Co-Operative Housing in Canada

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What you should know

  • Co-op residents own shares of a corporation that provides them with exclusive unit access.
  • Cooperative housing is generally cheaper than a condo but requires a higher down payment.
  • Co-op residents jointly make decisions about their community.
  • They are not only for low-income residents. Historically, they were designed to have low and high-income residents live alongside.

Co-Operative Housing in Canada

Traditionally those looking for a place to live were required to choose between renting or buying a property. However, cooperative housing (also known as a co-op) is becoming a popular alternative with the rising cost of living. Cooperative housing is available all across Canada, from rural communities to large cities, and it often has a more affordable monthly fee for residence. Continue reading to get a complete understanding of cooperative housing in Canada and the options available in central provinces.

Cooperative Housing Explained

What is cooperative housing?

A co-op is a type of housing concept in which the owners do not own their units outright. Each resident is a shareholder of a non-profit corporation that owns the building. Owning shares provides residents with exclusive use of a unit along with voting rights. However, the number of shares residents must buy depends on a few factors such as apartment size, floor, and additional amenities. As with a traditional comparative market analysis, desirable features make the unit more expensive, which results in the need to purchase more shares. In addition to the initial investment in shares, owners must pay a monthly maintenance fee to contribute to operational costs.

Community House

Each resident of a cooperative is a shareholder, which provides them with voting rights. As a result, a co-op operates as a democracy where all residents have a say in management decisions. There is no landlord, and residents vote over repairs, homeowner policies, and new occupants. Given the non-profit nature of a cooperative, rent is typically lower than acondo. However, all residents are expected to contribute to the community and upkeep of the property.

There are multiple different types of co-ops:

  • Market Rate Co-ops: With board approval, owners can sell their shares on the open market. Allows residents to own profit from the change in share price.
  • Limited Equity Co-ops: Limits the profit a shareholder can earn when selling their shares of the co-op.
  • Leasing Co-ops: Shareholders can't sell their shares for more than their purchase price.

History of co-op housing in Canada

In Canada, cooperative housing started gaining traction in the mid-1960s. The government saw this as a method to provide affordable housing for families and funded it through the Canada Mortgage and Housing Corporation (CMHC).

Canada Real Estate

As part of this funding agreement, cooperatives were required to provide 15-20% of their units to government-subsidized housing. Lower-income families would pay a predetermined rent to the co-op in these units, with the remainder paid by the government. This arrangement provided the co-op with income security, the residents with lower rent, and the government with subsidized units.

The remainder of the units are "market-value" units where residents pay the fair market price in full. It's worth noting that some co-ops have an income limit to be eligible for these units, while others have no limit. This resulted in mixed-income co-op housing, in which relatively well-off individuals lived side by side with relatively low-income people and worked together on committees. This frequently had the effect of improving the financial health of low-income residents.

By the 1990s, co-ops were booming, and thousands of homes were created via various federal and provincial programs. However, by the mid-1990s, the government had slashed funding for cooperative housing, which sent the industry into a downtrend.

Many co-ops are now finding themselves needing to make big-ticket repairs. The ageing buildings require new infrastructures such as roofs, boilers, elevators, plumbing and electrical systems. Even with financial reserves, they might not have enough cash for large expenditures like this.

Financial support is required to ensure that these low-cost housing communities remain affordable for all of their residents. The Co-operative Housing Federation of Canada has been lobbying for public funding to prevent the loss of thousands of low-income apartments. Their efforts are seeing signs of success as the 2017 launch of Canada's National Housing Strategy includes grants and loans for co-op housing.

Pros and Cons of housing cooperatives

ProsCons
  • Entitled to homeowner tax deductions
  • Lower down payment than buying a property
  • No landlord; communal decision making
  • The community must approve new residents
  • Stricter rules than condominiums
  • Application process with a potential waitlist
  • Harder to receive mortgage financing
  • There is a process to sell your shares
  • Some co-ops may not let shareholders profit off appreciation

Co-op housing in Ontario

More than 550 non-profit housing co-ops house more than 125,000 people inOntario. Co-ops may be found in both big cities and rural areas. Housing co-ops exist in 95 of the province's 124 electoral ridings.

Housing co-ops are governed by the Ontario Co-operative Corporations Act, which specifies regulations that apply to all types of co-ops and manage the relationship between housing co-ops and their members.

Cooperative housing in Ottawa

Ottawa cooperatives are overseen by the Co-operative Housing Association of Eastern Ontario (CHASEO). Some of the best co-ops in Ottawa include:

Cooperative housing in Toronto

Toronto cooperatives are overseen by the Co-operative Housing Association of Toronto (CHFT). Some of the best co-ops in Ottawa include:

Co-op housing in Quebec

Quebec has over 1,130 co-ops throughout the province and a total of 22,501 units. Cooperatives in this province are overseen by the Fédération de l'habitation coopérative du Canada (FHCQ).

Cooperative housing in Montreal

Montreal is the most popular city in Quebec for cooperative housing. Some of the best co-ops include:

Co-op housing in Alberta

The prairies have over 120 co-ops throughout the region and a total of 6,739 units. Cooperatives in this region are overseen by the Northern Alberta Cooperative Housing Association (NACHA).

Cooperative housing in Calgary

Co-op housing in BC

British Columbia has over 270 co-ops throughout the province and a total of 15,784 units. Cooperatives in this province are overseen by the Cooperative Housing Federation of BC (CHF-BC).

Cooperative housing in Vancouver

Vancouver's best co-ops include:

The Bottom Line

Cooperative housing is an affordable housing option that provides the occupants with autonomy, responsibility and self-management within a democratic framework. Co-operatives are housing units owned by a non-profit housing corporation and managed by its members who live there. They can be found in big cities and rural areas across Canada, from Alberta to Quebec, Ontario to BC.

FAQ

How are cooperatives different from condos?

The ownership structure is the significant difference between a condo and a co-op. In a condo, you own your unit and receive a deed for it. However, in a co-op, you own shares of a company that grants you exclusive rights to occupy a unit. This difference makes it more challenging for co-op applicants to receive a mortgage and sell their units. Additionally, co-op applicants are interviewed by current residents who determine their tenancy.

How much do housing cooperatives cost?

On a square foot basis, co-ops are cheaper than a condo. However, co-ops typically require a higher down payment than a condo. Co-op applicants usually work with a credit union to secure a mortgage.

Is there an income restriction on co-ops?

Some co-ops have an income limit to be eligible for market-rate units, while others have no limit.

Can I invest in a housing cooperative?

Although it is possible to invest in a cooperative housing project, they are often not a good idea. Co-ops operate on a non-profit basis which provides a minimal return for investors. However, residents living in the units may see their share price appreciation over the years. It is worth double-checking that it is a market-rate co-op that enables residents to sell their shares at a profit.

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