Idea - Co-op Rental
I've rented for my entire adult life. Where I am now, the idea of home ownership feels a remote dream at best. I've lived in at least 10 different flats in several cities, so I feel like I've got a decent grasp of the various pros and cons of rental.
I live in the UK, and here, as in many countries, home ownership is seen as the ultimate end goal. You get your own place, that's yours to do with as you will. 'An Englishman's home is his castle', and all that. Increasingly these days, homes are also assets, and with the price of housing here going up ever more, profitable ones at that. I'm going to leave aside the whole 'house as asset' issue, as it strays into a lot of other debates around inheritance, wealth, and other questions, and focus on the day-to-day plusses and minuses of renting versus home-ownership.
I really like renting, for the most part. There's a relatively low barrier to entry financially (at least versus mortgage requirements or the major savings needed for buying), and there's flexibility. Want a bigger place? Want somewhere quieter? Need to move to a different city? It's a pretty easy process for the most part. There's definitely some privilege here – I've generally been fortunate to have regular income, savings and a job in a sector that ticks boxes on rental applications – not true of everyone. If you have maintenance issues, the landlord is obliged to fix them, minimising time and expense on your part. It's a bit like having a form of home maintenance insurance in a way.
That brings me onto the downsides. You're majorly at the whims of estate agents and landlords. If you get lucky, things are sorted fast, they leave you alone, and they're flexible about making a place your own. Improvements in landlord/tenant regulation have helped a little with this, but it's still largely case-by-case. I've had landlords turn up with no notice, walk in on me whilst I'm getting changed, I've had maintenance issues go unfixed for months/years, fights over deposits, and much more. Rental horror-stories are common, and are likely a big contributor to many wanting to own. Sure, you need to arrange everything yourself and have a bunch more overheads, but you have control, not some arbitrary third party.
A different approach
I'm currently looking at moving again in the next couple of months, to avoid a major rent increase. However, I'm currently living in a type of place I've seen spring up more and more in big cities. It's a modern new-build development made for rental – a company owns the building and acts as landlord. They have a dedicated team for leasing and rentals and a standardised process. Flats are purpose-built (a huge improvement over the poorly-converted flats I've rented in the past) come fitted to a high standard, and there's a dedicated maintenance team for issues. Rules on noise etc. mean the environment remains pretty pleasant (I had a nasty time in 2020 thanks to neighbours who decided weekly raves until 8am was totally reasonable behaviour), and it makes renting a pretty easy and smooth experience. You're allowed to have a pet (for a small fee), you can put up pictures, and whilst you can't redecorate in my development, in others that's also allowed.
However, such developments are pricey – they charge a distinct premium for being a nicer, easier experience. Hence my sizeable rent increase – they have a standardised percentage rent increase each year, and if you don't like it, well, sucks for you – go find somewhere else. So that got me thinking – what if such a development was run on a not-for-profit basis?
N.B. I'm aware this is almost certainly not an original idea, but I've not come across anything like this in my brief poking around. If such a thing exists, I'd love to know about it!
My idea, broadly, is to have an organisation that owns a building of flats, and rents them out without taking a profit. It offers the ease of rental experience that the 'designed for rental' places do, but without taking a big chunk for themselves. Indeed, accounts and profit/loss could be open-sourced, with residents able to vote on new amenities they'd be OK with paying a bit more for, or others they'd rather do without. Staff, maintenance costs and upkeep all come out of the building's accounts, and rent is only adjusted if costs go up, with residents being made aware of this ahead of time if at all possible. Ideally all residents would have an equal say in most/all matters about how the development is run, perhaps even including efforts to build a more diverse and inclusive community. My own development is nice and all, but its price and marketing inevitably skews those who live here to a fairly narrow demographic.
I'm still unsure on the ownership structure of such a place. My original thought was a co-operative, owned by the renters, but that's just co-op ownership of housing with extra steps – cool, but a different idea. I'd guess there's an organisation, perhaps a co-op, set up as a non-profit to run the place, that owns/rents the building, and handles all the admin. It'd take a sizeable chunk of cash to set up, and I'm not sure where that'd come from given there's no profit motive to justify investment beyond 'this is a neat idea and I'd like it to succeed'.