Should You Choose Co-Op Living?

There are homes that we can afford and buy as and when we want. Then, there are homes that we can afford but may not be able to buy as and when we want. Co-operative homes fall into that latter category. For "a housing cooperative is a legally established association, that is owned and democratically controlled by its members for the primary purpose of improving their living conditions", homes are typically far more affordable.

As the National Cooperative Housing Federation of India (NCHF) puts it, "as it incorporates a high degree of participatory involvement of members, the housing stock created is more responsive to user's needs than those supplied through any other sub-system".

At every stage, your opinion would matter as you would have equal participation in every matter. Members have the right to vote and participate in the affairs of the cooperative.

Finances of a co-op would never go haywire. Each member has an individual and a collective responsibility to manage well. This is something that is not often seen in regular housing society projects. Typically, "project cost efficiency is demonstrated on account of the concerted efforts of members to keep overheads to a minimum and to effect economy in construction by other means as well".

However, to buy or to rent such units is no easy task as the aspirant has to meet certain criterions. In case you meet the desired criterion, board members would conduct a personal interview to gauge whether or not you will be able to fit in.

This concept is in fact quite popular in the West, and the best addresses of many cities are co-operative homes. In India, co-operative living is quite popular in Delhi, Gujarat, Haryana, Maharashtra, Uttar Pradesh and West Bengal. However, having a co-operative housing property would not be similar to having a property in a standard housing society. This prime difference lies with ownership. There are tenant ownership housing societies, in which land is held either on leasehold or freehold basis by the society, and homes are owned by members. Then, there are tenant co-partnership housing societies, in which the society holds both land and building, either on leasehold or freehold basis, and allot flats to members. Additionally, there are house mortgage societies and house building societies. In the former category, societies lend money to their members for construction of houses. The members have to make their own arrangements for building their houses. In the latter category, the society spends money on behalf of its members for building the houses, and the houses are handed over to members when ready and the money spent is recovered as a loan. The equal division of ownership between a society and its members means the latter will have a great deal of say when it comes to rules formation; members will have to abide by these rules, often strict in nature.

Also read: Can Maharashtra's New Redevelopment Rules Benefit Housing Societies?

In case you plan to buy in a co-operative housing society

In case you are considering co-op living, you have to keep in mind certain points.

Rules aplenty: You have to follow quite a drill to be able to own a house in such societies. You may also have to adhere to specific rules once you become a member. Read the co-operative bye-laws carefully to make sure they do not pose a problem for you. For instance, some housing societies may not allow pets inside the premises.  If you decide to own a pet at a certain stage of your life, in-house rules would not let you do so. To carry out renovations, too, you would have to have an approval from the board in place.

Limited funding sources: Often, you will also not be able to approach any bank to finance your purchase. You may have to approach specific banks with which a particular co-operative housing society has a tie-up. You will not be able to grab great deals offered that do not have a tie-up with your society. Unlike standard housing societies, co-operative housing societies may also demand a higher down-payment.  

No quick fixes: Selling this property at a later stage may turn out to be another challenge. You will have to find a buyer who meets the society criterion to be able to sell your property. It would not be your sole decision, the board members would have a say, too. The same is true if you plan to rent your property. If will have to follow a long procedure before you are able to finalise a tenant.

No shortcuts: All these procedural hiccups also mean co-op living is ideal if you are planning to stay in for a long time. They may not turn out to be great investment options. Selling and renting both would be a time-taking process.

Also read: 5 Schemes That Can Inspire India's 'Housing For All'

In case you plan to rent in a co-operative housing society

In comparison with home ownership, renting provides a great deal of freedom. Co-operative housing societies will have strict rules and regulations. In case you are one of those who would like to have it easy as a tenant, you may not find co-operative housing societies a viable option.