In the Chrysalis Cohousing introduction, I presented a template development process with typical stages. An important aspect of delivering a cohousing project is the development finance and development "vehicle".
For example, Urban Coup, based in Melbourne is an Incorporated Association with annual membership fees to access the privelege of defining projects. Their current project is "Near & Tall" at 30 Hope Street, Brunswick.
Members who agreed to develop this specific cohousing project and intentional community subscribe to and become members of a unit trust. The development is undertaken by a Special Purpose Development Company directed by architects and a representative from Urban Coup. Members then buy their apartment 'off the plan'.
Alternatively, Property Collectives, also based in Melbourne, assist people who want to develop a cohousing project as Development Managers. In their process, groups approach them to guide them through the complex and difficult development stages to deliver a "citizen-led housing model that builds quality homes at cost".
People who join a project early have more control in regard to strategic direction, values and principles, design outcomes and location. These early adopters are more comfortable with the unknowns about their future home. Interestingly, the Property Collective do not try to have 100% commitment from all homeowners before site acquistion.
Rather from their extensive experience thay have learnt that not having the full complement before land acquistion works well because the final site yield is unknown and so the opportunity exists for late comers to join the collective housing group.
People who join later, need and have more certainty about the cohousing development (with access to Concept Plans and Planning Approval), but have less choice about the overall design concept and apartment selection.
Members commit to a project by signing a Participation Agreement with the Development Manager (DM). At the site acquistion stage, participants become Joint Venturers and to finance the purchase enter into a Joint Venture Agreement with built in financial obligations (purchase deposits). When the project enters the construction stage and Development Finance is required the Joint Venturers obtain bank finance.
The group have the option to form a Development Company which has tax and GST advantages. At completion, Joint Venturers take out their own individual home loans to purchase at cost their home from the Joint Venture/Development Company.
Thanks to Tim Riley of Property Collectives for this snapshot and diagram below given recently in a webinar.
With this model, Property Collectives have delivered 9 projects and 60 homes at 15% below market prices, by cutting out Speculative Developer overheads, Marketing costs and sales commissions and no Captial Gains Tax, GST or stamp duty on completion.
For the Sunshine Coast property market, a 15% saving is significant. For example, the average price per square meter to buy an apartment in a city centre on the Sunshine Coast is $4333.00. A 15% saving is $650/sqm making the cost price $3683/sqm. For a 100 square meter apartment that means a home which is $65,000.00 cheaper than the market.
Who is more keen now to commit to a cohousing project?
ciao Phillip and Denise Daffara