Affordable Housing

Kevin Cox
4 min readNov 10, 2021


Housing has become unaffordable because the price of housing has increased without the value of the house increasing. The price has increased because people treat the house they live in as an asset that generates income. Unfortunately, when you live in a house, it does not generate revenue.

It means there are two markets for houses. One is for occupiers. The other is for landlords who wish to rent the house. One way to solve the problem is to divide the housing market into two types—one for landlords and one for occupiers.

One way to create a market for occupiers is to create an organisation that owns the houses and where the occupier is a custodian and has the rights and obligations of a homeowner. The custodian treats the house as though they owned it and benefits from living in it while paying rent to the organisation. As they pay rent or lump sums, they accumulate equity in the home. Suppose the organisation sells the house; the custodian and the organisation share the profit. If a custodian vacates a home, they take their equity as a deposit on another property. If the custodian accumulates equity that equals the house's value, their rent reduces to match the operating and maintenance cost. Custodians can sell their equity to investors.

When we have such an organisation, it looks like regular housing, with the cost of exchanging ownership removed. The savings from not changing ownership are the interest cost on house loans, the buying and selling charges, and the transfer taxes and fees.

Change of ownership via bank loans
Group ownership of housing

The costs of transferring ownership turn out to be close to the price of the house. It means the cost of providing housing is twice what it needs to be.

Investors in the organisation and occupiers share the savings—investors with higher returns and occupiers with lower rents. Housing will become affordable because people will acquire equity by paying their rent and what the occupier can afford.

Capital in group ownership is in the form of future rent payments. A return on investment is a discount on the rent when using future rent payments. It eliminates the need to create extra money when giving a return on investment and ties the return directly to the production of a service. Taking profits as lower prices is economically efficient as we exchange less money for the same value of goods and services.

The home occupier markets will attract investors, and the ownership market will remain. Occupiers and investors can move between the two markets. The traditional homeownership market will set the prices while the group ownership market will provide competition and restrain house prices.

Occupiers can sell accumulated equity. It provides a way for empty nesters to sell their homes incrementally while still living in them.

Occupier Value to resolve Contention

With homeownership, when two parties want the same house, the price the buyer is willing to pay determines who buys the dwelling. With custodianship, instead of the price determining who occupies a residence, we use the value to the occupier. The value to the occupier includes what proportion of their income they need to pay, how close they are to where they work, the distance to services, and the distance to family and friends. The value for each prospective occupier determines who becomes the custodian.

For the community, this is economically efficient as it gives the most value for the least cost without disadvantaging anyone.

Government Involvement

Governments can kickstart the process by turning some existing social housing into group ownership cooperatives. Governments can encourage the development of greenfield group ownership by treating land as a loan to the group. The same approach can occur whenever rezoning land.

The approach works for all forms of real estate and offers competition to the capital markets. It has similar elements to social credit and Henry Georges ideas of keeping the value generated by a community staying within the community.

Returning Housing Costs to Historic Levels

In Australia in the 1950s and 1960s houses were affordable. Most people with a job could afford to buy a house. Rules of thumb were that a person could afford to buy a house five times their income with housing interest rates about 5%. Monthly rental charges were the price of a home divided by 100.

Today houses cost at least 10 times a person’s salary and weekly rental charges are the price of a house divided by 100.

Using group ownership we can drop the price of a house back to five times a person’s income. Occupiers of houses acquire equity that they can use for accommodation. Investors have yearly indexed incomes of 7% that last for 30 years. These returns compare to superannuation indexed allocated pensions of 7% that last for 15 years.

With group ownership the group can decide the relative benefits for investors versus occupiers independently of other groups. Houses can move between groups and occupiers can move as well. This gives individuals choice and ensures groups are economically efficient.



Kevin Cox

Kevin works on empowering individuals within local communities to rid the economy of unearned income.