Frequently-asked Questions

What is the difference between a "housing co-operative" and a "co-operative community"?

What is a housing finance co-operative?

What is a Starr-Bowkett society?

What is a rental housing co-operative?

What is a co-operative community?

What is a co-operative?

What are the co-operative values?

What is the co-operative tradition?

How is a registered co-operative different from a company?

Do rental housing co-operatives conform to the international principles?

What benefits and opportunities exist with co-operative communities?



What is the difference between a "housing co-operative" and a "co-operative community"?

The term "housing co-operative" can mean three different things:

  • a housing finance co-operative - a vehicle to finance private (often first) home ownership
  • a rental housing co-operative - a mechanism for having public housing tenants maintain public housing stock
  • a co-operative community - a group of people who have come together to collectively own, govern and manage their own neighbourhood


Housing finance co-operatives can be either self-organised and self-funding or government-supported.

  • Government support has usually come in the form of guarantees for loans and interest subsidies. Something like 60 per cent of all house purchases in Victoria in the 40 years after World War II were financed through co-operative housing societies as they were called. Government support for these was eventually withdrawn with the advent of mortgage brokers.

(See NSW Fair Trading website, for example)

  • Starr-Bowkett societies are one form of self-organised housing finance co-operative. Effectively, they operate as a lottery-based savings plan. Members pledge to (say) a 25-year savings plan to save (say) $300,000. The contributions are pooled. As the collective savings reaches $300,000, one member is selected at random to be lent the $300,000. The savings continue and when another $300,000 is saved another member is randomly selected for a loan. This continues until the end of the 25th year when the final member is given his savings of $300,000.

(See NSW Fair Trading website, for example)

Benefits claimed for this approach are that

1. No member is worse off than if they were saving on their own (ie it would take 25 years to reach their target).

2. Many members are substantially better off.

3. It is possible to operate without an interest charge.

4. With an interest charge, it is possible to index the payouts for inflation/housing costs

5. It suits the Australian proclivity for a gamble. (You are "lucky" if you get your loan within the first couple of years.)


Rental housing co-operatives are part of the Government public housing system, and operate within the community housing sector. State Governments finance authorised Community Housing Providers to buy rental housing stock. These housing providers act as landlords and are responsible for selecting tenants and maintaining the properties. However, they may also enter into an arrangement with a group of these tenants who form a co-operative whose role is to maintain their properties. Often these co-ops are given the right to set rent levels and maintenance standards, and may also have the right to select future tenants. Frequently, they also form an important social function and encourage formal and informal social interaction and support amongst the tenants. This form of housing co-operative is currently the most numerous in Australia.


Co-operative communities are groups of people who form a registered co-operative to create and govern their own neighbourhoods. In Australia, they are usually non-profit land-sharing communities (ie the co-operative owns the land in one title or parcel), upon which members have houses which they own themselves and can sell on to incoming members when they leave. However, there are some religious communities where both housing and land are owned by the co-operative.  In co-operative communities, members see themselves as collective owners of the whole property, rather than as landlords and tenants; as being in a participatory democracy, rather than a representative democracy; as being actively involved in the operation and maintenance, rather than employing property managers. Co-operative communities in Australia have provided finance to their own members, either in their own right or as vehicles for other co-operative lenders (such as credit unions). As well as providing for their own members, they have also been known to finance the establishment of other co-operative communities.


What is a co-operative?

The International Co-operative Alliance defines a co-operative as: "A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise." (

The Alliance defines seven co-operative principles which it expects its members to follow and which are embedded in the legal framework for co-operatives across Australia. these principles are:

  1. Voluntary and Open Membership: Co-operatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.
  2. Democratic Member Control: Co-operatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote) and co-operatives at other levels are also organised in a democratic manner.
  3. Member Economic Participation: Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.
  4. Autonomy and Independence: Co-operatives are autonomous, self-help organisations controlled by their members. If they enter into agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.
  5. Education, Training and Information: Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public - particularly young people and opinion leaders - about the nature and benefits of co-operation.
  6. Co-operation among Co-operatives: Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.
  7. Concern for Community: Co-operatives work for the sustainable development of their communities through policies approved by their members.

What are the co-operative values?

The seven co-operative principles are based on six co-operative values which are described as:

  1. Self-help: Helping each other while helping yourself by working together for mutual benefit.
  2. Self-responsibility: Act responsibly and play a full part in your group.
  3. Democracy: The structure should ensure that all members have control over the whole group. One member - one vote.
  4. Equality: Each member has equal rights and benefits.
  5. Equity: Members are treated justly and fairly.
  6. Solidarity: Members will support each other and other co-operatives.

What is the co-operative tradition?

The modern co-operative movement traces its roots back to the Rochdale Society of Equitable Pioneers, which was established in Britain in the 1840s. (Watch a short YouTube video about this.)

Originally, co-operatives were designed to be cost-saving rather than money-making.

They were owned and operated by ordinary, often poor, people.

They were designed around economies of scale and mutual contribution and benefit.

The members were the customers as well as the financiers.

Members were given rebates rather than dividends.

The benefit and reward to members was proportional to their involvement and participation, and was not necessarily financial.

There was usually no return on capital invested.

They had a non-profit ethos.


How is a registered co-operative different from a company?

A group of people may form a legal entity, such as an incorporated association or company, that operates according to co-operative principles. However, there are some legal restrictions on the use of the word "co-operative" in their name. Use of the word "co-operative" is usually reserved for registered co-operatives.

According to the NSW Co-operatives Registrar: "Co-operatives are different from other forms of incorporation because of their member ownership, democratic structure and the use of funds for mutual, rather than individual, benefit." (See website)

Unlike a company, a co-operative is legally required to abide by the co-operative principles.

It is required to have an active membership provision in its constitution which requires members to participate in the primary purpose of the co-operative, and disqualifies people from membership if they do not.

Voting is not proportional to investment. Each member has one vote irrespective of the size of shareholding and the voting system must be "democratic".



Do rental housing co-operatives conform to the international principles?

It is arguable that most rental housing co-operatives in Australia fail to meet the international principles in some major respects.

For example, rental housing co-operatives are not open to people who do not qualify for public housing. (Principle 1)

Members do not control the capital - the housing in which they live. (Principle 3)

They are not independent of the community housing system. (Principle 4)

While they can make their own decisions, these are circumscribed by the public housing regulations and the rules of the community housing providers and, at any staged, can be "trumped" by the housing authorities or housing providers. They usually cannot, for example, decide to make structural changes to their buildings or build extensions, even at their own cost. (Principles 2 and 4)


What benefits and opportunities exist with co-operative communities?

The Co-operative Living Information Service is an advocate for co-operative communities.

This is because they can (and often do) operate in the spirit of the co-operative tradition and comply fully with the International Co-operative Principles.

They are low-cost self-help autonomous communities funded by ordinary people often on low incomes, and are designed to support meaningful and satsifying lives for their members. They can be (and often are) designed to keep costs of living low, primarily through keeping housing costs down.

They are often the middle ground between renting, where for example people might stand to lose $350,000 over 20 years, and private ownership, where they might stand to gain $350,000 over 20 years. Members can get their money back after 20 years, neither losing nor gaining.

While fully-funded by the members, their non-profit nature means that the appreciating value of community's assets remains with the community. As a consequence, not only does the cost of joining remain affordable, but the mutual benefits available to members increases. With an increasingly strong financial position, the community is also in  a position to extend credit or to finance the creation of other similar communities.

Their participatory, collective, self-governing structure provides efficiencies that allow a healthy personal, social and physical/natural environment to be maintained with relative ease. They are resilient and sustainable in the face of climate change, resource depletion and the vagaries of a precarious Western economic system.

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