Legal structures for cohousing in Australia

One of the biggest decisions a cohousing group makes is how to structure the community legally. The structure determines who owns what, how decisions are made, how homes are bought and sold, whether banks will lend, how tax applies and how much say the community has over who joins. There's no single right answer: each structure involves trade-offs.

This guide gives an overview of the structures most often discussed for cohousing in Australia. Laws differ between states and change over time, and the right structure depends on your group's goals. Treat this as background for conversations with your lawyer and accountant, not as legal advice.

What a structure needs to do

When comparing structures, think about:

• Ownership: do households own their homes, hold shares, or rent?
• Finance: will banks lend to members or the group?
• Control: how are decisions made, and can the community influence who joins?
• Common property: who owns and maintains the common house and grounds?
• Entry and exit: how do members buy in and leave, and at what price?
• Affordability: can the structure keep homes affordable over time?
• Tax and duty: how do stamp duty, GST, land tax and capital gains apply?
• Familiarity: will councils, banks, buyers and insurers understand it?

Strata and community title

Under strata title (and similar community or unit title schemes), each household owns its lot, and all owners share ownership of common property through an owners' corporation or body corporate. Community title can suit larger sites with shared land and multiple buildings.

Advantages:

• familiar to banks, councils, valuers and buyers;
• each household owns its home and can usually get a standard home loan;
• clear legislation and dispute processes.

Limitations:

• owners generally can sell to anyone, so the community has limited say over who joins;
• strata law sets decision-making rules that may not match consensus;
• by-laws can support community life but have limits.

Many cohousing groups use strata and supplement it with community agreements about participation and decision-making.

Company title

Under company title, a company owns the land and buildings, and residents own shares that give them the right to occupy a particular home. It's an older structure, more common in some older apartment buildings in Sydney.

Advantages:

• the company's constitution can give the community a say over who buys shares;
• flexible governance.

Limitations:

• banks may be reluctant to lend, or lend less;
• less familiar to buyers, which can affect resale;
• company law obligations for directors.

Co-operatives

A co-operative is a member-owned organisation. Most states and territories have adopted the Co-operatives National Law. Housing co-operatives can be:

• rental co-operatives, where the co-op owns or leases homes and members rent them, sometimes in partnership with community housing organisations;
• equity or ownership co-operatives, where members contribute capital.

Advantages:

• democratic, member-controlled governance;
• can keep homes affordable and exclude speculation;
• strong fit with cohousing values.

Limitations:

• finance can be harder to obtain;
• members may build less personal equity;
• governance obligations under co-operatives law.

Murundaka in Melbourne is an example of cohousing developed with a rental co-operative. See cohousing in Australia.

Tenants in common

Small groups sometimes buy property as tenants in common, each owning a share of the whole property, with a co-ownership agreement setting out who occupies what and how decisions and sales work.

Advantages: simple to set up for a small group, such as two or three households.

Limitations: lending can be complicated, disputes can be hard to resolve, and one owner's financial problems can affect others. A detailed co-ownership agreement is essential.

Trusts and companies for development

Groups often use a company, unit trust or incorporated association during development to buy land, sign contracts and manage money, and then transfer homes to members under the final structure, such as strata. This adds steps and costs, including possible stamp duty, so plan it carefully with advisers.

Community land trusts

A community land trust (CLT) holds land for community benefit, usually permanently, and leases or sells homes on terms that keep them affordable. CLTs are well established in the United States and UK and have been explored in Australia. They can be combined with cohousing to provide long-term affordability.

Rental partnerships

Some groups partner with a community housing provider that owns or manages rental homes within the community, alongside owner-occupied homes. This can widen access but requires careful agreements about governance and allocation.

Choosing a structure

1. Clarify your priorities: ownership, affordability, control, finance.
2. Talk to communities that have used each structure.
3. Get advice from a lawyer and accountant experienced in property and community housing.
4. Test finance with lenders early.
5. Document everything: constitutions, by-laws, membership and co-ownership agreements.

Getting the structure right early saves money, time and stress later, and gives members confidence that their homes and contributions are protected.

Common mistakes

• Choosing a structure for ideological reasons without testing finance.
• Using informal agreements for large sums of money.
• Forgetting tax and duty on transfers.

Insurance and liability

Whatever structure you choose, you'll need appropriate insurance: building insurance for common property, public liability cover for shared spaces and activities, and directors' and officers' cover for committee members of companies, co-operatives or associations where relevant. Ask an insurance broker who understands strata and community housing.

Reviewing your structure over time

Structures can be changed, though it may be costly. As your community matures, review whether your structure still meets your goals, and seek advice before making changes.

Where to find more information

State fair trading agencies publish guides to strata schemes, associations and co-operatives. business.gov.au compares business structures. Wikipedia's articles on company title and community land trusts give useful background. Always confirm details with your lawyer.

No structure removes the need for good relationships and clear agreements. Even the best legal framework works only when members understand it, follow it and communicate well. Invest time in explaining your structure to every member, including new ones who join later.

Whatever stage you're at, talking with people who have lived in or built cohousing is one of the most valuable things you can do. Their experience, good and bad, will help you make better decisions and set realistic expectations for the road ahead.

Key points

Cohousing in Australia uses strata or community title, company title, co-operatives, tenants in common, development entities, community land trusts and rental partnerships. Each balances ownership, finance, control and affordability differently. Clarify priorities, talk to existing communities, test finance early and get legal and tax advice.