Anyone interested in setting up a housing co-operative to buy housing to then rent to our members along the lines of the idea below ?
My idea is to simply set up an organisation which would continuously seek crowdfunding for redeemable shares offering (at present) about 3-4% which would be used to purchase rentable homes. The redeemable shares would enable savers currently offered laughable savings rates by the banks to be able to use this as a safe and reliable method of savings offering much better returns than banks.
The tenants to which these homes would be rented would also share in the profit their rent ultimately generates as it pays off the purchase cost. The whole idea is to enable the tenants to build up a sum of money from the profits of the organisation for them to use as a deposit to buy their own home.
If the funds borrowed to 100% fund the purchase are fully repaid by means of charging rent, at the end of a term similar to an average type of mortgage of, say 25 years, then at that point the organisation would own the asset outright. It would obviously then be able to offer a portion of the value of that asset to the tenant.
This portion would accrue from the moment the tenant commences paying rent and would be available to the tenant whenever he leaves which could be at any time. He does not have to remain any longer than any initial short tenancy.
The tenant would always be paying a ‘market’ rent the same as any other tenant. But he would be getting something back that no other tenant ever does. He will be getting back a portion of the rent he has paid which he can then use as his deposit to go and buy his own home with an ordinary mortgage if he so wishes.
Instead of just paying rent to line a landlord’s pocket, tenants would get something back so their rent would be not completely wasted money dow the drain as it normally is for all tenants.
This model would thus enable a person with no capital whatever to accrue a deposit for their own home purchase, or even use this organisation to end up either a long leaseholder on low rent if he wished to remain in the property. It could almost be viewed as a means of just turning an ordinary rental into a (different) type of mortgage for the ultimate purchase of a home. A mortgage where no deposit is needed at all. It’s just a rental that eventually just turns into actual home ownership.
It offers a means of home ownership which dis-enfranchises no-one and whereby any tenant turns progressively into an owner.
If set up as the legal concept of a Co-op, it is legally allowed to ask the public to invest in redeemable shares which would pay an interest rate which might currently be 3-4%.
This is just a brief description of the idea, obviously there is a lot of detail to ramble on about, but I’ll leave that for the moment as it isn’t needed until people want to know more and join.
Oh, by the way. I have spent a lot of time doing all the maths and the idea does work. You can have a look for yourself if you are interested & contact me.
With the help of the crowdfunding crowd, we can cut the legs of those greedy bankers and eventually take all their mortgage business away from them so that every penny people pay to live in a home goes directly towards actually paying for that home and not the huge profits for greedy bankers.
This idea has wings; it could take off and fly !
leave a comment if you’re interested !