CO-OPERATIVE HOUSING SOCIETY

What is a Housing Cooperative ?

Housing cooperative has been defined as:

“A legally incorporated group of persons,

generally of limited means, pursuing the same cause

of meeting the common need of housing or its

improvement based on mutual assistance.

In such a cooperative, the membership is

voluntary and control is democratic, and members

make an approximately equal contribution to the

capital required.”

Co-operative Housing Society

These societies are formed to provide residential

houses to members.

They purchase land, develop it and construct

houses or flats and allot the same to members.

Some societies also provide loans at low rate of

interest to members to construct their own houses.

Examples of housing co-operative society The

Employees Housing Societies and Metropolitan

Housing Co-operative Society

Different types of Housing

CooperativesHousing cooperatives at the primary level can

broadly be classified into four groups as detailed

below:

Tenant Ownership Housing Societies

Tenant Co-Partnership Housing

Societies

House Mortgage Societies

House Construction or House Building

Societies

Tenant Ownership

Housing Societies

Under this category the land is held either on

leasehold or free hold basis by societies, and

houses are owned by members.

Tenant Co-Partnership

Housing Societies

These housing societies hold both land or building,

either on leasehold or freehold basis and allot flats to

their members.

House Mortgage Societies

Such societies lend money to their members for

construction of houses.

The members have to make their own arrangements

for building their houses.

This type of societies are really credit societies as

distinguished from other credit societies as per the

objects for which they lend, the duration of the loan

and the security they demand.

House Construction or House

Building Societies

Societies of this type spend money on behalf of the

members for building the houses, and the houses

are handed over to members when ready and the

money spent is recovered as loan.

Characteristics of Co-operative

Housing Society

Open membership

Voluntary Association

State control

Democratic Management

Service motive

Separate Legal Entity

Distribution of Surplus

Self-help through mutual cooperation

How to become a Member of Housing

Cooperative?

Have necessary qualifications as provided in the Bye-

laws of cooperative.

Reside or intend to reside permanently within the area of

operation of the housing cooperative.

Have paid necessary admission fee.

Have purchased minimum number of shares of the cooperative

and paid other stipulated charges as per the Bye-laws.

Make necessary down payment within the time limit as per the

norms laid down in the Bye-laws.

Make necessary declaration whether he/she owns any plot, flat

or accommodation in his/her own name or in the name of any

other family member.

Government Policies

The Union Cabinet first time approved the National

Cooperative Policy, aiming at:

Minimizing the share of the Government in Cooperatives.

Redefining the role of Registrar of Coop. Societies as afacilitator for Cooperative Societies.

Repatriation of the Government’s equity in the Cooperativesby infusion of equivalent cooperative shares.

Co-operative Law

Multi-State Cooperative Societies Act- 2002 ensures

functioning of Cooperatives as autonomous Institutions on

sound Cooperative Principles.

The new legislation reduces the role of Government and

provides professionalism in Cooperatives to withstand

competition.

Government participation in the equity is allowed only when

requested by the Society.

FinanceA housing cooperative is normally non-profit, since usually

most of its income comes from the rents paid by its residents ,

who are invariably its members.

There is no point in creating a deliberate surplus except for

operational requirements such as setting aside funds for

replacement of assets.

It is relatively difficult to start a housing co-op because if the

idea is, for instance, to build a building or group of buildings to

house the members, this usually takes a significant mortgage

loan for which a financial institution will want assurances of

responsibility.

Contd……In the lifecycle of buildings, the replacement of

assets requires significant funds which can be

obtained through a variety of ways:

Assessments on current owners.

Sales of Treasury Stock to new shareholders.

Draw down of reserves.

Unsecured loans.

Operating surpluses.

Fees on the sales of units between

shareholders and new and increases to existing

mortgages.

Advantages of Housing

Cooperatives A housing cooperative is neither a public nor a profit seeking

organisation.

Its principal objective is to eliminate economic exploitation as it

is controlled by members only.

Contrary to public housing, cooperative housing provides

opportunities to its members to control the house designs at the

planning stages.

The maintenance of the estate is also in the hands of members,

which leads to maintenance at lesser expenses and in a better

way.

Cooperative housing satisfies quantitative as well as qualitative

aspects of housing.

Disadvantages

• Limited Capital

• Problems in Management

• Lack of Motivation

• Lack of Cooperation

• Dependence on Government

There are many advantages and disadvantages in cooperative

housing society. Though the main aim of these cooperative

housing society is not to earn profit but still they are interested in

knowing whether their current income is more than the current

expenses or not.

They are also keen in knowing the financial position of their

concern.

Co-operative Societies are not charitable societies.

They carry on Economic Activities. The profit is not the motive

but the proper accounts need to be maintained and presented

before the members for their approval in the Annual General

Body meeting.