Can a Bunch of Tech Nerds Solve the Housing Crisis?

In May last year, Andrew Bailie posted a photo of the kind rarely seen on LinkedIn: a small white mushroom growing out of a floorboard. “That mushroom grew in the last flat I rented,” Bailie wrote, a shocking confession on a platform famed for shameless self-promotion. “I was paying 50% of my income to live there. Rents are soaring, amid a crisis of affordability, safety and decency. Co-ops offer a way forward.”

In the post, Bailie announced he’d co-founded a fix for the “broken market”: Roost, a company that would “make it easy for renters to set up & finance a co-op”, and if successful would “get a million homes into community ownership” (tech startups love nothing if not a delusional-sounding claim). LinkedIn lapped it up: the company had hundreds of would-be co-op members on its waiting list within a week; it now has 10,271.

Roost has not yet realised its grand ambitions. Out of 1m promised co-ops, it has so far created five – one being Bailie’s in Hackney, east London, which he shares with five others, including his partner Paula Bendiek. There is also a Roost co-op in Sheffield – a 48-bedroom former hotel opened in March this year – and three other London Roosts.

Yet at the moment, Roost co-ops differ significantly from traditional housing co-ops in two important ways: they charge market rent and are leased, not owned. Rooms in Sheffield cost between £560 and £750 per month, while a recent Roost newsletter advertised a soon-to-be Tottenham Roost in northeast London, a terraced house converted into four one-bedroom flats with a large shared garden, for £1,700 each (£850 each for a couple) – an eye-watering amount for the kinds of people co-ops conventionally attract.

Unlike the 12-month tenancy agreements typical of private rentals, Roost has helped its co-ops secure long leases, in some cases extremely long. Bailie’s lease is five years – in Sheffield, it is 20. The company has also managed to lock in low rent increases: Bailie’s is capped at 3.5% each year, Sheffield to 3% or inflation, whichever is lower. This will soon mean Roost co-ops charge significantly less than market rent: private rents in Sheffield increased by an average of 9.8% between July 2023 and July 2024; in Hackney, they rose by 11% in the same period. Knowing where you will live and what your rent will be in 2040 is nothing to sniff at.

In typical startup fashion, Roost wants to move fast and break things, most of all the co-operative orthodoxy that says co-ops must grow slowly from the grassroots and resist the temptations of capitalism. Just over a year since launch, the company already has four employees, three more on the way and a glittering advisory board of Oxford lecturers, bank bosses and marketing gurus. Yet Roost’s ambitions to scale, its willingness to work with big investors and its acceptance of the inevitability (at least in the short-to-mid-term) of landlordism have rung alarm bells among housing activists allergic to the trappings of tech companies. In trying to engineer a co-operative housing boom, is Roost threatening the principles that underpin it? Or is it oiling the wheels of a creaky co-op movement in the hopes of popularising a different way of living?

A closed shop.

At their heart, co-ops are about collective ownership: groups of individuals pooling resources to gain more control over a certain commodity (food, housing, energy, credit card debt) and, crucially, make it cheaper. In the case of housing, this has historically meant using co-op members’ collective resources to build or buy properties and so escape the whims of landlords.

Co-ops were always, however, something of a minority activity in the UK. They got their start in the 1840s, when a group of weavers and artisans in Rochdale came together to build around 80 co-operatively owned homes. A second wave of co-operative house-building in the early 1900s created a few hundred more, including across large sections of Hampstead Garden Suburb, now one of the capital’s most expensive areas. The suburb’s Waterlow Court was purpose-built to house single working women and their children; a one-bedroom flat in the block could now easily set you back half a million pounds.

The third and last major wave of co-operative residential construction happened in the 1960s, facilitated by the 1964 Housing Act, which offered government loans and grants to housing associations and co-operatives to rebuild bombed-out housing. Margaret Thatcher would soon put an end to this. From the 1970s onwards, hers and successive governments choked off funding to co-ops, instead privileging individual homeownership and deregulating housing. Property speculation and amateur landlordism boomed; housing associations, many of them as imperious as private landlords, took control over much of what remained of the council housing stock. Only 196,000 people currently live in a co-op in Britain, while in Sweden, for instance, 22% of housing stock is co-operatively owned. The 685 housing co-ops left in the UK today are an oasis within a housing desert – and competition for them is intense.

Few renters in the UK will have ever seen a place in a co-op advertised – and that’s intentional. Many co-ops work with local authorities and housing associations to refer people directly from the council house waiting list, meaning there’s no way to apply to join. Those with open applications receive dozens of applicants. Tenancies are usually lifelong, so turnover is low; a small number of co-ops grant automatic membership to members’ children.

Starting new co-ops, meanwhile, is difficult. While there is a small amount of government funding available – mostly to build, rather than acquire properties – most would-be co-op founders find themselves having to beg, borrow and steal from friends and family. “It feels like a very big undertaking,” said Marieke, who has been a member of Sanford co-op in southeast London for four years, and asked to be identified by her first name only. “You have to … [do] a lot of visioning. … That does take time and dedication.” The process usually takes several years.

Some established co-ops do lend money to other co-ops – co-operation between co-ops is the sixth of the seven co-operative principles, a list first drawn up by the Rochdale Pioneers and since refined and standardised by the International Co-operative Alliance. Yet while interest rates of inter-co-op loans are low (usually between 0 and 6%), the amounts involved are usually small: £25,000 is considered substantial. Marieke also admitted that loans are “not something we [at Sanford] promote very openly”, meaning that acquiring them often relies on personal networks and insider knowledge. These kinds of networks are facilitated somewhat by groups such as Radical Routes, which hosts gatherings of housing and worker co-ops, but these are few and far between.

The relative atomisation of the co-operative universe means co-ops often sit on cash reserves they are reluctant to spend, particularly outside of the co-op – what if a roof needs replacing, or a member loses their job and can’t afford their rent? Bailie told me he understands this mindset: “People start off with principle six [of the seven co-operative principles, co-operation among co-operatives] and then [they decide] ‘The point of my co-op is to give me permanently affordable rents and I’m really risk-averse because I’ve put my blood, sweat and tears into it.’” A recent vote at Sanford – the oldest purpose-built housing co-op in the UK, housing 120 people across 14 properties and a block of flats – decided to increase rents for the first time in several years by around 10%, from £284 to £312. Keeping rents this low means Sanford must eat into its reserves to stay afloat, and will eventually go bust. Bailie’s co-founder Ben Dunn Flores is blunt about the problem at hand: “Co-ops are too big and they’re too conservative.”

The co-op movement is waking up to this: in 2019 a group of housing activists founded Community Assets for Society and Housing (mostly for the acronym, one imagines). Centring the sixth co-op principle, Cash launched with the express intention of unlocking the flow of funds between established and new co-ops. Inviting existing co-ops to donate to the project, Cash offers workshops and publishes detailed guides on how to start a co-op, advertises spaces in co-ops and lobbies co-ops to support a new crop of co-ops.

Yet even with such energetic projects, the hostile climate for co-operatives deters all but the most tenacious; many precariously housed people are too busy trying to make rent to dedicate time to creatively solving their housing problems. This, it seems to me, is where Roost comes in.

A deal with the devil.

Bailie met Dunn Flores – a criminally young 24-year-old – in February 2023, over a patchy WiFi connection provided by the Colombian bar near the hostel where Bailie was staying. A former homelessness charity worker and a UX designer, Bailie and Dunn Flores were put in touch by a mutual friend sick of hearing them both complain endlessly about the housing crisis at parties, and who wanted them to do something about it (the friend, Iman Mouloudi, now works for Roost, too).

Bailie had a hunch that co-ops were the answer to the housing crisis after meeting his partner Bendiek, who at the time was living in the Edinburgh student co-op. It blew Bailie’s mind that the young people could do anything they wanted with the house, a drastic departure from the bluetac-phobic landlords students are used to. By the time he met Dunn Flores, Bailie was in Colombia on a fellowship researching how cities can help food markets grow – by enabling co-operative behaviour, he found. Both men also had an interest in the ability of tech to improve people’s living, and dying, conditions: Bailie had worked in a startup, Farewill, that helps people organise their affairs after they die, Dunn Flores at another “tech for good” company trying to identify exploitation on construction sites (the problem, he found, is that workers didn’t care about being exploited, as long as they could afford their rent).

Bailie and Dunn Flores subscribe heavily to the tech industry axiom of the power of the nudge: the idea that marginally reducing the friction involved in an activity – in this case, starting a housing co-op – will drastically impact individual behaviour. The UK housing market is ripe for co-operatives, Bailie and Dunn Flores insist, but creating them is prohibitively complicated. Their bet is that by lowering some of the barriers to entry, “we can give [the housing market] a push” and initiate what they believe is an inevitable transition.

“I genuinely think we’re going to get to the stage that most housing in London is a co-op,” Bailie told me, “and not [just because of] us.”

Declining rents, rising interest rates, regulatory pressures and growing social stigma (look at the recent furore over Labour’s newly-elected slumlord MP Jas Athwal) have meant that “landlordism on easy mode is over”, said Bailie. This, Bailie added, is exactly where Copenhagen was on the eve of its co-operative boom.

The “push” Roost intends to give the housing market is to centralise the unglamorous bits of starting and running a co-op: incorporation, setting up bank accounts, bookkeeping, drawing up contracts and voting on changes to the co-op. It also currently operates something like an estate agent, scouting for and securing properties for prospective co-ops (Roost says it hopes that in the long term, it’ll be more hands-off in this regard). “Roost is the boring admin automation company that helps people set up really interesting housing,” Dunn Flores said.

Roost’s definition of “interesting” has changed over the past year, however. The company began with the intention of helping co-ops buy housing. Co-op members would contribute towards mortgages, which when paid off would mean that the co-op would own the property (members could, however, retrieve their deposit if they left).

But as interest rates shot up, and banks proved reluctant to lend to a group of zoomers/millennials with an untested startup idea, Roost realised its original strategy would exclude all but the wealthiest – people who could likely afford to buy properties of their own.

Roost has since pivoted from an ownership model towards a renting-but-better model, acquiring long-term leases from landlords rather than trying to buy properties (a co-op in Kassel, Germany that Roost helped to start has bought a property, though that’s partly thanks to an already robust German co-op sector).

Roost’s offer to landlords is lower-than-market rent in return for stable, long-term tenancies and fewer management responsibilities. Its offer to renters is greater security within and a sense of (though not actual) ownership over their home, minus the complex and time-consuming administration of traditional co-ops.

For this, Roost charges co-op members a fee: the difference between the reduced rent the landlord receives and the market rate (Roost hasn’t decided on a fixed amount, but it imagines it’ll be around 10% in UK cities). It uses this money to pay its staff and build its platform, supplemented by periodic injections of venture capital funding: Roost recently raised £600,000 from a mixture of angel investors (wealthy individuals who donate to early-stage companies) and dedicated startup funds.

What this means is that Roost co-ops lack what many consider to be the primary selling points of housing co-ops: housing ownership and cheap rent. This has ruffled feathers among some in the co-op movement.

“I am worried about Roost,” said Marieke. “It sounds like they aren’t interested in changing the ownership model.

“Co-operative living is great … but affordability is what changed my life. … I don’t really see how charging people market rate will change anything about the housing crisis.”

Bailie’s answer to this is that long-term leases are a short-term solution, a stepping stone on the way to co-operative ownership. Long leases “are how we get a foothold,” Bailie said. “It’s just about getting more affordable starting points”. The next step, he said, is to use the success stories that come from these long-leased co-ops to make a case to big-money investors; Roost is currently in talks with large social and housing investors, mostly in mainland Europe, to lend to co-ops looking to buy properties. Roost’s distinctive ambition, one the co-op movement has largely neglected, is scale.

Five down, 999,999,995 to go.

I join Bailie and Dunn Flores at Bailie’s co-op in Hackney for the company’s weekly “community lunch”. Attracting a rotating medley of friends, Roost employees and extended members of the Roost universe (surveyors, co-op evangelists, mentors), its purpose feels ambiguous. At various points in the afternoon, I feel like I’m at a networking event, a corporate away day and the engagement party of someone I barely know. I remind myself that startups are intended disrupt these categories.

Over a lavish Mexican feast, Bailie and Dunn Flores explain that it has been harder to persuade risk-averse co-ops of the benefits of helping co-ops start up than it has landlords and investors. They’re content with working with capitalists in order to grow, and grow quickly. “The way we see it is almost like a capital ladder,” said Bailie, “where you need to prove that £1m of investment into community-owned housing works really well, and then you can go back and say, ‘Well, let’s scale it up to £10m, then £100m, and then stop lending to the buy-to-let sector altogether.’” The sums are dizzying.

And who would receive these theoretical millions? Not Roost, which is a limited company, but an asset-locked community interest company, which could then disburse funds to co-ops to enable them to buy properties. “Startups go bust all the time,” said Bailie. “We obviously think it’s going quite well and that we’re right, but we feel it’s important that the co-ops aren’t tied up with our operational success.” If Roost went bust, all co-ops would lose is the platform they use to manage their properties.

After lunch, I exit Bailie’s house via the dining room, where a group of stragglers is huddled around the dining table, each glued to a different Google Sheet or Zoom call. “I’ve got to jump onto this interview,” Bailie tells me – can I show myself out? The room has the electric atmosphere of a hack day, a tech industry ritual in which coders put their heads together on a thorny problem. Some trace the origins of the modern “hackathon” well past the creation of the internet to 1929, when India held a nationwide contest to design a more efficient spinning wheel. If successful, Roost’s invention could be just as revolutionary – but by Bailie’s own admission, it could also unravel.

What’s unequivocal is that co-ops aren’t working as well as they could in the UK, even within the constraints of the current system – or at least they are, but for a very small number of people. But what’s the alternative? Roost thinks the missing link in the UK’s co-operative revolution is a tech company, one that can make it a lot easier for a lot of people to start co-operatives. Roost is prioritising things the UK co-operative movement never has – scale and speed – but in doing so has been forced to make compromises with capitalism that most co-ops never would. Even many sceptics I spoke to agree it’s a step in the right direction, however: better that more people are invested in co-operatives, loosening the chokehold of homeownership and laying the foundations for a more collective society. Better that the hundreds of millions Roost hopes to attract goes to co-ops than into the pockets of landlords. The question is: can the housing market be hacked by a group of young upstarts? At least 10,271 people hope so.