If you’re a first-time homebuyer whose primary concern is price, it can be a struggle to find a home that fits nicely within your budget. Or maybe you already own a home and are looking to downsize, but affordable properties remain elusive, leaving you with few options. If you’re feeling priced out of the housing market, an alternative to consider is co-op housing.
Key Points
- Housing co-ops are non-profit corporations that own and operate a block of affordable residences.
- When you buy into a co-op, you become a member and own a share in the corporation, but don’t own any equity.
- Depending on the location, housing co-ops can cost as much as a few hundred dollars less per month compared to traditional rental housing.
What Is Co-Op Housing?
A housing co-op is a corporation that owns a group of multi-unit residences and is usually run as a non-profit organization. Having emerged as a popular type of living arrangement in the 1960s, today’s co-op housing communities come in many forms and serve diverse groups of people.
Co-ops offer Canadians a more affordable housing alternative. Since these non-profits seek to cover operational costs without generating a profit, co-ops are typically a lot cheaper than market rentals.
How Does Co-Op Housing Work?
While co-ops’ structure resembles that of a condo on the surface, they operate quite differently. In a co-op, you own a share of the entire co-op housing complex and don’t own any equity in your unit. This is in stark contrast to a condo where you own your unit and are solely responsible for its upkeep, while the condo corporation is responsible for maintaining the common property.
These differences are the reason co-ops are cheaper than a traditional condo. As such, they’re a more attractive option for low-income residents, particularly when housing and rent prices are very high.
Governance Of Co-Ops
A co-op is run by a board of directors elected by the co-op members. Each co-op member gets one vote.
The board is responsible for maintenance, renovations, security, budgeting, and the day-to-day operations of the co-op. However, they may choose to outsource some functions as well. Individual co-op members are also more heavily involved in setting rules compared to a condo corporation.
In addition to the purchase price, you must also pay a monthly “housing charge,” which is the equivalent of the rent you would pay to live in an apartment.
Types Of Co-Op Units Offered
Unlike private low-income housing or city-run housing programs, co-op housing offers the following types of units:
- Market-value units: These units are priced at whatever the current market price is for a comparable unit. While you’re required to pay the full monthly fee, the cost is usually much lower compared to privately-rented units.
- Subsidized units: These unit prices are based on your gross monthly income instead of the going rent rates. As such, they’re less expensive than market-value units. Subsidized units’ housing charges are typically set at about 30% of occupants’ gross monthly household income.
Where Can You Find Co-Op Housing In Canada?
Housing co-ops are available all throughout Canada. To help you start your search, here are some co-ops currently available in the following provinces:
| Co-Op Housing Toronto | – Hugh Garner Housing Co-operative – Dufferin Grove Housing Co-Operative – Stanley Knowles Housing Co-Op |
| Co-Op Housing Ottawa | – Westboro Housing Co-Op – Sandy Hill Housing Co-Op – St Georges Housing |
| Co-Op Housing Vancouver | – Kinship Housing Co-Op – Fraserview Housing Cooperative – Arbutus Housing Co-Op at Kitsilano Vancouver – Heritage Housing Co-Op |
| Co-Op Housing Montreal | – Coopérative d’habitation Val Perché – Coopérative d’habitation Mile-End – Coopérative Beau Quartier – Esperluette |
Housing Co-Ops In Ontario
Ontario is home to over 500 housing co-ops. You can use CHF Canada to help you find Co-op housing in your area.
Housing Co-Ops In BC
Find a housing co-op close to you in BC by searching the CHF BC website. You can narrow your search by location and other features to find exactly what you’re looking for.
Housing Co-Ops In Alberta
If you live in Alberta, you can use CHF Canada or NACHA to help you find available co-op housing.
Housing Co-Ops In Quebec
You can quickly find a housing co-op in Quebec by searching on the Fédération de l’habitation coopérative du Canada (FHCQ) website.
Advantages Of Co-Op Housing
Co-op housing offers several advantages compared with other housing options:
- Affordability. Co-op units are typically cheaper to purchase than condos or townhouses. Monthly housing costs are reasonable, particularly if you buy a geared-to-income unit.
- Safety. Co-op housing environments are generally safe places. Individual members interact with each other frequently and collaborate to keep the property safe and secure. Co-op housing members are more attuned to unusual behaviours or activities that may present safety concerns and can work to resolve them.
- Community involvement. Active involvement within a co-op housing community is encouraged, which results in a shared sense of trust, responsibility, and camaraderie among members. Everyone helps maintain the community and partakes in critical decision-making to ensure the co-op is run according to its values and vision. Co-ops also organize social events, which help enrich the community and add to a sense of belonging.
Disadvantages Of Co-Op Housing
There are also some drawbacks to co-op housing, such as the following:
- More responsibility among members. Co-op members work together to ensure the units are properly maintained, financial obligations are met, and conflict is minimized. Active engagement from members is expected, which means you’ll have to shoulder more responsibility than if you were living in a regular house or condo.
- Less privacy. If you’re private and would rather not interact with your neighbours too often, you’ll likely find the co-op lifestyle burdensome and invasive.
- Net worth thresholds. To remain in good standing with the co-op, you’ll also have to maintain a certain net worth and prove your ability to meet your ongoing financial obligations.
- More restrictive. Co-op housing generally has more limitations than other living arrangements with strict rules governing what you can and can’t do with your unit. For example, the co-op’s bylaws may prohibit you from subleasing your unit.
- More difficult to get financing. Since a co-op is technically owned by the corporation and owners are simply buying shares of the corporation, lenders may not be as willing to extend financing. As such, it may be more difficult to get a loan. Further, it’s possible for a co-op board to outright forbid financing, in which case you won’t be able to get financing at all.
- Less appreciation. Co-ops generally see less appreciation compared to condos. While condos may see an appreciation rate of 3% to 5% per year, co-ops only realize an average of 1% annual rate of appreciation.
How To Become A Member Of A Housing Co-Op
To become a member of a housing co-op, consider the following:
Step 1: Do Your Homework
Each co-op has its unique approval process for admitting new members. To increase your chance of being accepted, you should research the co-op to assess whether it’s the right choice for you.
Step 2: Attend Sessions
Some co-ops actively promote their co-op by holding information sessions for potential members. Attending these sessions is an excellent way to get acquainted with their core values, admissions process, and services offered.
Step 3: Submit An Application
Once you’ve submitted your application, a co-op staff member will contact you to conduct an interview. If the co-op board determines you’re a good fit for the co-op, they’ll offer you a unit.
Step 4: Sign The Contract
Before the board finalizes your membership, you’ll sign an occupancy agreement outlining your rights and obligations as a co-op member.
Step 5: Secure Funding
If you need financial assistance to buy shares in a co-op, now’s the time to apply for financing. Just keep in mind that securing financing for a co-op may be more difficult than financing a standard home, as mentioned.
Step 6: Place Your Name On A Waiting List If Necessary
If no units are available, the co-op will place you on a waiting list. Vacant units are provided on a first-come, first-served basis, so it may take some time to secure one, especially if you’ve signed up for a geared-to-income unit.
Can A Co-Op Tenant Be Evicted?
Like apartment tenants, the board can evict co-op members for valid reasons, including breaking the co-op’s rules, and bylaws, or failure to pay monthly housing charges. You can get evicted from a co-op because you don’t actually own the property; instead, you own a share.
The eviction process typically involves notifying the member of their membership cancellation. The notification will provide details on the reason for the eviction, which must be reasonable and free from bias. The co-op must allow the terminated member sufficient time to organize their affairs and provide them with an opportunity to speak at a meeting related to the eviction with their legal counsel present.
In a housing co-op, you have no equity, despite owning a share of everything. Because you don’t have any stake in the complex in terms of equity, lenders may consider this a higher risk since it’s tougher to foreclose in the event of default. As such, it may be more difficult to secure a mortgage for a co-op.
If you want to buy into a housing co-op but need financial assistance, you can take out a share loan or co-op home loan to cover the cost of the shares. In this case, your share of the housing co-op will serve as the collateral, and not the property itself.
Are Housing Co-Ops Subsidized By The Government?
Housing co-ops may seek government funding to help subsidize a certain number of units. The co-op offers subsidized units at a discount to members who earn a low income, providing them with an opportunity to join the co-op without paying the market price for a unit.
Co-ops must adhere to the rules described in the funding agreement to qualify for government subsidies. They can receive funding at the municipal, provincial, or federal government level.
Your Rights As A Co-Op Housing Member
As a Co-Op housing member, you have certain rights:
Where Can I Find Information On My Rights As A Co-op Housing Member?
The rules and regulations vary depending on which province or territory a co-op is located. To find out more about housing co-op regulations across Canada, click here.
What Can I Do If I’ve Been Unfairly Rejected For Co-Op Housing?
Housing co-ops must exercise sound moral judgements and observe human rights laws that deal with discrimination. Co-ops can’t deny housing to people based on things like race, religion, sex, ethnicity, family or marital status, political beliefs, and other protected attributes. The only exception relates to age – under some circumstances, co-ops may set a minimum age requirement for admittance as a member.
If you feel that you’ve been unfairly discriminated against, reach out to a representative from the Human Rights Commission in your province or territory.
Do I Have Equity In My Co-Op Housing Unit?
As mentioned, when you purchase a co-op housing unit, you’re buying a share rather than equity ownership. As a result, your co-op unit is not considered real property from an investment perspective, like a detached home.
If you’re a shareholder, you have the right to live in your unit, participate in setting rules, vote for board members, and cooperate with other members to support and enhance the co-op. While co-op shares can appreciate, the returns tend to be modest compared to other types of real estate.
Co-Op Housing And The Federal Budget 2024
The federal government first committed to a $1.5 billion Co-operative Housing Development Program in the 2022 budget, and reinforced this pledge in the 2024 budget. In its most recent budget announcement, the federal government promised to spend an additional $976 million over the next 5 years to build more affordable housing units, including co-ops, to alleviate the continued housing crisis.
That said, as of mid-2024, housing construction has not started, even though it was supposed to start earlier in the year. Such delays will continue to impact the housing shortages across Canada.
Final Thoughts
It can take a real effort to find an affordable home, especially when the real estate market is thriving, and few properties are available at bargain prices. If you find yourself in such a predicament, co-op housing may be a viable alternative. While co-op units present some disadvantages, they can be the right option if you’re keen on active participation within the co-op community, while keeping your living expenses in check.
Co-Op Housing FAQs
What kind of people live in co-op housing?
What types of co-op housing exist?
How do I find co-op housing near me?
What is the average monthly housing co-op rent in Canada?
Which provinces have tenancy legislation for Co-op housing?
- Nova Scotia: Both the co-op act and provincial tenancy legislation apply to housing co-ops.
- Quebec: The provincial tenancy authority can get involved in certain situations, such as when a co-op or member does not fulfill their obligations.
- Manitoba and Saskatchewan. The tenancy authorities in these provinces can get involved if an evicted co-op member does not vacate their unit.
