Housing Democracy

Kevin Cox
4 min readMar 11, 2021


Housing democracy means every citizen has equal access to funds to own the house in which they can afford to live. Today’s monetised housing market fails this simple test. The housing market is undemocratic and unfair because it has become a way for investors to make money rather than a market in places to live.

Those with money can always outbid those without money. Investors who have no intention of living in a house will set the market price and increase the cost for those who need housing in which to live. The system is made worse by the way loan money is created. Loans are given first to those who have saleable assets, such as an existing home in which they live. Those without assets, especially without a house to live in, have difficulty raising funds.

Many government programs address the problem by giving people more money to spend on housing. These schemes, such as first home buyer grants and rent subsidies, make the problem worse as they increase existing homes’ price.

Another solution is to give everyone equal access to housing instead of more money to purchase assets in an unequal access asset market. We store capital as future rent payments rather than capital as the ownership of a dwelling.

A Right to Occupy Market

One method is for local communities to form small local co-operatives to own the homes in which members live. The co-operative has investors and buyers. Within the co-operative, individuals own the right to live in a particular dwelling. Instead of owning a house, individuals own the right to occupy a specific home. They have all the rights and obligations of owning the home. Co-operative owned houses become a rental market where everyone who can pay the rent has equal access. Co-operative owned housing is not the same as Co-operative housing as it uses a different form of equity.

Investment in housing is by the prepayment of rent, and a return on investment is the discount on the rent earned by the prepayments. The discount depends on the length of time the investor holds the prepayments. Within the co-operative, some members will have more prepayments than they can use. They sell the excess prepayments to members who need to pay for home occupation but have no prepayments.

Funding housing using this approach will:

  1. Eliminate the cost of changing ownership when one person stops occupying a property and another person occupies the same property. The co-operative owns the home, and so there is no need to transfer the title. A member’s prepayment equity applies to any home.
  2. Eliminate the cost of renting money to purchase the ownership of the home. Instead of interest returns, an investor receives a discount on rent. Interest requires more money, while discounts require less money. The value saved is the cost of interest.

An Example of Savings from Co-operative ownership


  1. A person changes their place of residence once every seven years.
  2. The cost of changing ownership is 10% of the purchase price.
  3. The cost of debt is 5% per annum.

Each year $100,000 invested in co-operative ownership saves $1,500 in the cost of ownership change and $5,000 in interest.

The co-operative decides how to distribute the savings between investors who invest in prepayments and occupiers who pay rent. The following shows one way.

Co-operative owned House Funding.

Today in Australia, the average superannuation fund gives a 7% indexed allocated pension for 15 years on the capital balance held. Co-operative owned housing gives a 7% indexed allocated pension for 28.5 years.

Half of each occupier payment becomes a future prepayment for the occupier in a co-operatively owned house.

On average, it means investors get the same return for twice as long. Occupiers pay half the rent for twice as long. However, investors can get lower returns over a shorter period, and occupiers can pay more over less time. Investors can sell their prepayments to other members at any time. Occupiers become investors.

Social and Government Outcomes

The approach reduces the percentage of income an individual pays to occupy their own home. It means everyone in Australia can find an affordable place to live. People working together to provide local housing strengthens the local communities. The local communities are supported because the money paid for housing stays within the community to benefit members. Importantly there is less need for taxes to redistribute wealth and every consumer of housing builds up equity in their home. This equity is available when people are unemployed, retired, or become ill, further reducing the cost to other taxpayers.

Importantly the system is easy to implement as it requires no legislative changes or government programs. It requires governments to kick-start the process as entrenched interests in the financial system will oppose the levelling of access to housing finance. A convenient place to start is to turn some government housing into co-operatively owned housing. The co-operate can invite local privately-owned homes with elderly long-term residents or large mortgages into the co-operative. An economy will become democratic, one co-operative at a time.

Local Currencies and Mutual Credit

Local currencies, some blockchain currencies and mutual credit schemes could give the same outcomes as Housing Democracy. They all eliminate the ability of money to earn money without a direct outcome from its use.

Housing Democracy eliminates Interest from fiat currencies for a restricted set of transactions among a restricted set of members. It is a modern form of Mutual Credit Association that fits seamlessly into the existing financial system. It is seamless because it is an extension of renting procedures, so it piggy-backs onto regular invoicing and payments. There is no need to use expensive ownership systems to encourage housing investment.

Housing Democracy is an instance of Economic Democracy. The idea applies to any community asset.



Kevin Cox

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