Housing co-operatives and life leases: A comparison

Housing co-operatives have many similarities with life-lease projects, and a few significant differences. The table below provides a comparison.

 

Occupancy Concerns  Old Grace Housing Co-operative (OGHC)  Standard Life Lease
Governance and Structure Ownership The residents are members and owners of the co-op. Members may run for a position on the board and members elect the Board of Directors at the annual meeting. In addition to the board, OGHC has several functioning committees. As they are deeply involved in decisions related to the functioning of their co-op, members hold meetings on a regular basis. Co-ops are part of an international movement and OGHC has strong mission, vision, and values that are guided by a set of International Co-operative Principles. Life Lease properties are typically built and operated by non-profit organizations and service clubs. The board of a Life Lease is appointed by the organization that owns the Life Lease. Residents cannot be members of the board. Normally, residents elect a committee to represent them to the board. An annual meeting is required.
Provincial Law The Co-operatives Act of 1998 includes legislation for housing co-ops The Life Lease Act of 1999 governs Life Leases.
Restrictions on Residents The co-op itself determines restrictions on residents, if any. Old Grace Housing Co-op is committed to a model that is multi-generational, multi-ethnic, mixed-income, and welcoming and supportive of people with disabilities. Life Lease often has a 55+ requirement, but there need not be such a restriction.
For-Profit vs Not-for-Profit Although for-profit housing co-operatives exist, OGHC is a not-for-profit organization. Although for-profit Life Leases exist, most Life Leases are not-for-profit organizations.
Cost Comparisons Membership Share  Co-ops typically collect a membership share. The cost varies, depending on the co-op. A share to become a member of OGHC is $50 and is refundable should the member ever leave the co-op. Some Life Leases charge a fee, others don’t.
Share Amount  The cost of co-op shares varies depending on a variety of factors, including the building costs and size of selected suite. Member shares may be reduced by various government investments in the co-op, although such investments are typically directed toward lower-income members. OGHC shares range between $16,000 and $132,000. Entrance fees vary depending on the building, but generally, the Entrance fees in Winnipeg Life Leases range between $25,000 and $100,000.
Refundability Shares are fully refundable when members leave the co-op. Entrance fees must be at least 95% refundable and, depending on the building, may be up to 100% refundable.
Security Deposits Upon moving out, any repairs or money owing can be collected from the refundable shares. Upon moving out, any repairs or back rent can be collected from the refundable Entrance fees. Normally one half of a month’s rent is also secured for this purpose.
 Monthly fees Monthly occupancy charges (similar to rent) are set by the co-op to cover the costs of operation (utilities, property taxes, mortgage payment, maintenance and repairs, etc). OGHC has determined that the charges will not exceed the Median Market Rent (MMR) for Winnipeg, as determined by the Manitoba Department of Housing. Co-op members have the opportunity to review and approve the operating budget each year and determine increases in monthly charges. Over time OGHC monthly occupancy charges are expected to become substantially below market rates.

OGHC occupancy charges in 2018 will range between $889 and $1,528 per month, depending on suite size.

The owner/operator of the Life Lease complex establishes the monthly fees to cover all costs of operating the building. As no profit is expected from a not-for-profit building, the monthly fees can become lower than market rates over time

Some Life Lease complexes permit residents to provide more than the minimum entry fees and use the interest from these deposits to reduce the resident’s monthly charges.

 Other fees Unlike a condominium, there are no monthly maintenance fees or taxes charged to residents. Unlike a condominium, there are no monthly maintenance fees or taxes charged to residents.
 Other  Market Value No interest is paid on the membership share nor the co-op shares paid for a suite. Some Life Leases allow the sale of Entrance fees privately but this is uncommon. It could result in a marginal gain or loss. No interest is paid on Entrance Fees.
Cancellation A member who leaves the co-op must give 30 days’ notice. Within 3 months, the Membership Shares (less any required repairs or outstanding debt to the co-op) will be paid to the former member. The $50 Membership fee will also be refunded. The landlord must refund the full Entrance fee (less necessary repairs or outstanding rent) within 14 days after the tenant gives notice.

 

 

In Summary

This summary is merely a snapshot of some differences between the Old Grace Housing Co-op and Life Lease. One of the most important differences is that co-op members have more rights and responsibilities than residents of Life Lease buildings. In a housing co-operative, members relate to their neighbours in the management of their residence and community.

Residents of Life Lease buildings have fewer rights and responsibilities. Residents relate to a board in the management of their residence, but, unlike co-op members, they are not member/owners and therefore cannot run for a position on the board. Decision making is not in the hands of the residents.

Further information is available on the following sites:

 

Residential Tenancies Branch

CMHC Guide to Co-operative Housing

CMHC Guide to Life Leases