Co-operative approaches to tackling housing affordability in Australia

28 February 2024

In late 2023, the Business Council of Co-operatives and Mutuals (BCCM) and the Parliamentary Friends of Co-operatives and Mutuals held an Affordable Housing Policy Roundtable and Luncheon in Canberra. The Australian Co-operative Housing Alliance (ACHA) and the BCCM launched a policy and a new website aimed at increasing awareness of non-market housing models to help combat the affordability crisis.

The Roundtable featured presentations from a number of experts from the co-operative housing sector. They explained how, from community-led rental housing co-operatives to market-based co-op models, the co-operative housing sector is mobilising resources and expertise to provide viable alternatives to traditional housing models. These initiatives emphasise the importance of empowering communities, fostering collaboration, and reimagining the relationship between residents, developers and policymakers. With the right settings, co-operatives can offer more housing at a competitive cost while also delivering important social benefits.

As we navigate the complexities of Australia’s housing landscape, these diverse initiatives offer hope and inspiration for a more inclusive and sustainable future. By harnessing the power of co-operation, stakeholders are working together to build a more equitable and resilient housing system for all Australians.

Scene setting – the housing crisis

Dr. Marcus Spiller, from the National Housing Supply and Affordability Council, provided a comprehensive overview of the current housing crisis. With the national rental vacancy rate nearing an all-time low and an 8.1 per cent increase in advertised rents, more than half a million households in the bottom 40 per cent of the income distribution are experiencing housing stress, and close to 200,000 households are on public housing waiting lists. Marcus attributed this crisis to a combination of short-term factors and long-term policy decisions.

Efficiency in housing supply, Marcus emphasised, is vital in a market-driven housing system. This entails fit-for-purpose regulation, strategic land sourcing and infrastructure development to ensure communities are adequately serviced. However, merely relying on market forces to address the housing crisis falls short of delivering essential outcomes such as protecting low-income households from poverty, supplying housing for essential workers and fostering social mix in neighbourhoods.

Despite the efficiency of market-driven housing system, Marcus noted that it fails to address critical societal needs due to the commercial imperatives of developers. To bridge this gap, various strategies can be employed, including income top-ups, public sector investment in social housing, mobilising private capital and leveraging co-operative housing initiatives. Marcus underscored the importance of an overarching vision for the Australian housing system, highlighting how historical policy decisions have shaped housing markets. He emphasised the urgent need for new decisions to address the challenges posed by the current housing crisis, suggesting that co-operative housing sectors could play a significant role with appropriate support.

Rental co-operative housing movement – history, impact and policy blueprint

Liz Thomas, Managing Director of Common Equity Housing Limited (CEHL) and speaking on behalf of Australian Cooperative Housing Alliance (ACHA), shed light on the often-overlooked rental co-operative housing sector in Australia. Emphasising the importance of community alongside supply and affordability in addressing the housing crisis, Liz introduced rental housing co-operatives as the “missing middle” in housing solutions, sitting between the duopoly of renting and owning.

Rental housing co-operatives empower residents to manage their housing collectively, offering security of tenure, affordability and a sense of community. Liz highlighted the inclusive and supportive nature of co-ops, particularly beneficial for vulnerable groups such as victims of family violence and older Australians. With an average tenant age of 59 and a remarkably long average tenancy duration of 12 years, rental housing co-operatives provide a long-term housing solution and effectively prevent homelessness.

In Victoria, CEHL operates a federated co-op model, managing over 2,000 properties across the state. Liz emphasised the need for continued support and growth of the co-operative housing sector, advocating for dedicated funding and a target of 10 per cent of social housing stock. CEHL’s success in accessing the Victorian Government Social Housing Growth Fund demonstrates the potential for expansion, with plans to open new co-ops to cater to specific community needs, such as housing for allied health workers in Brunswick.

ACHA aims to sustain and strengthen co-operative housing practices while also advocating for growth of the model. With co-operative housing comprising only 1% of the national social housing stock, ACHA’s vision includes reinstating dedicated government funding and increasing co-operative housing to 10 per cent of social housing stock.

Helping marginalised communities to empowered housing

Nick Sabel, CEO of Common Equity NSW, delved into the transformative power of co-operative housing in empowering marginalised communities. Managing and supporting 32 housing co-ops across New South Wales, Nick emphasised how the international principles of co-operation, including democratic member control and concern for the community, are lived out in co-op housing communities.

Co-operative housing provides residents with agency and democratic control over their housing outcomes, fostering strong communities and building tenant capacity. Beyond providing a roof over one’s head, co-operative housing offers social benefits such as reduced isolation, strong support networks and opportunities for skill development and employment.

Nick provided a compelling example of the Vietnamese housing co-ops in New South Wales, established to address the housing needs of non-English speaking community members aged 55 and older. Through active participation and democratic decision-making, these co-ops have thrived for 30 years, managing properties in socially disadvantaged areas and serving as vibrant community hubs. Nick stressed the need for continued support and growth of co-operative housing to address the housing crisis effectively.

Groundbreaking research on the advantages of co-op housing

Dr. Sidsel Grimstad, Senior Lecturer at the Griffith Centre for Systems Innovation, shared insights from a groundbreaking, four-year research project funded by the Australian Research Council (ARC) focused on understanding the value of Australian rental housing co-operatives.

The research initiative, Articulating value in housing cooperatives, was initiated by ACHA to provide evidence of the benefits of the co-operative model. Despite limited existing research on housing co-operatives, the ARC recognised the national interest in exploring alternative housing models, leading to the allocation of funding for the project.

The research team’s objectives include examining the benefits and challenges of co-operative housing, understanding the role of tenant participation in co-operative management and exploring opportunities for sector growth and development. By employing both quantitative and qualitative research methods, including surveys and in-depth interviews, the team aim to provide a comprehensive analysis of the co-operative housing landscape in Australia.

Key findings from the research highlight the stability and affordability offered by co-operative housing, as well as the sense of home, community and belonging experienced by members. Sidsel noted that many research participants expressed a desire to remain in their housing co-op for life. Moreover, co-operative housing was found to facilitate capacity building and agency among tenants, leading to improved education, employment and overall well-being.

Innovative co-op models addressing housing affordability

Tim Riley, founder of Property Collectives, presented market-based co-op models aimed at tackling housing affordability. Since 2010, Property Collectives has developed a terminating co-operative model inspired by the German Baugruppe concept, empowering individuals to co-develop their future homes.

Members join to gain control over their housing futures and access quality, well-located homes. The key difference is members’ control over equity, leading to significant cost savings of around 11 per cent. However, despite these initial achievements, average home costs remain high, limiting access primarily to higher-income individuals.

Tim was one of the authors of a feasibility study report, How Feasible is a New Generation of Housing Co-operatives in Australia?, which was supported by the BCCM’s The Bunya Fund. The study, which focused on developing an affordable model, shows promising results. To unlock affordability, the report advocates for ground leases, separating building ownership from land ownership. Members would buy into the co-op, which owns and manages the building, while leasing the land for around 50 years. Advantages include the ability to pay commercial ground leases for land, facilitating more affordable housing options in desirable locations.

To support these models, Tim proposes low-margin investment debt, government guarantees for private equity investment and seed funding for an umbrella organisation. These initiatives offer a new pathway to address housing affordability and promote inclusive communities.

As Australia grapples with the persistent challenge of housing affordability, co-operative housing models offer promising sustainable and community-driven solutions. The broad-ranging expertise among the Roundtable speakers affirms the tangible benefits of co-operative housing, from fostering social cohesion to promoting economic resilience and empowering marginalised communities.

However, realising the full potential of co-operative housing requires the support of government agencies and policymakers. The Rent it like you own it policy blueprint provides a comprehensive framework for advancing co-operative housing initiatives and addressing the systemic barriers that hinder their widespread adoption.

The blueprint calls for a greater commitment by government to include co-operative models in future spending to ensure at least 10 per cent of all social housing stock nationally is co-operatively owned by 2033, compared with the current level of one per cent. ACHA is also asking for at least 10 per cent of funds, such as the Social Housing Accelerator, the Housing Australia Future Fund and the expanded National Housing Infrastructure Facility, to be allocated to building the co-operative housing sector.

Co-operative housing represents a viable and scalable solution to Australia’s housing affordability crisis. By embracing this model and providing strategic support, governments can foster a more equitable and sustainable housing system that benefits all Australians. We continue to call on our leaders to embrace co-operative housing as a cornerstone of Australia’s housing policy agenda.

Find out more

• Read the release, Co-operative Housing is the ‘missing middle’ in Australia’s affordability crisis
• Listen to Melina Morrison’s interview with Patricia Karvelas on RN Breakfast about housing co-operatives
• Read Proactive Australia’s article, Are co-ops the answer to Australian housing crisis?, 30 November 2023
• Browse the event photo gallery