Canada residents who don’t want to buy a house, can’t afford a mortgage or don’t have the credit rating required for a mortgage application approval have a different option. Welcome to Co-operative housing, or as they are also known “co-ops”. Think it sounds strange, maybe a little risky? Well, granted, the term “co-ops”  or co-operative housing is not a marketing bomb and it does have the ring of a soviet work colony. However, cooperative housing is a successful, tried and tested housing option with over 2,000 housing co-ops owned by over 111,000 members, which represent assets of over $5.6 billion.

So what is a co-op?

Cooperative housing comes in a variety of shapes and flavors. You can a find a collection of single-unit townhouses, small buildings with a four to seven units or huge buildings that can hold hundreds of members. What sets aside co-ops from regular housing options is the way the property is organized, owned and managed.

There are two main types of cooperative housing models: the non-profit co-op and the for-profit co-op. In a non-profit co-op members own shares in the community and have the right to live in a unit but cannot sell their shares. In for-profit co-ops members own shares in the community and can sell them to others. Note however that the member owns the share in the community, not the particular unit they live in. So although they can sell the right to live in the co-op they cannot guarantee the use of any particular unit.

Management

The big difference between co-ops and other housing models is how it is run. Co-ops do not have a third-party management community in charge of management. The members choose a board of directors who govern the co-ops affairs. However, the co-op members still must vote for important matters such as the approval of the co-ops budget and to make changes in the community’s policies.

Benefits

The main benefits of co-ops is their affordability, democratic governance model, security of tenure and sense of community. They are affordable because once you own a share in the co-op you only need to pay for monthly housing charges which are set by the co-ops board. The community is governed directly by its members which improves its efficiency and the accountability of the board of directors. It is secure because you can’t get thrown out as long as you follow the community’s by-laws and pay your housing charges.