Co-operative Living: A Home-Ownership Alternative

What do you think of when you hear the term “co-operative housing or co-op housing”? If you’re a bit older you might think back to the 70s with hippies living together in communes and living off the land.

Today, you might think more about subsidized housing in low-income neighbourhoods.

Both are forms of co-op housing but there is so much more to this alternative form of living.

A housing co-op is typically set up as a not-for-profit corporation that owns a property with a block of units or townhomes. People who live in a co-op do not own their unit, rather they own a share of the entire property and are granted exclusive use of a unit to live in. So rather than being a tenant or an owner, they are a member (or shareholder) of the co-operative.

As a member, you have a say in how the property is managed by the member-elected board of directors. The board is responsible for building and property maintenance, determining housing costs, as well as deciding who gets in. As a result, application processes can be lengthy and wait lists are long.

Like the 70s analogy, co-op living is communal. As a shareholder of a property you are responsible for its management and upkeep and therefore expected to participate on some level. So if you’re not the type of person to interact with your neighbours, attend meetings or contribute time and energy for the betterment of your shared surroundings, co-op living is probably not for you.

Co-op living can also be subsidized living. In Toronto, most co-ops are federally funded under the National Housing Act. In many properties there are both subsidized members (geared to income) and market-value members. Government subsidies help to bridge the gap in housing charges between these two groups. Housing charges can therefore be kept lower, making co-op housing more affordable and an attractive alternative to buying a condo.

Let’s look at some of the other major differences between co-op housing and regular home ownership.

Perhaps most importantly, you cannot get a typical mortgage to buy into a co-op. Because you don’t actually own your unit, banks have no collateral to foreclose on in the event of default. So if you don’t have the cash on hand to buy in, you will need alternative financing such as a share loan, which uses your share in the property as collateral.

It’s much harder to get into a co-op building. Firstly, there are long wait lists - people don’t tend to move out of a co-op but rather within it. And even if you are lucky enough to find a co-op unit in the area you want, potential members are carefully scrutinized to ensure they will fit into the community and lifestyle of the building.

Finally, there are co-ops to suit a broad range of interests and lifestyles. You can find women-only co-ops, co-ops for LGBTQ+, co-ops geared towards artists and more.

Diversity and a sense of community is an inherent part of co-op living and one of its unique strengths. And in today’s market where home ownership is out of reach for so many, it is becoming a popular option once again.

If you think co-op living might be right for you, give me a call today to learn more about this alternative-living lifestyle.