There are two main models – housing cooperatives and mutual home ownership societies – below are the main pros and cons of each as I understand them…

Mutual Home Ownership Societies (MHOS)

We have going on 40 members now, some have houses to sell, some a lump sum, and some have benefits. By forming a MHOS, all members are treated equally whilst retaining their respective financial interests. All members collectively own the whole project and everyone pays monthly rent/mortgage payment to the MHOS. The property is bought using funding, grants, members’ investment and, if necessary, a mortgage (see our Funding page). Investing in the project won’t affect investors’ rights or rent. All members are equal.

LILAC (Low Impact Living Affordable Community) in Leeds is one of the earliest examples, which, from the outset, aimed to provide a model that others could use to create similar projects. They have many useful resources on their website, including their complete Project Development Plan.

Housing co-operatives

Housing cooperatives don’t require residents to have any capital input and can therefore be more flexible – and so also possibly less stable. This could cut both ways as, if it is easy for someone to leave when they aren’t happy with the situation, this could benefit the co-op as a whole as well as the unhappy individual.

A co-operative society is formed with all residents as members. The organisation acts as landlord, and all residents pay rent into the society’s bank account. The mortgage, utility bills, and any repair work is paid out of this account.

Decisions about the property are made together. Benefits entitlement is not affected, as there is no ownership involved, and those who need to can claim housing benefit to cover their rent.

The capital for the initial purchase/deposit comes from funding – there are a variety of sources (see the Funding page), including investments from individual members. Also, loanstock is a method whereby supporters invest in the project.