Rental cooperatives: the housing fix hiding in plain sight

Last week I stood in a fifth-floor apartment in Brunswick and watched a man named Iain point at the Melbourne skyline like he still couldn’t quite believe it was his.

“It’s like, ‘Oh my God, I can see the world,’” he said.

Iain is 47. Studies part-time. Works as a disability support worker. The flat he left was sinking and water-damaged, one bedroom, barely affordable. Getting the agent to answer an email about the damp was, he said, harder than his university coursework. The place cost too much and gave back nothing. Plenty of Australians know that arithmetic.

What he has now from his fifth-floor window is not a better version of the same thing. It is a different category. Six hundred dollars extra a month. A three-year lease that rolls over as long as he meets the tenancy agreement. Rent pegged to 30 per cent of his income. He knows every name in the building.

In Australian housing terms Iain should not exist. Low-income forever renter in a secure, affordable place five kilometres from the CBD. But here is what stayed with me after I left: his situation is not luck. You can trace it to one policy decision made by a federal minister in the 1980s.

The building that shouldn’t exist

The block Iain moved into is a rental cooperative. Sixteen dwellings owned by Common Equity Housing Limited, CEHL, a non-profit and the biggest co-op housing operator in the country. First new building they have done in more than ten years, funded through Victoria’s Property Fund.

The difference from a private rental is not complicated. Rent follows what you earn, not what the market demands. Leases do not expire after twelve months. Residents manage the building: committees, a board, disputes. Iain is on the bin group. He told me this with the half-smile of someone who has discovered that shared rubbish management is, of all things, a legitimate form of community bonding.

“It feels completely different to a private rental,” he said. “We make an effort to see each other and chat and help each other out.”

I should pause here. I know how this sounds. Cooperative housing. The phrase has baggage. Communes. Hippie enclaves. Earnest meetings about compost. I walked into the Brunswick building carrying some version of that assumption. Walked out wondering why I had been so ready to dismiss something that works.

Dr Sidsel Grimstad has heard every version of the scepticism. Cooperative housing expert at Griffith University, Norwegian-born, member of an equity-based co-op in Oslo. Forty per cent of housing stock there sits in cooperatives. When I asked her about the hippie thing she laughed.

“My old, retired mum and my brother, who’s a lawyer, have lived in housing co-ops. There is nothing hippie about it. It’s just a practical, smart way of providing decent housing.”

The policy that worked, then vanished

I did not know this until I started digging: most rental cooperatives in Australia were built in the 1980s and 1990s. Hawke-Keating era. Community development minister Tom Uren allocated funding under the Commonwealth-State Housing Agreement for people who wanted to start them.

Some of those co-ops, mostly clusters of suburban houses and units, not apartment towers, are now 40 years old. Still functioning. Still full. The average CEHL tenant stays about 15 years. Some stay for decades.

Fifteen years. The standard rental lease in this country runs twelve months. Median capital city rent just hit $724 a week. Home ownership is declining. The rental market, as CEHL CEO Liz Thomas put it to me, “is no longer where people wait while they save a deposit for a house.”

“That’s the stark reality we as Australians need to accept,” she said.

Liz chairs the Australian Cooperative Housing Alliance. She has been in this long enough to know cooperative housing sits in a strange place: romanticised as utopian and dismissed as unserious, often by the same people. The numbers say it is neither.

About a quarter of CEHL renters now pay market rent. They crossed the income threshold for subsidised housing and chose to stay. Their payments cover the residents who cannot afford market rates. The model generates its own cross-subsidy. It does not just provide affordable housing. It funds itself doing it.

The Norway question

I keep coming back to that 40 per cent. Not a typo. In Norway cooperatives are not a fringe experiment. They are normal. Lawyers live in them. Retirees. Students. Disability support workers. The funding mixes private capital, public money, member equity, and solidarity funds in ways that spread risk and shrink the need for big government outlays.

“In many European countries, you find innovative funding models with a mix of private, public, member equity and solidarity funds,” Sidsel told me. “These funding models enable growth, share risk and seek to reduce the need for large amounts of public money.”

Australia has about 8,000 people in cooperative housing. Affordable rental co-ops: 0.03 per cent of homes. Every form of cooperative housing combined: still under 1 per cent.

I am not naive about why. Australian housing policy spent half a century treating home ownership as a rite of passage and a retirement strategy in one. The welfare system encouraged it. The tax system rewards it. The culture worships it. Cooperative housing is not just competing with private rental. It is competing with the idea that the only legitimate Australian housing story ends with a mortgage and your own front door.

Something has shifted though. The numbers do not work anymore for a growing chunk of the population. The median capital city house price is more than ten times the median household income. The RBA just lifted rates for the third time in a row, 4.35 per cent. The government is about to wind back negative gearing and the capital gains tax discount in a budget pitched at young voters who have stopped believing they will ever own a home.

The Budget 2026 cost-of-living package landed last week. Two hundred dollar offsets. Feels like teaspoons against a flood when your rent is climbing faster than your wages.

What the research actually says

Professor Louise Crabtree-Hayes has been researching housing cooperatives for years at Western Sydney University. She told me something the policy debate misses: cooperatives do not just work economically. They produce better housing.

“They tend to be maintained at a really high quality. They’ve got a really high standard of homes that’s been maintained by the co-op, whether through members’ labour or subcontracted labour.”

This is not surprising. People with a stake in their housing, who expect to be there for 15 years instead of 12 months, who have a say in how things run, they look after the place. But the thing that stopped me was something else.

“The thing that we found absolutely striking was the sense of home, the sense of community and the sense of stability. People talk about their rental co-op as their forever home, knowing that they can live in it as long as they choose.”

Forever home. Australians do not use that phrase about renting. It is for the house you buy, the mortgage you finally kill, the garden you plant knowing you will watch the trees grow. The idea that rental housing could offer the same thing is, in this country, almost radical.

The money problem

So if it works, why has it not scaled? Same answer as everything in housing: funding.

The government’s $10 billion Housing Australia Future Fund launched in 2023 to build social and affordable housing. As of this week: zero cooperative housing projects funded through it. The minister’s spokesman told me co-op housing is “a practical part of Australia’s housing mix” and the government has been “pleased to support cooperative housing projects through Housing Australia.” The money has not followed the words.

Cooperatives have survived on the Affordable Housing Bond Aggregator, low-cost loans to community housing providers. It is something. It is not a pipeline. The Business Council of Co-operatives and Mutuals recently set up a housing activation group: mutual lenders, co-op developers. They are working on a pilot in regional Victoria. Multi-residential rental and limited-equity co-op development. A proof of concept. A start.

Louise thinks build-to-rent could bend toward cooperatives. The model gives tax incentives to developers who build multi-unit blocks and keep them for at least 15 years. Ten per cent of dwellings have to be affordable tenancies run by community housing providers. Not a cooperative, but a template you could adapt.

What kind of community do you want?

Before I left Brunswick, Iain stood by his window. Skyline flattening into dusk. He talked about what the cooperative had given him beyond the money.

“I’ve lived a pretty isolated, disconnected life. There’s been no network in my life, and I think COVID really showed that in a very confronting way.”

He paused. “We’re living in such a disconnected time. We need community as a species. The economic model doesn’t care about that.”

Then the thing that has stayed with me.

“There are only certain people we’re going to allow to live close to the city. We just push those people away, and it’s not going to build community and culture.”

He is right. The private rental market does not optimise for community. It optimises for return. Does not care whether the disability support worker can afford to live near his job, or whether the barista who makes your coffee commutes 90 minutes each way, or whether anyone in a 50-unit block knows their neighbour’s name. Those are not market failures. They are market outcomes.

Cooperative housing will not replace the private market. Nobody is saying it should. But 0.03 per cent? A model that delivers affordability, stability, quality, and community in one package, and we have got it serving 8,000 people while 40 per cent of Oslo lives in something similar? That is not a policy outcome. That is an imagination problem.

Liz Thomas told me the sector wants to grow to 10 per cent of Australia’s stock. It sounds absurd only if you have accepted that the current system is the only one on offer. The co-ops Tom Uren funded in the 1980s are still standing. The Brunswick building, the first new one in over a decade, is full. The model works. We just stopped building it.