Housing cooperative: The middle way between owning and renting
As affordable as renting, as safe as home ownership
A co-op apartment is as coveted as it is rare, especially in urban neighbourhoods. The security of a housing cooperative is on par with home ownership, whilst offering a greater degree of flexibility, which usually only is available while renting. Living in a co-op has many benefits, but there are also some differences from renting that must be considered. People interested in co-op living should be prepared to wait a considerable amount of time for their desired apartment. Here we will explain the special features of a housing co-op along with its advantages and disadvantages. We’ll also explain how to find vacant co-op apartments.
Cooperative housing is in high demand
In total, there are around 2,000 housing cooperatives in Germany, with around 2.2 million apartments. This trend will continue to grow as co-op living offers an interesting alternative in times of high interest rates and correspondingly high real estate acquisition costs. However, properties of this type are still rare, especially in the big cities. To secure your own co-op apartment, it will take a lot of time and patience as cooperative housing is relatively inexpensive, this naturally leads to long wait lists. Additionally, some co-ops no longer accept new members. However, there are regional differences to consider here, and the long waiting period is usually worth it, as once you obtain such an apartment, you have a lifelong right of residence.
Advantages and disadvantages of a co-op
Those who manage to rent a co-op apartment enjoy numerous benefits. Since cooperatives are not profit-oriented, rents for such apartments tend to be significantly lower than for comparable properties on the open market. In addition, you automatically receive a lifelong right of residence. Only those who grossly violate the rules of the cooperative can be expelled. If the cooperative generates surpluses, you as a member also receive interest on your share. In addition, housing cooperatives usually offer their members excellent service. This includes not only the rapid repair of any damage and defects in the apartment, but also sound advice in social emergencies. Members also have a right of co-determination when it comes to decisions regarding the housing cooperative, for example, the purchase of new properties.
However, there are also some disadvantages. In addition to previously mentioned long waiting periods, there is also an obligation to join, which is accompanied by the financial cost of the share. Some co-ops also charge an entrance fee. In the event of bankruptcy, members are also financially liable for their shares. Anyone who cancels their membership will have their share refunded. However, there are also sometimes long waiting periods for repayment, partly because the termination is somewhat more complicated than for a rental apartment.
Patience needed: How to join a housing co-op
Anyone wishing to join a housing cooperative must apply for a share. The Board of Directors of the cooperative also decides on the admission of new members and their approval is needed. Ideally, you should inquire directly with housing cooperatives in your region, for example via relevant websites. If there is no apartment available yet, you can put your name on the wait list to rent the next available apartment in the co-op. The cost of a share is around 200 to 1,000 euros, depending on the provider. Between 400 and 20,000 euros can be payable for the total compulsory shares. These are usually higher for newly established cooperatives than for long-established providers since the inventory of apartments must first grow in order to be able to operate.
Cooperative homes with a purchase option
Even if it is rather unusual, interested parties, in principle, have the possibility to buy a cooperative apartment. However, this is only feasible if the relevant cooperative offers this option. It often exists only for members who have been involved for many years. However, it should be noted that you are then a condominium owner in a house that is majority owned by the co-op. Under certain circumstances, this can lead to potential conflicts, as you as the owner have little influence over the cooperative when it comes to decisions affecting the building. Nevertheless, such a membership with a purchase option can be a more cost-effective alternative to the classic purchase of real estate, for example, if there are currently no financial resources available for the purchase, but this may change in the future.
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