In times of rising rents, interest in cooperatives grows. But even those who are not looking for an apartment can buy shares. The benefits and risks.
The most important things at a glance
Affordable housing and protection from luxury renovations – that’s what building cooperatives promise their members. This is an attractive offer for many city dwellers.
But how do you become a member of a cooperative? What will it cost me? And is the purchase of cooperative shares also suitable as a pure financial investment?
What are cooperative shares?
Cooperative shares are nothing more than business shares. In cooperatives, people come together to do business together for the benefit of all members. Housing cooperatives in particular aim to provide their members with affordable housing.
If you want to rent a cooperative apartment, you have to buy shares in the cooperative. This is how you turn from a mere tenant to a partner.
They not only get a say and can elect the supervisory board, but can also participate in the profits generated by the cooperative in the form of dividends.
This also makes cooperative shares interesting for investors who are not looking for an apartment at all. If you leave the cooperative again, your shares will be repaid to you with interest.
How much does a cooperative share cost?
According to the Federal Association of German Housing and Real Estate Companies (Gdw), shares in cooperatives that have existed for a long time are generally available for between EUR 500 and EUR 3,000.
The costs are higher for new cooperatives because they initially lack capital. According to Gdw, five-digit sums are usually due.
How many cooperative shares do you have to buy?
This varies depending on the size of the apartment. The larger the apartment, the more shares are usually due. However, the right to vote is the same for every member – no matter how many cooperative shares he or she owns.
What is the difference to the rental deposit?
As a rule, owners of cooperative shares do not have to pay an additional rental deposit. However, the shares can be used as a deposit. This means that you do not get the full share paid back if damage occurs in your cooperative apartment.
If you move, you will get a rent deposit back more quickly than you will get the cooperative shares back if you leave. Cooperatives have up to two years to make repayments; for rent deposits, the period usually ends a maximum of six months later.
How much return do cooperative shares bring?
In view of low interest rates, more and more investors are interested in cooperative shares. Here were recently between 1.5 and 5 percent yields per year.
However, there is no guarantee that dividends will be paid out. The cooperative can also reinvest profits generated in order to modernize existing buildings or to build new ones. In addition, young building cooperatives often do not pay any dividends at all in the first few years.
Are cooperative shares a sensible investment?
Investing in cooperative shares can make sense. Because the yield, called return, is not only comparatively high, it is also a sustainable form of investment.
Because the cooperative law stipulates that cooperatives should support their members economically and socially. In many cases, the purchase of cooperative shares is a social investment. You can buy them from cooperative banks – for example the Volks- und Raiffeisenbanken.
You should know these risks
However, there are also black sheep among cooperatives – and not all of them are profitable. Before making an investment, you should therefore take a look at the balance sheets and annual reports for the past few years.
Money that you invest in cooperative shares is also not subject to statutory deposit insurance. If a cooperative goes bankrupt, you suffer a total loss. However, the insolvency rate is only 0.1 percent.
Nevertheless, you should be aware that you may have a so-called obligation to make additional payments. According to the cooperative law, this applies if, in the event of insolvency, there is not enough insolvency assets to satisfy the creditors. However, cooperatives can completely or partially exclude the obligation to make additional payments in their articles of association.
In practice, there is a completely different problem: those who only want to join a cooperative for the sake of investing are in bad hands with most of them. If you don’t have a specific desire to live, many cooperatives have a freeze on admissions.
