After 18 months of fundraising, Luna Houseboat Co-operative are so close to our goal. The generosity of the community and strangers alike has blown us away. Between loanstock from co-ops and private individuals, conventional lending from Cooperative and Community Finance (CCF), we are within touching distance of our dream of affordable, black and brown, queer-friendly housing remaining a key component of Deptford Creek. Luna’s current owner has put an incredible amount of trust in us to make this work, and held off taking a developer’s offer at no small cost to himself.

There are three major sticking points with our plan:

High Interest Rates: While Co-operative and Community Finance do amazing work, their commitment to ethical finance means their interest rates are necessarily high, at 8.5%. Although Luna is, and will continue to be, a profitable business, interest rates this high would undermine a key principle of our business by forcing us to raise rents to unaffordable levels for the first eight years.

Timings: CCF can also only move so fast, and Luna’s owner has already waited six months longer than he had planned to and cannot wait much longer without severely damaging his own finances.

Refinancing has always been a crucial part of the plan. The first priority has always been to save Luna, and the finance we have been able to raise, coming mostly as loanstock from private individuals, naturally has to be more short-term loans. If we were to pay off all the loans as they come due without refinancing, the brunt of the repayments would be borne by community members who have already put in thousands of hours work to safeguard Luna for future generations, doubling their rent and leaving no capacity in the budget for maintenance. 

With this in mind, we are adjusting our approach.

We are looking to replace the current £34,500 investment from Co-operative and Community Finance with further loanstock from individuals and co-operatives. If we can match the interest rate and term that one co-op has been able to provide, of 3% over 25 years, we will be able to pivot fully to improving Luna as a community hub. Even loanstock at a higher rate, or over a longer period, though, could still make a crucial difference. 

If some loanstock is amortised (meaning that lenders only receive interest payments over the loan term, and then have their initial investment repaid in full as part of refinancing), then another lender can ‘buy’ the debt at the point of repayment, paying back the original lender and taking on the interest repayments. This means that Luna Co-op can spread the loans out over a longer period, keeping space in the budget for maintenance and spreading the cost out more fairly. It also lets us access more simple and affordable finance: with five years’ record of sound financial management to show, we would be able to clearly demonstrate to more traditional lenders that we are a secure and safe investment, allowing us to negotiate for a much more affordable interest rate at the poi​​​​nt where we refinance and giving us plenty of time to do so. Having managed to source £116,000 in 18 months, with no formal track record, we are very confident of being able to arrange refinancing by the ten year mark.!

We understand that this is a significant request, but putting faith in those who wish to protect this decades-old multi-generational community has paid dividends before. Any loans of £500 or more would help keep our housing safe and the project alive. 

Thank you for your time and belief in us!