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Funding Models

Housing Co-operatives can be classified into three groups on the basis of the amount of equity the members contribute to the venture.
Full Equity Housing Co-operative Model In a full equity housing cooperative, the venture is fully funded by the members through their personal capacity to raise money. The housing cooperative is formed via an incorporated structure and the member may buy or sell a membership or shares in the housing cooperative at the going market price. Purchase prices and equity accumulation are very similar to the private market. This model is independent of the public housing sector. However, as the houses are owned by the incorporated body and members are essentially tenants of the incorporated body, low income owners may still be entitled to Commonwealth Rental Assistance.
Shared Equity (Limited Equity) Housing Co-operative Model With shared equity housing cooperatives, funding may be from more diverse sources, such as a mix of private and public funding. The housing cooperative is incorporated and members have shares in the entity. The housing cooperative may have been established with grants or other benefits that enable the housing to be more "affordable" to both the initial and future residents. The co-op has rules regarding pricing of shares that when sold that will restrict what outgoing members can get from sale of their shares. These rules maintain the housing cooperative’s focus on affordable housing. This model is relatively independent of the public housing sector. However, again, as the houses are owned by the incorporated body and members are essentially tenants of the incorporated body, low income owners may still be entitled to Commonwealth Rental Assistance.
Common Equity (Non-equity) Rental Housing Co-operative Model The Common Equity model looks very similar to renting. The public housing authority vests housing into the housing cooperative via mechanisms such as head leases or deeds of trust. Members are usually from low income backgrounds and rentals are capped at a percentage of gross income, usually 25%. The basis of the housing cooperative is security of tenure and self-management. As the housing cooperative does not own any real estate, it does not build any equity. This model involves a direct relationship with the public housing sector. Tenants are able to also claim Commonwealth Rental Assistance.
The Common Equity Rental Housing Co-operative Model:

  • Exists to provide Affordable Housing
  • Offers security of tenure, a central principle of co-operative housing
  • Provides other benefits to members beyond affordable and secure housing
  • Establishes and retains good positive links within their broader communities
      In Western Australia, most of the housing co-operatives fall into the non-equity model and are funded by the Department of Housing. This type of housing co-operative is a strand of the community (also referred to as social or affordable) housing sector and the primary focus is to provide affordable rental housing to people on low to moderate incomes. Prospective tenants must meet community housing eligibility criteria.  FOHCOL can provide additional advice on this.