Mutual home ownership
Dandelion Community Limited is a co-operative that has purchased the property and owns the freehold. The permanent residents of the community are members of the co-op, all equally owning all the land and buildings in a mutual ownership system.
The co-op has taken on a mortgage to purchase the property. Each of the private units (where people sleep and have their private space) has a value which includes a share of the land and communal buildings.
When a person joins the community as a permanent member, they can put in the agreed value of the private unit as capital. Their capital is a loan against the private unit and they sign an “equity loan agreement” with the co-op.
If a new member doesn’t have enough capital for the unit value, they take on a mortgage lender’s commitment and agree to make a monthly payment for their part of the shared mortgage. Some of the members will need to put in capital, since the mortgage company will require a certain loan-to-value ratio.
When a member wants to leave, they get back any capital they loaned the co-op, within an agreed time period. This capital will usually come from a new member coming in, or it could come from the co-op increasing its mortgage loan. If the person leaving made mortgage repayments, they get back most of the capital (but not the interest) they have paid as mortgage repayments. In this way, a member who had started off with no capital will gradually gain some over the years.
This mutual home-ownership model enables some people with no capital to share the mortgage and thus to “buy in” to the community.
Our ownership and financial model may be reviewed or altered in the future to reflect the changing needs of our growing community.
Advantages of mutual home ownership:
- Members of the community can move to a new unit within the community property by agreement with other community members, rather than needing to buy a new home, for example if their family circumstances change.
- Moving to a new unit will not incur Stamp Duty Land Tax
- All members of the co-op will be jointly responsible for the monthly mortgage payment, so if someone falls on hard times, the community can give them some flexibility, if there’s consent and funds are available.
- There is equality between people who put in capital and people who don’t; all are equal members of the co-op with equal rights and responsibilities.
- It is in everyone’s interest to keep the buildings and the estate in good condition.
- For those who don’t have capital, still working on upkeep and maintenance, will know they are contributing to their own wealth and to the mutual wealth of the community members, and not to that of a landlord.
