[+] Co-Operative Living: Emerging Model to Tackle Affordable Missing Middle

Co-operative living is not a well understood housing typology in Australia. It makes up almost 50 per cent of housing in Austria’s capital, Vienna, but just 1 per cent here in Australia. However, it could be a solution to the growing affordability crisis in Australia’s housing market. Under such schemes, residents are members of the co-op and get affordable rent pegged to a proportion of their income with tenure for life. In return they share responsibility for maintaining their homes collectively. “We talk about co-operative housing being the missing middle within Australia’s housing market,” Common Equity Housing Limited chief executive Liz Thomas says. “I think there’s the opportunity to change the conversation about what affordable housing means. We need to change the dialogue about who needs affordable housing. “We want to look at how we can use this housing typology to give people agency.” ▲ Co-op living: Common Equity’s Gibbs Street, Abbotsford property. The emerging housing model enables people from all walks of life to access affordable housing in well-located areas. The co-operative is run like a small business made up of co-op members who manage the housing platform. “We hold title to all the properties, we then head lease to the co-op, and the co-op is a small business,” Thomas says. “They pay a percentage of between 45 and 55 per cent of their rent to Common Equity and retain the other part of the rent within the co-op to manage and maintain the properties. “It’s an opportunity for people to rent as though they own. We’ve been doing build-to-rent for 40 years,” Thomas jokes. There are about 450,000 affordable homes in Australia’s four main social housing programs, according to the Australian Institute of Health and Welfare. Two-thirds are public housing, with a further 25 per cent identified as community housing, run by community housing providers. “When you look at the housing continuum, there’s public housing, to qualify you have to be on a government benefit essentially, and at the other end of the home continuum you’ve got home ownership. For people on an average wage of $70,000 to $80,000 per annum, they’re facing the prospect of never owning a home,” she says. “Affordability is even impacting regional areas like it never has before.” ▲ Common Equity Housing Limited chief executive Liz Thomas. Common Equity has 2000 properties in its portfolio that are run by about 100 co-ops. Thomas says the co-ops are either co-located or have a shared community interest. “It’s affordable because your rent is tied to your income. A quarter of your income goes to the co-op. We call it a sweat equity discount because you’re putting time and energy to contribute to your co-op.” Thomas says it also helps to counteract that “danger age” for women at risk of homelessness. “That’s when a lot of women become homeless, when they age, not as they age. In co-operative housing, rent reduces as income reduces.” The self-funded not-for-profit manages the acquisition, development and disposal cycle of properties, most of which are low-density housing co-ops. “We have a $1-billion balance sheet and we are self-funding in terms of maintenance and capital works,” she says. “We apply for government funding (such as the HAFF), which gives us a way to leverage our balance sheet. “We have a strong balance sheet with limited debt and we own land.” ▲ Common Equity’s Lakewood Housing Co-operative. Common Equity recently completed a $12.4-million refurbishment of its Lakewood Housing Co-operative in Melbourne’s eastern suburbs. The Lakewood redevelopment, which was jointly funded by the Federal Government and Common Equity, comprises 80 units for renters needing secure and affordable accommodation, including residents who have come straight from street homelessness. Thomas says sometimes they are able to take back properties to recycle them and create greater density, replacing a house with two to three townhouses. “We handle the development, acquisition and disposal of assets. A lot of [the portfolio] is old housing stock … we are actively managing the portfolio to increase density and sustainability. “Much of our portfolio is scatter site co-ops, so a number of houses within a 20km radius, a geographically linked co-op, but some are focused on sustainable living or LGBQTIA+ communities, or groups of artists.” University of Western Sydney is undertaking research into the value of housing co-operatives in Australia. “That’s really exciting for us because it demonstrates how co-operative living, co-location or shared community interests can benefit communities,” she says. And that co-location piece is becoming part of a broader conversation on the development of key worker housing, something which Community Equity is also looking at at one of its Brunswick sites. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Co-Operative Living: Emerging Model to Tackle Affordable Missing Middle

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