Journal of Co-operative Studies, 58(2), 43-46

Abstract

One of the basic ideas in a limited-equity housing co-operative is for the tenants to pay a “true cost” rent. But that rent is typically determined by the cashflow requirements of the co-operative—particularly by the need to pay off the acquisition or construction loan. But then when the loan is paid off, the rent is suddenly reduced essentially to the cost of occupancy (without the cost of the loan payments). This means that the first cohort of tenants, in effect, pays off the acquisition debt and then is forced by the financial organisation of the co-operative to gift it to the later tenants and “go out naked.” But borrowing the concept of Internal Capital Accounts (ICAs) from worker co-operatives (e.g., the Mondragon co-operatives), there is a way to organise the housing co-operative so that, overall, each tenant pays for the true cost of their occupancy. This paper explains how such a “housing co-operative with ICAs” works. The result is that, over the whole time of tenancy, the tenants pay only for what they actually use, no more or less.

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