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LONDON: Co-Op living is becoming the fastest growing segment within the affordable housing sector.

With house prices soaring and the National Rental Affordability Scheme ending, there’s rising interest in housing co-ops as alternative housing models.

A growing number of people are being forced to acknowledge they may never own their own home.

Soaring house prices, not just in our major cities but also increasingly in the bush, means the great Australian dream of home ownership is increasingly beyond the reach of millions of people.

Meanwhile, the end of the federal government’s National Rental Affordability Scheme is leaving policymakers scrambling for affordable housing options.

But what if there was a proven alternative to public housing, the rental market or private home ownership?

A financially self-sustaining model that is not just a once-off trial, or a hypothetical, but has a proven decades-long track record of providing homes for thousands of Australians?

That’s what housing co-operatives offer.

So what are housing co-ops and how do they work?

At their simplest, co-operatives are voluntary, member-owned organisations that are used to collectively buy (or sell) goods or services.

Unlike corporations, which have boards that are elected by shareholders on a one-vote-per share basis, co-ops are owned by members and run on a one-member, one-vote basis.

In housing, a co-op is used to provide affordable homes to its members. In other words, the tenants who live in the housing co-op are also the members who own it.

Each member lives in their own dwelling, and actively participates in the management of the co-op.

The housing co-ops each have a board of directors that’s made up of members. In turn, in Victoria, each housing co-op is a member of a body, called Common Equity Housing Limited. Its board is made up of directors appointed based on their skill sets, as well as directors elected by the member co-ops.

(Similar bodies to CEHL exist in New South Wales, Tasmania, Western Australia and South Australia.)

CEHL owns the properties and leases them back to the individual coops, which in turn lease them back to their members.

The model is financially self-sustaining. Rents are typically set at 25 per cent of a tenant’s income. In turn, CEHL is funded through the services it provides to its member housing co-ops.

Liz Thomas, CEHL’s managing director, said there are two types of arrangements it has with its member co-ops.

“One is called equity rental housing cooperatives. They are a co-op that is relatively self-sufficient, and they will manage urgent maintenance, property repairs and conduct routine inspections and monitor the conditions of properties.

“The average age of our co-op members is currently in the late 60s, so often that can become too much for a co-op to actually have that degree of hands-on involvement in property maintenance, and they’re more interested in the social connection of the co-op.

“And in response to that, we developed a model called community managed co-ops where CHEL, as a fee for service, delivers the bookkeeping, the maintenance and other services to that co-op, but it maintains its integrity as a standalone co-op.”

A viable option for affordable housing

The housing co-op model has a long track record, dating back to the 1980s in Victoria, and the 19th century in the UK where it originated.

As of 2019, CHEL had 2119 properties housing 4375 people, with a total asset value of just over $860 million. In NSW, there are 32 co-ops, with 500 properties housing 900 people, while Tasmania’s six co-ops have 90 properties.

In Britain, housing co-ops often filled the void after the Thatcher and Blair governments privatised public housing during the ‘80s and ‘90s. Ms Thomas said she is seeing similar interest emerging in Australia.

“I think there is a regeneration of interest in housing co-ops that’s been primarily triggered by housing affordability generally,” Ms Thomas said. “Co-operative housing is this wonderful bridge that offers people the benefits of having an interest in the property.

“When rents are sent as a percentage of your income, or as a percentage of market rental for higher income earners, then I think they offer a viable alternative to the vagaries of the private rental market for people seeking permanent accommodation.

“One lady said to me the other day [that] just being able to choose the colour her house was painted in the rooms you know home were painted, rather than having to rely on what the landlord bought at Bunnings, means such a lot to people’s agency and empowerment.”

In Victoria, people are invited to join a housing co-op by applying through the Victorian Housing Register.

“The introduction of the VHR is relatively new, but virtually all community housing providers in Victoria are now signed up to the VHR. It’s the government’s way of ensuring that people most in need of affordable housing are prioritised for access to that housing.”

A big advantage of the co-operative model is that it allows for different ethnic, religious or social communities to provide themselves housing that meets their specific needs.

“We have a range of co-ops within our stable. Some of them are based on particular ethnic groups, we have some that share a commitment to environmental sustainability, we have others that are women-only co-operatives.

Challenges for the sector

A big challenge for the sector is the governance and compliance obligations imposed by consumer affairs departments and housing regulators for each state. These can be challenging for housing professionals to manage, let alone self-managed communities.

“The [Victorian Residential Tenancies Act] has compliance obligations in relation to smoke detectors, electrical checks, there are reporting requirements to the ACNC, there are reporting requirements to the Housing Registrar, that each co-op is obliged to meet,” Ms Thomas said.

“That can be quite challenging for people, especially older members of co-ops. And so we are gearing up to offer the support individuals and collectives need to make those responsibilities. But I think that’s one of the biggest challenges.”

Opportunities to partnership

With interest in the sector growing, the co-operative housing sector offers a good partnership opportunity for businesses, governments and philanthropists that are looking to provide more affordable housing.

“We’ve got a nearly $1 billion property portfolio and a really strong balance sheet. We’re an organisation with a proven commercial acumen. And I think it’s about using our model, and taking our experience in delivering a great housing model, to the wider community,” Ms Thomas said.