Collaborative housing offers the option to own, part-own or rent your home. With its focus on sharing, you might be curious about what you’ll actually own and how it works in practice.
What's shared and what's mine?
This is a decision your group needs to discuss and agree on at the outset. From a legal perspective, it depends on how you set up property ownership rights – it’s important to choose the housing property title that works best for your project’s goals.
Which property title?
There are many types of property ownership structures that can be used successfully for collaborative housing. These include strata and community title, company and cooperative title, tenants in common and retirement license to occupy. There may even be ways to combine ownership structures in a way specifically suited for your needs. Some titles, like strata or community title, delineate which areas are owned by you and which are in shared ownership. Others, like company title and some types of cooperative title, give you shares in commonly owned property. Read here for some factors to consider when choosing between title options and always seek tailored legal advice.
Purchasing as tenants in common
This is a way of co-buying and co-owning property with others. It’s typically used for small projects where a few households are buying an existing property together with the intention of developing it into collaborative housing. Groups purchasing as tenants in common should seek tailored legal advice and set up a legal co-ownership agreement.
Owning a stake in the development process
In some situations, residents band together to act as developer. They engage an expert development manager to help them through the process and co-borrow to finance land acquisition and development. When development is complete, units are typically partitioned into separate ownership parcels using whichever title suits the needs of the group (strata title is the most typical) and each household takes out their own home loan to pay out the development loan.
Buying into a development
In other situations, such as the Nightingale model, the process of land acquisition and development is led by an architectural organisation and financed by investors. Households commit a deposit before construction begins and have some input to the design process.
Owning versus investing
Australians are used to thinking of housing as an investment, begging the question, “Is collaborative housing a good investment?” It really depends on your goal – is it to make a quick profit, or have a secure, affordable place to live? If you answered the former, it may not be for you. Development profits and resale prices are usually capped to lock in long term affordability benefits and prevent the kind of speculation that inflates housing costs. Despite this, many investors believe collaborative housing can deliver attractive, stable returns – see the Nightingale model, for example.
Partial or shared equity models allow households to have a stake in their home without fully owning it. They help households with lower or variable incomes to enter the housing market. Shared equity schemes already operate in some parts of Australia. Other models like the mutual home ownership society have been pioneered in the UK, with some collaborative housing projectsgroups looking at applying them here.
Collaborative housing is for renters too
Whilst many people think of collaborative housing as primarily for owner-occupiers, there are rental options too. ‘Build to rent’ projects offering long term leases are becoming popular in Australia – Nightingale is exploring this. The rental cooperative is also an established model for collaborative housing. (e.g. Murundaka Cohousing Community), while some developments have both rental and owner-occupied housing in the same community (e.g. Pinakarri)