What is a Housing Cooperative?

After the real estate crisis and the slow recovery that followed, there was an increase in housing cooperatives in our country. In today’s blog article by ShBarcelona we will explain what a housing cooperative is and what its advantages and disadvantages are. Maybe joining a housing cooperative can be of interest to you.

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What is a housing cooperative and what are its advantages and disadvantages?

A housing cooperative is a non-profit organisation based on a group of people, and this group is coming together to share its need for a property. The underlying idea is to be able to access the housing market with remarkable quality homes at a reduced price, or at least less expensive than other newly developed homes.

The housing cooperative develops a property on its own initiative, so homes can later be granted to its members, who are part of the cooperative. The cooperative is a non-profit organisation, and the members of the cooperative are both initiator and beneficiary.

Cooperative members are involved in every important step and decision that needs to be made. Cooperatives are in essence a democratic community with a high level of participation. So an important element of being a cooperative is coming to a consensus with the group, without the capital playing a leading role.

Housing cooperatives are regulated by law in the Autonomous Community they are in. As a result every cooperative has its own statute on its operating procedures, structure and bodies (General Assembly, Auditor and Governing Council).

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Would you like to know what the advantages of a housing cooperative are? Keep reading to find out whether or not to consider becoming a member:

• As a general rule, the final price of the property is 20 to 30% less than regular market prices. Due to the fact that members are developer and owner, there is no property development company that needs to make a profit.
• Purchasing costs (for example notary and registration fees) are lower than with regular property purchases.
• There is an advantageous tax system, as cooperatives are exempt from VAT on land purchase and Stamp Duty.
• Property constructions are done with a fairly high level of customization in terms of design and construction materials. The end result is usually of a higher quality.
• If a member of the housing cooperative does not want to proceed with the purchase of the flat, it is easy to withdraw and recover the money contributed, as long as the withdrawal is justifiable. Without a good reason, you could lose up to 5% of your investment.
• Both the construction and buying process are completely transparent.

Here are some disadvantages of housing cooperatives:

• The price of a property is not final. It does not happen frequently, but it is possible for the initial price to go up a little. The margin is usually around 2%.
• Everyone who wants to be a member of a housing cooperative must pay a significant amount upon entry. This is 20 to 30% of the final price of the house.
• You could be the victim of a scam, and lose your money as well as your home. Before signing anything, check that the cooperative in question is registered at the Registro de Cooperativas de la Comunidad Autónoma.
• A housing cooperative member may decide to leave the cooperative and recover his or her money, but will lose contributions that were used to pay for the cooperative’s own expenses.

Do you have interesting information about housing cooperatives?