martes, 26 de enero de 2021
Keys to buying your house in a housing
A housing cooperative is a real estate formula that allows you to buy a new house much cheaper (around 20% or even more) than in the free market. In order to obtain housing at cost, the cooperative members are in charge of the entire process, from the purchase of the land to the construction of the property. By becoming self-promoters and not having to pay another company, the house is cheaper.
Other advantages of buying a house in a cooperative regime are that the owners can modify some characteristics of the property according to their preferences, that the payment is more flexible and that there are certain tax benefits. However, there are also some risks that you should know and that we also tell you in this article about housing cooperatives.
What is a housing cooperative?
A housing cooperative is a group of people who constitute a non-profit entity to access a home at a lower cost. The cooperative takes care of all the procedures, from the purchase of the land to the construction of the property, to eliminate the benefit of the property developer and thus achieve significant savings in the final price of the homes. This means that the cooperative member is both the promoter and the winner of the property.
All buyers have the same participation in the cooperative and make all the decisions that affect the promotion. However, and in order to professionalize the entire process and avoid possible errors resulting from lack of experience, it is common for a manager to be hired to take care of all the procedures, from the permits to the search for the land and the construction company.
Many real estate developers act as managers of cooperatives, since it is a way of developing projects without having the necessary capital to do so (that money is contributed by cooperatives). It is important that the manager of the housing cooperative has a track record: proven experience, many homes delivered, financial solvency and good communication with the cooperative members.
These entities are regulated by the state Cooperative Law and by the specific laws of each autonomous community. In addition, each cooperative establishes its own statutes to set the rules, structure and operation. These statutes must be registered in the Register of Cooperatives and collect the rights (participation, vote and voluntary withdrawal) and duties (comply with the agreements, accept the positions for which they are elected and comply with the stipulated payments) of all its members.
To enter the cooperative, participants have to make a contribution of money to become members. Generally, during the construction of the development, the cooperative members give the manager around 20-25% of the total price of the house. Without a doubt, a more relaxed way of paying for a good part of the property.
The law requires that this money delivered on account to housing cooperatives is guaranteed by surety insurance or solidarity guarantees (be careful, only the money contributed since the building license is approved is insured, not the previous one).
In addition, this capital must be deposited in a specific account destined for the development, as happens when you buy a free home off plan. On the other hand, it is important to know that cooperative members have the right to voluntarily unsubscribe at any time and to receive all the money they have given since the granting of the major work license.
The last step is to dissolve the housing cooperative once its construction has been completed and the keys have been handed over and the property deed.
Advantages of housing cooperatives
As we mentioned at the beginning, the main advantage of buying a home in a cooperative regime is its lower price, since the savings can be between 20 and 30% compared to one acquired from a developer. However, a housing cooperative has other important advantages:
- Personalization of the home and materials. Changes can be made in the design and equipment of the house (provided that the statutes allow it) to adapt it to the tastes of each cooperative member.
- Tax advantages. Cooperatives are exempt from the Tax on Documented Legal Acts (IAJD) and VAT on the acquisition of land.
- Less expenses. Notary, registration and management expenses are lower than when buying the home directly from the developer.
- More flexible payment. By paying 20-30% of the house during its construction (about two years from the granting of the building license) it is not necessary to have saved so much money.
- Participation in decision-making. The housing cooperatives work through a general assembly in which all members participate to make decisions regarding the development.
- Possibility of resigning. The cooperative member can renounce the home, unsubscribe from the cooperative and recover the money contributed provided that the withdrawal is justified and recognized in the statutes.
Disadvantages of housing cooperatives
Although housing cooperatives currently have legal certainty that has nothing to do with past times in which some buyers lost their savings due to mismanagement or negligence by some of these entities, there are some risks that you should take into account.
- The price may go up. Although cost is one of the advantages that cooperatives have, it can also become a disadvantage. As the houses do not have a fixed price, this can increase throughout the construction process. Normally a 2% deviation from the original price is allowed.
- Money on account. Advancing money for a house that at the moment is only a project, can become a serious problem if complications arise during construction.
- Longer construction times. It is common for the construction process of cooperative housing to be longer and even for delays to occur over the fixed delivery date.
- Need for more funds. There have been cases in which, due to a miscalculation or the appearance of unforeseen events, cooperative members have had to put up more money.
- Bankruptcy of the housing cooperative. Although it is not frequent, it is one of the big problems that can occur during the home construction process, be it due to poor management by the manager, negligence or even bad faith. Therefore, it is always necessary to take some precautions before joining a cooperative.
What should you do before joining a housing cooperative?
Taking into account that the purchase of a home requires a large investment, to avoid possible problems it is important that you make sure that the cooperative complies with all the requirements of the law.
First of all, you must check that it is registered in the cooperative registry of the corresponding autonomous community. You should also find out about other projects carried out by the manager of your promotion in the cooperative register and in the commercial register: so you can confirm that there have been no problems in other previous promotions. In this search for information, you must also check that the land on which it is going to be built is in the name of the cooperative and that it is urban land.
As for money, according to law 20/2015, and as happens when buying an off-plan home, you must check that all amounts paid on account are insured and deposited in a special account. In cooperatives, a contribution is made at the beginning and different payments are made periodically until the keys are handed over, which is when the mortgage is signed (if necessary).
Finally, you should know that the Cooperatives Law establishes that the member can unsubscribe and recover the amounts contributed when a new member to replace him or her joins or within a maximum period of three to five years.