A housing co-op is, on one level, a group of people who have control over their own housing, without actually owning it personally. The legal structure, technically an Industrial and Provident Society, can be thought of as a separate person, who owns the property, takes out mortgages, and to whom the tenants pay rent. This separate person, however, only does what the members of the co-op tell it to!
A housing co-op is very similar to a housing association, but it is managed (either entirely, or mainly) by its tenants. If it is 'Fully Mutual' only tenants or prospective tenants are allowed to be 'members' and control/manage its affairs. (Our Rules are for fully mutual co-ops), Housing Co-ops, like all other Industrial & Provident Societies, are registered with the Registrar of Friendly Societies at the Financial Services Authority (FSA).
Once registered, the co-op can lease or buy properties, and then rent them, either wholly or as flats/bedsits/rooms, to its members - who pay rent to the co-op, which is their landlord. So, by registering a co-op, we create our own landlord, created for our benefit, with us, as members, collectively making all the decisions that need to be made - what property to buy, what rent to charge, whether to allow Jo Smith to join, what colour to paint our rooms, whether to install woodburning stoves or solar pannels, etc. Co-ops allow us to reclaim aspects of our lives and distance ourselves from some of the hierarchical structures of society, without having to take part in the "home owner, this is mine, consumer" debacle. And they encourage greater co-operation with each other as tenants.
The co-op is a 'private landlord'. And fully mutual co-ops can claim tax exemption on 'rental income': this means it pays no tax on the rent it receives, so if it is making a 'surplus' [income higher than expenses] it can save this up without penalty, ready to buy another house or make improvements to existing ones. Other income (if a profit is made at the end of your financial year) will incur corporation tax.
Loan stock is a way that housing co-ops & other IPSs can raise money from supporters. It is one way that people can lend your co-op money, and it is the easiest way in which the co-op can advertise publicly that it is seeking financial support. Our info pack provides models of the documents needed to run a loanstock scheme. Radical Routes has invested much time and money developing this pioneering way of generating private finance.
The Next Steps
The booklet How To Set Up a Housing Co-op (which can be found here) details all the likely steps involved in the registration process - we recommend you read this. The book has been written using the experience of a number of co-ops, and talking to those who have done it already is the best way to find out whether it is a suitable path for you to follow.
If you do wish to register as a housing co-operative, please email Alex, who will send you the necessary forms.
Radical Routes is a network of independent co-operatives working for social change, creating bases from which to resist and challenge dominant structures in society, and aiming to develop an alternative economy and way of living. RR co-ops are involved in a wide range of socially useful activities, including organic vegetable distribution, catering, computing, electrical contracting, permaculture, disablility campaigning and more.
For more information visit the Radical Routes website.
You can support the work of Radical Routes by investing in the investors co-operative, Rootstock Ltd.