WHAT IS A HOUSINGCOOPERATIVE? 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 2 contribution to the capital required”.
CO-OPERATIVE HOUSING SOCIETY These societies are formed to provideresidential houses to members.They purchase land, develop it and constructhouses or flats and allot the same to members.Some societies also provide loans at low rate ofinterest to members to construct their ownhouses.Examples of housing co-operative society TheEmployees Housing Societies and Metropolitan 3Housing Co-operative Society
DIFFERENT TYPES OF HOUSINGCOOPERATIVES Housing 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 4 Societies
TENANT OWNERSHIP HOUSINGSOCIETIESUnder this category the land is held either on leasehold or free hold basis by societies, and houses are owned by members. 5
TENANT CO-PARTNERSHIPHOUSING SOCIETIESThese housing societies hold both land or building, either on leasehold or freehold basis and allot flats to their members. 6
HOUSE MORTGAGE SOCIETIESSuch 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. 7
HOUSE CONSTRUCTION ORHOUSE BUILDING SOCIETIESSocieties 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. 8
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 9
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 10 other family member.
GOVERNMENT POLICIES The Union Cabinet first time approvedthe National Cooperative Policy, aimingat: Minimizing the share of the Government in Cooperatives. Redefining the role of Registrar of Coop. Societies as a facilitator for Cooperative Societies. Repatriation of the Government’s equity in the Cooperatives by infusion of equivalent cooperative shares. 11
COOPERATIVE 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. 12
WHAT IS THE LEGISLATION THAT GOVERNSHOUSING COOPERATIVES?The activities of housing cooperatives in various States are regulated through Respective Cooperative Societies Act and Cooperative Societies Rules administered by the Registrar of Cooperative Societies appointed by the Government. The national level cooperative organisations and the multi-state cooperative societies are governed by the provisions of Multi-State Cooperative Societies Act and Rules. 13
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 14 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. 15
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. 16
Advantages Disadvantages• Easy formation • LimitedCapital• Open membership • Problems in• Democratic Control Management• Limited Liability • Lack of Motivation • Lack of Cooperation• Elimination of • Dependence on Middleman’s Government Profit• State Assistance• Stable Life 17