EA - Set up a co-op to donate your rent by Ben Dunn-Flores

Link to original articleWelcome to The Nonlinear Library, where we use Text-to-Speech software to convert the best writing from the Rationalist and EA communities into audio. This is: Set up a co-op to donate your rent, published by Ben Dunn-Flores on April 27, 2023 on The Effective Altruism Forum.London EAs pay £140m in rent. £56m of that is landlord profit which could be donated effectively. Enough money to save 10,000 lives per year is lying on the table.If you pay £1000 per month in rent, you could save a life each year -- without ruining any coats.Housing co-operatives enable their tenants to donate their rent, rather than it going into a landlords’ pocket. We believe this could unlock large additional donations, even among people who do not earn high salaries.We can help you set up a co-op to do this in the UK. The process is:Set up an asset-locked housing co-op (I can do this for you)Arrange the mortgage and deposit (I can help with this too)Pay rent to your co-op, which donates the money to effective causesThis is a guide to doing it yourself. It's not easy, but several groups have managed it in London. I'm building a tech company, Roost, to make it easy, but we can arrange a call without you needing to use our product.Note: impact measurementI estimate there are ~10,000 EAs renting in London, paying £1200pm on average. Landlord profit margins after costs and debt are about 40%, leading to the figure of £56m which could be donated effectively. Calculations in footnotes.Setting up a co-opStep 1: Find a homeThis is a guide to setting up a house-share without a landlord, where the surplus rent can go to effective causes. A housing co-operative is the ideal legal form for this – it has existed for hundreds of years and co-ops are very common in Europe.Co-ops work best with 3-6 people – fewer, and it’s often more expensive than renting; more, and planning permission is required. This form of housing would usually require a license, but co-operatives are exempt.Number of people in co-op:1-23-67+Do I need planning permission?NeverSometimesAlwaysIs it cheaper to do as a co-op than to rent?SometimesUsuallyAlwaysWe’ve been working on a property search tool to show how much rent you would pay for a given property. Let us know if you want free access.The process for finding a home to buy is the same as renting: search online, book viewings, and make an offer. However, it takes longer after this stage: usually around 12 weeks. There is more that can go wrong, so we recommend putting in two offers to make sure you get at least one.Step 2: Set up a co-opThere several legal forms for co-ops. At Roost, we use non-equity co-ops. We think this optimises for quality of life and allows large donations to effective charities.This is where the DIY approach differs from how we do it. If you're going the DIY route, I recommend using the model documents for a Fully Mutual Housing Co-operative at cch.coop.These model rules include an asset lock. This ensures that anything the co-op owns must eventually benefit a charity. The asset lock in clause 130 will need to be amended to specify an effective charity.Step 3: Get a mortgageEcology Building Society will usually give you a mortgage. They are more expensive than commercial lenders, charging a ~6% variable rate with some discounts for environmental upgrades. Most successful co-ops work with Ecology BS.For context, a comparable commercial mortgage is at ~4.5%, but co-operatives can’t access these directly.Roost uses a non-profit land trust that owns the property via a limited company. It is more complex, but it allows the co-op to access the cheaper commercial capital.Step 4: Get a depositPutting in your own moneyYou can put your money in as a donation to the co-op, in which case this is easy. If these are your savings and you need them back to live, then you can structure it as debt. There are model documents to do this.External debtCo-op Finance can help with up to £150k for the deposit...