The following is proposed model for funding and creating housing cooperatives. I must admit upfront that I am neither a programmer nor a lawyer, nor even someone who has extensive knowledge of housing cooperatives. All that aside, I believe that this model does propose something that is distinctively new, taking advantage of emerging digital technologies and existing models of housing cooperatives to decommodify housing and establish a decentralized system of rent control.
How I Came To This Proposal
The notion that housing should be a private commodity owned by a single family has always seemed alienating and unjust to me. This sense of injustice derives from a lifelong interest I have had in cooperative housing and communes. Growing up, I was fascinated by the nearby project at Ecovillage and in college I lived in a student cooperative. Now, I live in an apartment shared with 5 other people, and while we pay rent, we do put a lot of things in common.
A few months ago, I had to let my landlord into my apartment so that he could inspect it with the bank. It turns out that I am helping pay my landlord's mortgage through my rent. This moment highlighted for me how my rent is being transformed into equity for my landlord in this house.
This thought has led me to daydream about what it would mean to pay my own mortgage rather than paying rent. However, I encountered two issues with this idea. First, on a very practical level, I don’t have access to enough credit to get a mortgage. Secondly, on a more philosophical level, I don’t want to simply move from being a renter to being a property owner––I want to decommodify housing.
Thinking through these two problems has lead me to the notion of starting a housing cooperative. While there is extensive literature out there on housing cooperatives, I have been trying to theorize my own form for a housing cooperative, one that would move towards decommodifying housing and serve primarily those who are currently paying rent.
My proposal is essentially a proposal for how to start, fund and manage a housing coop that functions to decommodify housing and establish a system of rent-control. It is meant to be both incredibly practical and implementable but also connect to larger struggles against gentrification and property speculation. To explain how I envision this cooperative to work, I have broken it down into five steps: Creation, Acquisition, Rent, Rent-Control and the Communization Fund
The first step in creating a housing cooperative is to assemble a group of like-minded people who want to live together. These people then can review the existing models and create a non-profit that would serve as the housing cooperative. They also would create cryptographically enforced by-laws for this non-profit. Once the structure and common goals of the housing cooperative have been agreed on, they move on to part 2, purchasing a house.
In my ideal model, the house would be purchased through a crowdfunding campaign where all backers get a share (equity) in the house. The point of this crowdfunding campaign would not be to get some sort of special reward, but would function akin to a no-interest loan, replacing a centralized bank with a decentralized network. Ideally, this crowdfunding would work through something like Weifund, which is explicitly designed to function in this manner. Other possible sources of funding include tax-deductiable donation grants and mortgages that are specifically for housing cooperatives.
Once the house has been purchased, the members of the new house will move in. Every month they will pay “rent”. This rent would go to purchasing the shares that are owned by people who do not live in the house, essentially repaying them for their no-interest loan. Here is where the innovative aspect of this model lies. Rather than the shares being purchased in their entirety by person paying “rent”, the renter would only receive half of the share, the other half of the share being abolished (which would mean being transferred to ownership by the house itself).
In other words, after the initial round of investment, whenever a share is transferred, half of the share is removed from circulation and becomes owned by the house itself. For the “renter” living in the housing coop, this means that half of their rent purchases equity that they can receive back at some future date while the other half is gone forever. There are several distinct benefits of this model:
- Directly serves the needs of renters: money no longer goes to establishing equity or profit for landlord but to a) purchase shares which will be paid back if/when you leave and b) an entity that decommodifies housing.
- Allows for renter turn-over: there is no necessary long-term commitment from the renters here. One could live in this sort of a house for several months and then move to another city (for school, work etc.). Eventually, half of the rent you paid will be returned to you.
- Incorporates shares (which incentivize people to be part of the housing cooperative) while simultaneously incrementally removing housing as a commodity that is owned by anyone.
After some amount of time, there will no longer be any shares owned by people outside of the house. All the shares at this point will be owned either by a) residents of the housing cooperative or b) the house itself. Now, the need to actually pay “rent" is gone as ownership is fully owned by the housing cooperative or its members. At this point, the nature of rent would fundamentally be transformed. Firstly it would be dramatically reduced, to a level far below market rate. AKA Rent Control! This small rent would go to covering a) property tax and b) a small monthly contribution to the “Communization fund”. People would also have the choice to “abolish” their remaining shares as part of this payment, forgoing future repayment rather than contributing to the “communization fund”.
5. Communization Fund
At some point, the house would be completely de-commodified and small monthly “Rent” payments would be contributed a “communization fund”. This fund would not for the use of the house but rather would to buy shares in housing projects that use the same model. As more houses are formed under this model, this “communization” fund would grow larger and larger - making it increasingly easy to form housing cooperatives. Additionally, if this fund was held as crypto-currency, it could operate globally, helping redistribute wealth and create a global housing commons.
Anyways, this is the proposal and there are still obviously a lot of questions to be answered: How would the crowdfunding work? How would the non-profit be structured? How could smart-contracts be used as the basis of this mode? What sorts of grants would a project like this be eligible for? How would the amount of the "rent-controlled" contribution to the communization fund be determined? Would there be any venture communists willing to seed a “communization fund” to get this housing cooperative project started? Would it be more effective to focus on a city-wide level rather than make the communization fund global? How would you deal with the local legal frameworks of each housing cooperative while also having the communization fund operate globally?
Some major inspiration for this idea came from Dmytri Kleiner's Telekommunist Manifesto, the P2P foundation, the Commons Strategy Group, the notion of Commons Transition and of Open Cooperativism. Also, big shout out to some of the projects taking advantage of the blockchain as well as the rich tradition of housing coops. Also I really doubt I would have brought together all these diverse ideas had it not been for the platform cooperativism conference. Please share your thoughts, criticisms, suggestion and so forth with me! I am curious to hear them!
If you liked this post, you might also like these posts:
- A Common Wage for the Digital Commons
- The Mask as a Political Technology, or Todos Somos Satoshi Nakamoto
- Making Friends, Creating Maps, Growing our Shared Power
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