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Benefits of Co-op Housing

What is a Housing Co-op?

A housing cooperative,  is a legal entity, usually a cooperative or a corporation, which owns real estate, consisting of one or more residential buildings. It operates under the cooperative legal framework that usually exists at the regional or national level.  Furthermore, cooperatives are the only form of entrepreneurship organization with an internationally agreed and recognized definition.

There are seven cooperative principles that guide housing cooperatives in their governance and operations. Equally important, cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity.

The coop corporation is membership-based, with membership granted by way of a share purchase in the cooperative. Each shareholder or member in the housing cooperative is granted the right to occupy a housing unit.

Housing coops come in many forms. Some are townhouses and small buildings with just a handful of units. Others are large apartment-style buildings with hundreds of units. Some coops are rental whereas others are member-owned, also known as equity co-ops. The fact that there are so many variants is an indication of how cooperative housing is an adaptable and flexible model that can work in so many different circumstances.

Different co-op models are available depending on the country. But they all have one thing in common — they’re focused on community and are designed to meet the common economic, social, and cultural needs of their members. All of these different models are governed by a member-elected body. In addition, every member gets a vote in approving annual budgets, electing directors and setting policies on the co-op’s overall direction.


Source: Cooperative Housing International


Economic Advantages

  • Affordable: Lower down payment, much lower closing costs, economies of scale, and a longer mortgage term all make cooperatives more affordable than other ownership housing.

  • Living in a Cooperative Stays Affordable. Members have no reason to substantially increase monthly charges unless taxes or operating increase; typically monthly charges remain reasonable.

  • Tax Deductions. For income tax purposes, the cooperative member is usually considered a homeowner and, as such, can deduct his or her share of the real estate taxes and mortgage interest paid by the cooperative.
    Equity. Cooperatives can provide for accumulation of individual member equity. For market-rate cooperatives, the accumulation of equity and resale prices are based on the market. Limited-equity cooperatives establish limitations on the accumulation of equity to ensure long-term affordability to new members.

  • Limited Liability. Members have no personal liability on the cooperative mortgage. The cooperative association is responsible for paying off any mortgage loans. This can often make it possible for persons whose income might not qualify them for an individual mortgage to buy a membership in a limited equity cooperative.

  • Consumer Action. Through their cooperative association, members can jointly exert influence to change tax rates and utility prices and obtain improved services from local governments. The cooperative, as consumer advocate, also can join with other organizations and/or coalitions.

  • Savings. Cooperative members can benefit from economies of scale in cooperative costs as well as from not-for-profit operation. Also, when there are “transfers,” only the out-going member’s equity must be financed by the incoming member. Transfers of shares are subject to fewer settlement costs.

Social Advantages

  • Elimination of Outside Landlord. Cooperatives offer control of one’s living environment and a security of tenure not available in rental housing.

  • Community Control. As mutual owners, member residents participate at various levels in the decision-making process. This is not true of tenants who usually do not have the opportunity to exercise input into the landlord’s decisions. Members own the cooperative collectively and can remain in their homes for as long as they wish, as long as they meet their monthly obligations, and abide by the cooperative bylaws, rules, and regulations.

  • Cultural Diversity. Many cooperative members say that the possibility for interacting with people from different backgrounds, cultures, and income levels is a positive factor in their decision to become a member.

  • Extended Services. By establishing cooperative procedures and working together, people can provide services for themselves that otherwise would be impossible to obtain. When one cooperatively organized venture is successful, it often becomes clear that people can be successful in another area as well. As a result, the original effort often can be strengthened. Examples include athletic teams, cooperative preschools, credit unions, tutoring, food-buying clubs, arts and crafts, and senior health care and support services.

Physical Benefits

  • Shared Maintenance Responsibilities. Cooperative members usually have limited direct maintenance responsibilities. The cooperative association is responsible for major repairs, insurance, equipment replacement and upkeep of common grounds and facilities.

  • Vandalism and Security. Cooperative members vigorously protect their association’s property. An important benefit of converting rental properties to cooperative ownership is reduction in vandalism and abuse of property and improved and shared security arrangements. And recent studies show that a cooperative’s presence in the neighborhood reduces neighborhood crime.

Source: National Association of Housing Cooperatives

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