-down approach: delaying the payment of VAT (which is twenty-five percent) for construction, thereby reducing the initial project costs.

Alignment with project research areas

This pilot project addresses the three research areas of the RE-DWELL project as described below.

Design, planning and building

The pilot project contributes significantly to several areas of design, planning, and construction, including industrial construction, building retrofitting, and urban regeneration. Regarding industrial construction, the project emphasizes the use of natural and local materials in the construction and renovation of the designated building. For building renovation and urban regeneration, the project focuses on enhancing energy efficiency through deep renovation and implementing energy-efficient technologies such as photovoltaic systems for electricity generation.

Furthermore, the pilot project includes educational activities aimed at potential future members to educate them about the responsibilities within a housing co-operative, expected behaviours, and methods to ensure the sustainable operation of the co-operative.

Community participation

Community participation is essential in cooperative housing projects because it fosters a sense of ownership and commitment among residents, leading to long-term engagement and support. By involving community members in the planning and decision-making processes, these projects can tailor solutions that meet specific needs and preferences, enhancing design functionality and liveability. Active participation also promotes social cohesion by fostering relationships and networking opportunities among residents. Moreover, community input ensures sustainability by encouraging better management practices and maintenance efforts, while promoting democratic governance through transparent decision-making processes. Ultimately, community participation not only shapes the development to reflect the desires of its members but also strengthens the co-operative's foundation for a thriving and cohesive community environment.

Policy and financing

This pilot project is proving to be highly significant for assessing the potential of alternative housing forms in the Croatian housing market. It demonstrates that citizens in smaller cities are interested in establishing a housing co-operative, indicating potential interest in larger cities as well. Currently, affordable housing, including cooperative housing, is a neglected policy area, lacking a supportive legal framework for those interested in these initiatives. The challenges withing the current legal framework include the regulation of  housing co-operatives and the institutionalisation of such a relationship, as well as the lack of long-term loan options available in the Croatian financial market. The most viable solution appears to be the establishment of an intermediary organisation capable of professionally managing all critical aspects from financing to project execution.

Design, planning and building

Community participation

Policy and financing

* This diagram is for illustrative purposes only based on the author’s interpretation of the above case study

Alignment with SDGs

SDG 1: No poverty

Cooperative housing has the potential to alleviate poverty through the provision of several financial advantages. Residents in cooperative housing typically do not bear the costs of land ownership or real estate brokerage fees, which enhances household financial stability. This financial relief allows residents to allocate resources towards other essential aspects of life, such as raising a family or advancing their careers. Additionally, cooperative housing offers increased tenancy security, providing residents with a stable and predictable living arrangement.

 

SDG 11: Sustainable Cities and Communities

Cooperative housing enhances housing affordability and sustainability while fostering social inclusion. Introducing more cooperative housing in Croatia has the potential to stabilize the housing market and expand housing opportunities for individuals who struggle to secure credit for homeownership or find suitable rental accommodations. By providing an alternative housing model that is often more accessible financially, cooperative housing can reduce barriers to housing access and contribute to a more equitable distribution of housing resources. This approach not only addresses immediate housing needs but also promotes long-term community stability and resilience in the face of economic challenges.

References

Caturianas, D., Lewandowski, P., Sokołowski, J., Kowalik, Z., and Barcevicius, E. (2020). Policies to Ensure Access to Affordable Housing. Luxembourg: European Parliament.

 

Czischke, D. (2018) Collaborative housing and housing providers: towards an analytical framework of multi-stakeholder collaboration in housing co-production, International Journal of Housing Policy, 18:1, 55-81, DOI: 10.1080/19491247.2017.1331593

 

Czischke, D., Carriou, C. & Lang, L. (2020). Collaborative Housing in Europe: Conceptualizing the Field, Housing, Theory and Society, 37:1, 1-9, DOI: 10.1080/14036096.2020.1703611

 

European Systemic Risk Board (ESRB). (2022). WARNING OF THE EUROPEAN SYSTEMIC RISK BOARD of 2 December 2021 on medium-term vulnerabilities in the residential real estate sector of Croatia (ESRB/2021/13), Official Journal of the European Union, C 122/18

 

Eurostat. (2023). Total overcrowding rate in the EU-27 in (%). Accessed 25.9.2023. address: https://ec.europa.eu/eurostat/databrowser/view/ILC_LVHO05A__custom_6337587/bookmark/bar?lang=en&bookmarkId=b75f024b-5068-4af2-bb50-c3fa84a01da5

 

Grgas, G. (2022, January 24). U Europi je hit, a uskoro će biti moguće i u Hrvatskoj: Novi model gradnje priuštivih stanova. [It's a hit in Europe, and it will soon be possible in Croatia as well: A new model for building affordable apartments]. Forbes. https://forbes.n1info.hr/aktualno/u-europi-je-hit-a-uskoro-ce-biti-moguce-i-u-hrvatskoj-novi-model-gradnje-priustivih-stanova/

 

Norden. (2024). Housing in Denmark: Co-operative housing, address: https://www.norden.org/en/info-norden/housing-denmark, accessed on May 24, 2024.

 

Pósfai, Z. & Jelinek, C. (2022). Catalytic capital investment as an enabler of affordable rental and cooperative housing in Central and South-Eastern Europe. Investor report. ISBN: 978-615-01-6907-1

Related vocabulary

Community Empowerment

Community-led housing

Social Value

Area: Community participation

Community empowerment appears in the literature of participatory action research (Minkler, 2004), participatory planning (Jo & Nabatchi, 2018), and community development (Luttrell et al., 2009) as a key element of participatory practices, understanding it as a process that enables communities to take control of their lives and their environments (Rappaport, 2008; Zimmerman, 2000). Many argue that community participation becomes meaningless if it does not lead to, or pass through community empowerment. As the term is being used in diverse and ubiquitous ways, it runs the risk of ending up as an empty definition and a catch-all phrase (McLaughlin, 2015). It is therefore important to specify the perspective through which we will view the term and clarify the nuances.  Since its origins, empowerment has been used in two different ways. Firstly, top-down as the power that had been ‘granted’ by a higher authority, such as the state or a religious institution, and secondly, bottom-up, as a process by which groups or individuals come to develop the capacity to act and acquire power. Examples of the latter can be found in social groups such as feminists working in nongovernmental organizations throughout the global south in the 1970s, who found a way to address social issues and inequalities that enabled social transformation based on women’s self-organization (Biewener & Bacqué, 2015). The term was gradually appropriated by welfare, neoliberal, and social-neoliberal agendas whose priority was individual agency and choice. In neoliberal rationality, empowerment is related to efficiency, economic growth, business productivity, and individual rational choice to maximize profit in a competitive market economy. In social liberalism agendas, empowerment is understood as ‘effective agency’, where ‘agency’ is not an inherent attribute, but something that needs to be constructed through ‘consciousness-raising’ (McLaughlin, 2016). A broader definition sees empowerment as a social action process through which individuals, communities, and organizations take control of their lives in the context of changing the social and political environment to improve equity and quality of life (Rappaport, 2008; Zimmerman, 2000). Rowlands (1997), refers to four types of empowerment: power over, as the ability to influence and coerce; power to, to organize and change existing hierarchies; power with, as the power from the collective action and power within, as the power from the individual consciousness. Using this classification, Biewener & Bacqué (2015), adopting a feminist approach, understand empowerment as a multilevel construct with three interrelated dimensions: 1) an internal, psychological one, where ‘power within’ and ‘power to’ are developed, 2) an organizational, where ‘power with’ and ‘power over’ are strengthened and 3) a social or political level, where institutional and structural change is made possible through collective action. Thus, community empowerment links the individual level, which involves self-determination, growth of individual awareness, and self-esteem, to the collective level, relating critical consciousness and capacity building with the structural level, where collective engagement and transformative social action take place. This view of empowerment, which considers its goals and processes, has a social dimension that is lacking in other approaches that prioritize individual empowerment. Aside from the feminist movements, the philosophy and practices of community empowerment have been greatly influenced by the work of Paulo Freire, a Brazilian educator and an advocate on critical pedagogy. Freire proposed a dialogic problem-solving process based on equality and mutual respect between students and teachers; that engaged them in a process of iterative listening-discussing-acting. Through structured dialogue, group participants shared their experiences, discussed common problems, and looked for root causes and the connections among “problems behind the problems as symptoms” (Freire, 1970). The term conscientization, that Freire proposed, refers to the consciousness that arises through the involvement of people in the social analysis of conditions and their role in changing them. This awareness enables groups to be reflexive and open spaces, to enact change or to understand those limited situations that may deter change (Barndt, 1989). Empowerment can be understood as both a process and an outcome (Jo & Nabatchi, 2018). As a process, it refers to “the development and implementation of mechanisms to enable individuals or groups to gain control, develop skills and test knowledge”(Harrison & Waite, 2015) and it entails the creation of new subjects who have developed a critical consciousness and the formation of groups with a ‘collective agency’ ‚ or ‘social collective identity’ (Biewener & Bacqué, 2015). Empowerment as an outcome refers to “an affective state in which the individual or group feels that they have increased control, greater understanding and are involved and active” (Harrison & Waite, 2015). This can lead to a transformation of the social conditions by challenging the structures and institutionalized forms that reproduce inequalities. The values and the significance of community empowerment can be further applied in the participatory and community-based approaches of the housing sector. Examples of such approaches in the housing provision are the housing cooperatives, and self-developed and self-managed housing groups. Housing cooperatives aim at promoting co-creation to engage future residents, professionals, and non-profit organizations in all the stages of a housing project: problem-framing, designing, developing, cohabiting, managing, and maintaining. Such organisational models stress the importance and pave the way for community empowerment by uniting individuals with similar interests and ideals, enabling them to have housing that responds to their needs, preferences, and values. The participation of the residents aims to strengthen their sense of ownership of the process, the democratic decision-making and management, and the social collective identity, making community empowerment an integral characteristic of cooperative housing initiatives. With this social perspective, residents can gain individual and collective benefits while contributing to fairer and more sustainable urban development on a larger scale (Viskovic Rojs et al., 2020).

Created on 03-06-2022

Author: Z.Tzika (ESR10)

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Area: Community participation

Community-led housing involves residents, often organised into community groups, actively participating in planning, designing, financing and managing housing projects to meet their specific needs and preferences. This active involvement nurtures a sense of community ownership and control. This sense of community encompasses  feelings of belonging, shared identity, and mutual support among the residents of a community-led housing initiatives. The term is sometimes used interchangeably with the term "collaborative housing". Collaborative housing also refers to a participatory approach to housing development; however, the focus is on collaboration with the different stakeholders and encompasses various non-profit housing delivery models. While self-organised collective housing efforts are nothing new, a new wave of such initiatives has emerged in Europe since the 2000s (Lang et al., 2018; Tummers, 2016). In recent decades, market-provided housing has been the predominant model in Europe, often prioritising economic gain over the right to adequate shelter. The primary housing options from a tenure perspective are home ownership and rent, which are not always affordable for low-income groups (OECD, 2020, 2020). As a result, many communities are coming together to create secure and affordable housing solutions (Jarvis, 2015). However, the motivations behind these initiatives can vary among the involved groups and may reflect economic, ideological, social or ecological ideals (Caldenby et al., 2020). Some of these motivations include creating affordable homes, exploring more sustainable living practices, and fostering a sense of community and social cohesion. In contrast to other forms of collective housing, community-led housing schemes do not merely emphasize resource or living space sharing: they empower the community to play a proactive role in shaping their built and living environment. According to the Co-operative Councils Innovative Network (2018), community-led housing are developments that meet the following criteria: There is meaningful community engagement throughout the process, even if they did not initiate or build the scheme. The community has a long-term formal role in the ownership or management of the homes. The benefits of the scheme to the local area and/or specified community group are clearly defined and legally protected in perpetuity. Community-led housing can take diverse forms, contingent upon the extent of involvement from the participating communities and the specific type of development. These manifestations range from grassroots groups independently initiating projects to meet their housing needs, to community organizations spearheading housing initiatives. Additionally, developers, such as local authorities or housing associations, can initiate partnerships to provide housing solutions with a community-led component (Lang et al., 2020). Furthermore, concerning the development model, community-led housing can encompass constructing new homes, repurposing vacant homes and managing existing housing units. Each of these approaches has the potential to significantly influence the broader neighbourhood context (Fromm, 2012). The forms of community-led housing include: Housing cooperatives: These are groups of people who provide and collectively manage, homes for themselves as tenants or shared owners, based on democratic membership principles. Cohousing: These consist of like-minded people who come together to provide self-contained private homes for themselves while collectively managing their scheme and often sharing activities, including communal spaces. Cohousing can be developer-led, so it is important to examine whether cases meet the broad definition given above, rather than simply use the term cohousing as a marketing device. Community Land Trusts (CLTs): These are not-for-profit corporations that hold land as a community asset and serve as long-term providers of rental housing or shared ownership. Self-help housing: Small, community-based organisations bringing empty properties back into use, often without mainstream funding and with a strong emphasis on construction skills training and support. Tenant-Managed Organisations: They provide social housing tenants with collective responsibility for managing and maintaining the homes through an agreement with their council or housing association.   These models are adaptable and not mutually exclusive; for example, a co-housing group could choose to establish either a cooperative or a Community Land Trust (CLT). It is important to note that there are variations in how these models are applied in different contexts and countries. For local authorities, community-led housing offers several advantages. It improves the housing supply and the availability of affordable homes, diversifying the housing market while ensuring the long-term affordability of housing units. Additionally, community-led housing supports urban regeneration efforts and repurposes vacant homes. It has the potential to empower communities so that they become more self-sufficient. By involving residents in addressing their housing needs, these initiatives provide opportunities for vulnerable groups, such as the elderly, mono-parental families, etc., to live in supportive communities. Such housing schemes can be developed in various contexts, offering solutions for different housing challenges, including informal settlements, former refugee camps, and the heavily owner-occupied housing markets of South and Eastern Europe.

Created on 05-10-2023

Author: Z.Tzika (ESR10)

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Area: Community participation

Social value (SV) is a wide-ranging concept that encompasses the wider economic, social and environmental well-being impacts of a specific activity. Given its applicability across various sectors, diverse interpretations and definitions exist, often leading to its interchangeable use with other terms, such as social impact. This interchangeability makes it difficult to establish a universally accepted definition that satisfies all stakeholders, contributing to the term’s adaptability and to a variety of methods for identification, monitoring, measurement and demonstration. Nevertheless, common themes emerge from literature definitions. First, SV involves maximizing benefits for communities and society beyond an organisation's primary goals, which requires innovation and a focus that goes beyond financial values. It is often referred to as the added value of an intervention. Second, the short-, medium- and long-term effects of activities, as well as their broader community reach, need to be assessed in terms of a life-cycle project perspective. Thirdly, SV aligns with the triple bottom line of sustainability, which underlines social, environmental and economic considerations in well-being. In the UK, SV gained prominence with the introduction of the Public Services (Social Value) Act 2012. This legislation mandates organisations commissioning public services to consider and account for the wider impacts of their operations (UK Government 2012; UKGBC, 2020, 2021). The Act has provided incentives to quantitatively measure the impact of projects on communities and standardise approaches in the built environment, a sector that has been significantly influenced by this regulatory framework. Organisations such as the UK Green Building Council (UKGBC) have played a crucial role in shaping a common agenda through reports such as Delivering Social Value: Measurement (2020) and Framework for Defining Social Value (2021), which set out the steps needed to determine social value. Recognising that SV is strongly influenced by contextual factors, these publications emphasize the challenge for formulating an all-encompassing definition. Instead, they advocate for focusing efforts on developing context-specific steps and methods for measurement.     However, the existing literature is mainly concerned with SV during the procurement and construction phases, overlooking the SV of buildings during the use phase and the potential opportunities and benefits they offer to users. This bias is due to the construction sector's rapid response to the Act and its easier access to certain types of information. This influences the prominence of certain data in project’s impact assessments and SV reports, such as employment opportunities, training, placements, and support of local supply chains through procurement. More intangible outcomes such as community cohesion, quality of life improvements, enhanced social capital, cultural preservation, empowerment and long-term social benefits are rarely featured as they are deemed more challenging to quantify due to their subjective or qualitative nature. Similarly, there remains a lack of clarity and consensus regarding a standardised approach to assessing the added value created. The challenge stems from diverse interpretations of value among stakeholders, influenced by their unique interests and activities. Communicating something inherently subjective becomes particularly daunting due to these varying perspectives. Additionally, translating all outcomes into financial metrics is also problematic. This is primarily due to the unique circumstances that characterise each development and community, making it impractical to hastily establish targets and universal benchmarks for their assessment. (Raiden et al., 2018; Raiden & King, 2021a, 2023). This complexity is recognised by Social Value UK (2023: n.p.), stating: “Social value is a broader understanding of value. It moves beyond using money as the main indicator of value, instead putting the emphasis on engaging people to understand the impact of decisions on their lives.” Moreover, the growing significance and momentum that SV is gaining are evident in the emergence of analogous legislations that have appeared in recent years and that have a direct influence on shaping how the built environment sector operates in their respective countries. Noteworthy examples of social value-related regulations include the Well-being of Future Generations Act 2015 in Wales; the Procurement Reform Act 2014 in Scotland; the social procurement frameworks in Australia; the Community Benefit Agreements in Canada; the Government Procurement Rules in New Zealand; and the Environmental, Social, and Governance (ESG) criteria considered in various countries around the world, among others.   Identifying and measuring social value SV should be an integral aspect of project development and, therefore, must be considered from the early stages of its conception, taking into account the entire lifecycle. The literature highlights a three-step process for this: 1) identifying stakeholders, 2) understanding their interests, and 3) agreeing on intended outcomes (UKGBC 2020, 2021). More recently, Raiden & King (2021b) linked the creation of SV to the achievement of the United Nations Sustainable Development Goals (SDGs). In the context of the built environment, SV can contribute to reporting on the SDGs, elevating the value the sector creates to society onto the international agenda (Caprotti et al., 2017; United Nations, 2017). While SDG 11 “Make cities and human settlements inclusive, safe, resilient and sustainable”, is often placed within the remit of the built environment, SV programmes developed by social housing providers, for example, extend the sector’s impact beyond SDG 11, covering a broader range of areas  (Clarion Housing Group, 2023; Peabody, 2023). This aspect is also echoed in the Royal Institute of British Architects (RIBA) Sustainable Outcomes Guide, which links the SDGs to specific outcomes, including the creation of SV (Clark & HOK, 2019). Over the past decade, various methodologies have been proposed to undertake the intricate task of assessing value beyond financial metrics, drawing inspiration from the work of social enterprises. Among the most prominent and widely adopted by diverse stakeholders in the sector are the Social Return on Investment (SROI), Cost-Benefit Analysis (CBA) — sometimes referred to as SCBA when given the social epithet—, and the well-being valuation approach. (Fujiwara & Campbell, 2011; Trotter et al., 2014; Watson et al., 2016; Watson & Whitley, 2017). The widespread implementation of these approaches can be explained by the development of tools such as the UK Social Value Bank, linked to the well-being valuation method. This tool, used to monetise ‘social impacts’, is endorsed by influential stakeholders in the UK’s housing sector, including HACT (2023), or the Social Value Portal and National TOMs (Themes, Outcomes and Measures) (Social Value Portal 2023). In the measuring of SV, these methodologies unanimously emphasize the importance of avoiding overclaiming or double-counting outcomes and discounting the so-called deadweight, which refers to the value that would have been created anyway if the intervention had not taken place, either through inertia or the actions of other actors. While the development of these approaches to measuring SV is pivotal for advancing the social value agenda, some critics contend that there is an imbalance in presenting easily quantifiable outcomes, such as the number of apprenticeships and jobs created, compared to the long-term impact on the lives of residents and communities affected by projects. This discrepancy arises because these easily quantifiable metrics are relatively simpler to convert into financial estimates. Steve Taylor (2021), in an article for The Developer, pointed out that the methods employed to measure social value, coupled with the excessive attention given to monetisation and assigning financial proxy values to everything, may come at the expense of playing down the bearing of hard-to-measure well-being outcomes: “As long as measurement of social value is forced into the economist’s straightjacket of cost-benefit analysis, such disconnects will persist. The alternative is to ask what outcomes people and communities actually want to see, to incorporate their own experiences and perspectives, increase the weighting of qualitative outcomes and wrap up data in narratives that show, holistically, how the pieces fit together. We loosen the constraints of monetisation by mitigating the fixed sense of value as a noun; switching focus to its role as an active verb – to ‘value’ – measuring what people impacted by changes to their built environment consider important or beneficial.” The process of comprehensively measuring and reporting on SV can be challenging, time-consuming and resource-intensive. It is therefore important that stakeholders truly understand the importance of this endeavour and appreciate the responsibilities it entails. Recently, Raiden and King (2021a, 2023) have highlighted the use of a mixed-methods approach for assessing SV, proposing it as a strategy that can offer a more thorough understanding of the contributions of actors in the field. They argue that an assessment incorporating qualitative methods alongside the already utilized quantitative methods can provide a better picture of the added value created by the sector. These advancements contribute to the overarching goal of showcasing value and tracking the effects of investments and initiatives on people's well-being. Nevertheless, a lingering question persists regarding the feasibility of converting all outcomes into monetary values. Social value in architecture and housing design In the field of architecture, the RIBA, in collaboration with the University of Reading, took a significant step by publishing the Social Value Toolkit for Architecture (Samuel, 2020). This document provides a set of recommendations and examples, emphasizing why architects should consider the SV they create and providing guidance on how to identify and evaluate projects, incorporating techniques such as Post-Occupancy Evaluation. This is a remarkable first step in involving architects in the SV debate and drawing attention to the importance of design and the role of architecture in creating value (Samuel, 2018). More recently, Samuel (2022:76) proposed a definition of SV in housing that places the well-being of residents at the centre of the discussion. Accordingly, SV lies in “fostering positive emotions, whether through connections with nature or offering opportunities for an active lifestyle, connecting people and the environment in appropriate ways, and providing freedom and flexibility to pursue different lifestyles (autonomy).” In this context, it is also relevant to highlight the work of the Quality of Life Foundation (QoLF) & URBED, who published The Quality of Life Framework (URBED, 2021). This evidence-based framework identifies six themes in the built environment crucial for assessing relationships between places and people:  control, health, nature, wonder, movement, and community. More recently, Dissart & Ricaurte (2023) have proposed the capability approach as a more comprehensive conceptual basis for the SV of housing. This approach expands the work of the QoLF, focusing the discussion on the effective freedoms and opportunities that the built environment, specifically housing, offers its inhabitants. It serves as a means to gauge the effectiveness of housing solutions and construe SV.

Created on 16-11-2023

Author: L.Ricaurte (ESR15)

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