Cooperative housing society: Objectives, types and advantages

Cooperative housing societies have existed in India for many decades. They play a crucial role in providing affordable housing solutions to lakhs of people. Housing cooperatives are self-regulated entities, governed by their members. They are formed through mutual cooperation and with consent of their members. Here, we discuss everything about co operative housing societies, including the benefits of investing in one.

See also: New GR for housing society election 2022

 

Cooperative housing society meaning

A cooperative housing society is a legally-established body or entity owned by its members or residents for common needs. The entity owns and manages properties consisting of one or more residential structures. The cooperative housing society purchases land, develops it, constructs flats and allotts them to its members.

The working of housing cooperative societies in various states across India are managed by individual Cooperative Societies Acts, and Cooperative Societies rules regulated by the Registrar of Cooperative Societies entrusted by the government. Cooperative societies are mostly a part of the National Cooperative Housing Federation of India (NCHFI) and adhere to the model bye-laws under the Multi-State Cooperative Societies Act, 2002.

 

See also: All about RWA

 

Housing cooperative society objectives

The main objective of a housing cooperative societies is to provide support to its members. Some of the other objectives of a cooperative housing society are given below:

• Supporting the society members by providing loans for the construction of houses or additional structures within the complex.
• Acquiring land, constructing flats and distributing them among the members.
• Promoting economic interests of the housing society and encouraging self-reliance among members.
• Facilitating healthy living standards by enabling an ideal socio-economic environment within the housing society.
• Providing basic facilities like water and electricity supply and ensuring regular maintenance of the housing society.

 

See also: Can I claim tax exemption for a property in my wife’s name, for which I am paying full EMI

Cooperative housing society characteristics

• Voluntary organisation: Housing cooperative societies are voluntary organisations with respect to their functioning, based on the idea of self-reliance and self-help.
• Open membership: The membership to the co op housing society is open to all individuals having common interests.
• Autonomy and independence: Housing cooperatives are autonomous and independent in many aspects.
• Democratic leadership: The office bearers or representatives of a cooperative housing society are selected through a fair election process.
• Separate legal entity: A cooperative society is registered under the Cooperative Societies Act. Registered cooperatives become legal entities, subject to local/ national laws.
• Financial contribution: Every member of the housing society makes an equal contribution to purchase and maintain common properties.
• Limited liability: Expenses are shared equally to the extent of contribution made by every member.
• Beneficial for members: Welfare, convenience and prosperity are top priorities for each and every member of a housing cooperative without self-interest and power play.
• Training and information: Housing cooperative societies provide training and knowledge to their members about legal compliance, management and benefits of living in a community so that they can efficiently execute their roles.
• Mutual help: Housing cooperatives enable members to follow best practices and support them to have better living standards through local, national and international structures and paradigms.

 

History of cooperative housing society in India

India witnessed a substantial growth of the cooperative housing society movement around the start of the 20th century. The Bangalore Building Cooperative Society was the first cooperative housing society established in Karnataka in 1909, followed by the Bombay Cooperative Housing Association in 1913 in Maharashtra. The association also created the first ever model bye-laws and steered the growth of cooperative housing.

The National Cooperative Housing Federation was established in 1969 as a common forum to support housing societies to obtain funds and general insurance, carry out research and assist state-level Cooperative Housing Federations.

There have been several state and central-level schemes for providing loans and land development assistance to the housing societies. The government has introduced many amendments in cooperative housing laws to make them favourable for small and medium housing societies.

Also read all about the Maharashtra Cooperative Societies Act 1960

 

Types of housing cooperatives

Housing cooperatives are classified into the following categories:

• Tenant ownership housing societies: In this type of cooperative housing society, the land is held either on leasehold or freehold basis, by societies. The members are the owners of houses and leaseholders of the land. They need to adhere to the regulations for subletting and transferring the houses. However, they can construct their houses as per their needs.

See also: What is a leasehold property?

• Tenant co-partnership housing societies: Under this category, the cooperative societies hold the land and building either on a leasehold or freehold basis. The members get an occupancy right after paying an initial share and a monthly rent.

See also: What is freehold property meaning

• Housing mortgage societies: These housing societies are like credit societies that lend money to its members for constructing houses. However, the members are responsible for the arrangement of construction work.
• House construction or house building societies: In this category, the housing cooperative societies construct houses on behalf of their members. After the construction of houses, they are handed over to the members. The money spent on the construction are recovered as loans.

 

How to form a cooperative housing society?

Most cooperative societies in India are part of the National Cooperative Housing Federation of India. The formation and responsibilities of a cooperative housing society and its members are governed by the model bye-laws based on the Multi-State Cooperative Societies Act, 2002. Other cooperative societies are governed by the Cooperative Society Act, 1912 or the Cooperative Society Acts of the respective states.

There should be a minimum of 10 members having a common objective, to form a society. The members, having same interests, should be residents of the same locality, employees of an organisation, or belong to one group, etc.

 

How to register a cooperative housing society?

Registration of a cooperative housing society is mandatory in India under the Cooperative Societies Act, 1912. The procedure to register a cooperative housing society is mentioned below:

• The first step to register a housing society is to elect a chief promoter by its members.
• The members must select a name for the society, along with two alternatives.
• Fill the application with the promoter’s name and occupation and submit it to the registrar and pay the registration charges.
• The bye-laws are then adopted. Every house will have a share capital that must be paid equally by all residents.

See also: How much can housing societies charge as society transfer charges?

 

Documents for registration of a cooperative housing society

The following documents will be required for registering a cooperative housing society:

• Application for registration.
• All bank certificates/account statements.
• Four copies of the application form, signed by at least 90% of the promoter members.
• Details of the promoter members.
• Explanation of the society’s working.
• Additional copies of bye-laws proposed for the society,
• Form D account statements,
• Proof of payment of registration charges.
• Other documents specified by the registrar.
• Title Clearance Certificate provided by an advocate.

See also: Income tax rules for cooperative housing societies

 

Advantages of living in a cooperative housing society

Affordability

The members of a housing society control and decide the financial issues. The cost, in terms of services and amenities for each member, is considerably less. With a reasonable down payment, lower pre-closure charges and longer mortgage term, it becomes more affordable than any independent ownership.

Safe and secure investment

Cooperative housing societies are stable and reliable as they have a separate legal existence and the means to sustain their operations.

Owning a house in a cooperative housing society is a safe investment. With no intervention from landlords, members of the housing cooperative societies can reside in their flats as long as they wish. Even after vacating the flat, the occupancy benefits remain intact and one can either lease or rent it.

See also: All about non occupancy charges in cooperative housing societies

Better services and amenities

The members take care of the premises with a feeling of ownership. One can expect better management and good facilities. Needs of every member are duly met as they can voice their opinion for the benefit of others.

Democratic leadership

A cooperative housing society is managed in a democratic way with every member being a shareholder. Each member of housing cooperative societies has equal rights and privileges. The office bearers, who manage the society, are elected through voting.

Shared responsibilities

The responsibilities as owners are divided between various members. The cooperative society will be responsible for maintenance and repair works, insurance and replacements. The members are required to pay the society maintenance charges for services provided within the society. Also, the members have a say, right from the inception to the redevelopment stages, in terms of design and planning. The maintenance and overhead charges are minimal and equally divided among the members.

 

Cooperative housing society: Latest updates

Cooperative housing societies to get online platform to file complaints

August 23, 2023: The Maharashtra cooperation department is planning to launch a website and mobile application called ‘Sahakar Samvad’ in August, according to an Indian Express report. The website will enable Cooperative housing society members to file complaints online. According to an official from the registrar’s office in Mumbai, individuals filing complaints on the new portal must pay a nominal fee of Rs 50 for each complaint. This move will benefit about 115,172 cooperative housing societies in the state.

The new website will provide options for 24 types of complaints commonly raised by housing society members. These include share certificates, misappropriation or misapplication of funds, failure to conduct elections and failure to convene general body meetings, etc. Currently, individuals seeking to file complaints in cooperative housing societies are required to physically visit the registrar’s office or approach co-operation secretary and the minister’s office.

 

FAQs

Who can become a member of a cooperative housing society?

Any adult (minimum 10 in number), having common interests, can voluntarily form an association, become its member and register with the Registrar of Cooperative Societies.

What are the objectives of a cooperative housing society?

One of the main objectives of a cooperative housing society includes the purchase of land, construction of houses and allotment of the same to its members.

Are all members of a housing society given equal rights?

All members of a housing society are given equal rights and privileges. They are allowed to express their opinions.

Should every housing society be registered?

Every housing cooperative society must get registered under the Cooperative Society Act of 1912. The cooperative housing societies are governed by the relevant national/state laws.

What is the minimum number of members required to form a cooperative housing society?

A minimum of ten members are required to form a cooperative housing society.

What is the history of Bangalore Building cooperative society?

The Bangalore Building Cooperative Organisation was the first cooperative housing society to be created in Karnataka in 1909.

What is the difference between RWA and cooperative society?

While RWA is constituted by the residents after a residential project is completed while a co-operative society owns and manages the property.

What is GST on co-operative housing societies?

GST on Co-operative housing societies or RWAs is refers to the tax imposed on the monthly maintenance charges collected by such societies or associations from their members. Co-operative housing societies or RWAs having an annual turnover exceeding Rs 20 lakhs have to register under GST and pay tax at the rate of 18% on the monthly maintenance charges collected from their members.

Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com