Key strategy to fix housing #3
Urgently change the Cooperative Companies Act to provide for Residential Cooperatives
Aotearoa NZ has a long and proud history of cooperatives through the agricultural sector (from the 1800’s!). It is a business model that has existed here for over 100 years. The cooperative structure is the foundation of Fonterra’s success. In fact, recent research shows cooperatives represent 18% of Aotearoa’s GDP.
Applied to the housing space, the cooperative is an organisation of residents in buildings where each household owns a share of the building (e.g. apartment complex). Occupants are effectively co-owners because there is no landlord.
Shareholders as occupants have a right to occupy and govern which may be inheritable. Collectively residents can determine occupancy rules. This is part of the beauty of being involved in collective housing – you help make decisions. This does not negate the option to defer the majority of decisions to another entity if agreed with other cooperators. This could include deferring some decisions to a Community Land Trust (an option in the case of the Forever Affordable Homes method) if you choose. An array of approaches to time commitments to participate in self-governance are possible.
Housing cooperative facts - worldwide:
There are over 1 million Australians living in housing cooperatives (I once did!)
New York city’s housing stock is over 80% owned in some form of a co-operative
In Zurich, Switzerland, more people live in a housing cooperative than owner occupiers.
Cooperatives in Aotearoa NZ facts:
18% of New Zealand's GDP is generated by cooperatives
30% of Kiwis are members of a cooperative already
Aotearoa NZ remains one of the most co-operative economies of the world
The legislation which sets up cooperatives in Aotearoa NZ is the Cooperatives Companies Act 1996. It is administered by the Ministry of Business, Innovation and Employment under a number of Ministers.
Despite the history of cooperatives in Aotearoa, the Act does not consider and legislate for residential cooperatives. If the Act provided for housing cooperatives there would still be expenses, however there would be greater certainty and less risk, for those working in the space.
A community developer is currently working to set up their business as a cooperative pilot. The first housing cooperative in the Bay of Plenty. This community developer was quoted over $250,000 for the legal and commercial structuring and documentation required for the project from one of the major law firms. Costs have since been reduced by working with a smaller law firm, however the burden of setting up the construct, templates for contracts and guard-rails to protect all parties sits with the project.
While these self-determining housing groups are focused on delivering an alternative option to resolve the current housing catastrophe in an egalitarian way, they are doing so without the resources of the government. If a leadership role was taken on by the government, who committed to legislative change and other support for the emerging sector, rather than community-focused kiwis, we could see a greater number of housing cooperatives delivered.
Given the popularity of housing cooperatives globally, there are many legal examples to draw from. Notably Switzerland and Australia which have many resources on offer. They have been helping under-resourced citizens striving to introduce the model already. The economic data about the effect of cooperatives on the open housing market and economy at large is available. Also available is evidence of the social and environmental benefits residential cooperatives deliver.
This diagram shows how stand-alone housing cooperatives work in the United States. It does not directly reflect the Forever Affordable Homes method (e.g. land ownership).
Implementing this important and necessary step will help create a collective housing sector which can be self-sustaining into the future. This is the third of five fixes identified by Forever Affordable Homes to support those working Kiwis who will never catch the property ladder and are unlikely to qualify for any government housing support. They are otherwise lifelong trapped renters.
The Department of Internal Affairs has been engaged on this, with no response for over 6 months.
If this is something you also want action taken on, reach out to:
Jan Tinetti, Minister for Internal Affairs who should be taking the lead on amendment to the Act
Nicola Willis MP, Shadow Housing Minister who is currently formulating the Nationals position on various aspects to housing and is seeking input.
Roz Henry, CEO of Cooperative Business New Zealand as the established organisaton representing cooperatives in Aotearoa New Zealand.
We acknowledge and thank the considered contributions of Greer O’Donnell and Jo Allum for this piece.
