Housing cooperatives: A sustainable “third way” for affordable housing provision?

As a possible solution to growing housing unaffordability, housing cooperatives have attracted increasing attention in Switzerland. High time for the big picture!
by Adrien Guisan

Housing cooperatives flourished in Switzerland during the interwar period and then entered a period of decline in the second half of the 20^th century. However, in recent decades, this model of housing provision has again garnered the interest of the public and municipalities to tackle rising housing unaffordability. It is often referred to as a “third way” of housing provision, between market and state, between renting and owner-occupation. Conceptually, some forms of housing cooperatives are also framed as “commons”, which we investigate in the COMMONPATHS project.

What is a housing cooperative?

Under the Swiss code of obligations (Art. 828-926), a cooperative is a membership-based corporate entity whose primary aim is to promote and safeguard the interests of the cooperative’s members through collective self-help. Key features of cooperatives are direct democracy and the right to participate in decision-making (1 person = 1 vote). Through membership in a housing cooperative, its members gain the opportunity to build, occupy, and manage shared housing, often at lower costs.

There are different types of housing cooperatives in Switzerland, but we will focus here on residential “membership cooperatives” (Wohnbaugenossenschaften). The building, or house, is owned by the cooperative, while members own a share entitling them to a residential unit. In many housing cooperatives, the rents are based on operating costs, and shares are subject to re-sale restrictions. As such, most housing cooperatives are recognized as “public utility housing” under Art. 108 of the Swiss constitution, meaning that they operate under non-profit principles and aim to curb real estate speculation.

A small but important niche

Rents in cooperatives are approximately 20% lower than the market average and represent about 8% of the rental sector in Switzerland according to the Federal Statistical Office (FSO), making it a small but important niche, especially in urban areas where renting is more prevalent. In some urbanized cantons such as Zurich and Basel, cooperatives provide 14,3% and 12,9% of rental apartments. Besides their affordability, housing cooperatives offer higher ecological standards than both commercial rentals and owner-occupied homes. More than half of housing cooperatives are certified Minergie 3, which is around two times the national average. Cooperative housing is also denser than other housing types, often due to minimal occupation rules: cooperatives use 1/4 less land than traditional commercial rentals and 1/2 less than owner-occupied homes. More recent cooperatives have also proved to be innovative developers, working closely with leading architects to experiment with new forms of living, working, and in-between spaces. The Kalkbreite cooperative in Zurich, for example, pioneered so-called “residential clusters” to accommodate changing household structures and offers a large variety of shared living and working spaces.

History and policy framework

The first housing cooperatives emerged in the late 19th century but flourished in the early 20th century due to an enabling policy framework, particularly in left-leaning municipalities like Zurich.¹ The cooperative movement consolidated in the inter-war period, and peaked immediately after the second world war. From the 1960s to the 1990s, cooperative housing production stagnated for various reasons, notably due to rising land and construction costs, as well as difficulties in accessing finance for non-profit providers. However, the cooperative and utopian ideals animating the early wave of cooperatives also arguably eroded over the period, with large cooperatives becoming nothing more than “social landlords”.² However, as mentioned earlier, in recent decades, the production of cooperative housing has picked up again, often tied to aspirations of more sustainable lifestyles. Beyond affordability, new-generation housing cooperatives often aim to promote high ecological standards, democratic engagement, and solidarity among their members and the wider public.

Today, the cooperative sector is supported by a policy network coordinated by umbrella organizations working with authorities at the federal, cantonal, and municipal levels. At the national level, housing cooperatives can benefit from instruments facilitating their access to finance, notably a mortgage guarantee fund, a bond-issuing cooperative, and a revolving fund.³ Support at this level is mostly indirect, but more active policies exist at the cantonal and municipal levels, such as subsidies, fiscal relief, or long-term ground leases. Some cities have also established regulations that favor housing cooperatives in their building codes, such as the city of Bern where in the case of re-zoning or new zoning of residential zones, one-third of the residential units should be built by non-profit providers and let at cost rent.

The future of housing provision in Switzerland?

Housing cooperatives have many benefits. First and foremost, they offer quality housing for their members and insulate their housing stock from the market, guaranteeing long-term affordability. With a larger cooperative housing stock, ripple effects could also be observed in the real estate market, potentially benefiting all tenants. Second, they promote democratic values and civic engagement and can contribute to building social capital in neighborhoods. Third, without profit-maximization constraints, cooperative developers have more room to experiment with new architectural forms that promote socially and ecologically sustainable urban lifestyles. In addition, housing cooperatives tend to enjoy bipartisan support in Switzerland due to their private self-help nature.⁴

However, even at cost-rent, with rising land and construction costs, housing cooperatives remain unaffordable for some parts of the population. Indeed, housing cooperatives are sometimes portrayed as havens for a few privileged and drivers of gentrification. More policy support at all levels is needed to ensure their long-term affordability and universal access. The Federal Council has recently launched a consultation to revise the Housing Act regarding the cost-rent model by which public utility housing providers must abide to receive indirect support. Although the implications of such a change are not yet clear, it shows that housing cooperatives are back on the agenda, even at the highest levels of government. More research is also needed on the conditions favoring the development of housing cooperatives and their affordability – a knowledge gap we tackle in the COMMONPATHS project.