So that rents remain favourable in the future

Homeowners who want to sell their properties are increasingly opting to sell to co-operatives,.because they are committed to maintaining affordable housing and can largely take over the existing rental conditions.

As part of its growth strategy, the Allgemeine Wohnbaugenossenschaft Zug (Awzug: General Housing Cooperative) is always on the lookout for suitable properties for affordable housing. But it’s not only co-operatives for whom tenant concerns and socially acceptable solutions are important, however. Housing cooperatives sometimes have the opportunity to acquire properties from private individuals on fair terms.

The Awzug recently had such an opportunity to acquire a property from two private individuals on the Zugerbergstrasse in the city of Zug, including the land, on fair terms (we reported on 25th November). ‘It was important to the previous owners that the rents in the property should remain affordable in the future,’ explains Hanspeter Käppeli, Managing Director of Awzug. As the statutes of the housing co-operative commit it to maintaining affordable housing and preventing speculation on these, it was awarded the contract.

The property, which was built in 1964, is located on the south-eastern outskirts of Zug in an elevated position near St Michael's Church. It comprises a total of eight residential units ranging in size from 2- to 4.5-room flats, as well as three double garages. ‘The existing tenants will be carefully integrated into the cooperative as of 1 January 2025, and the rental agreements will be transferred on the basis of the existing conditions,’ said Hanspeter Käppeli.

Awzug was able to buy this house on the Zugerbergstrasse in Zug from private owners    Photo: zvg

Awzug has been pursuing the realisation of affordable housing in the canton of Zug since 1961. In order to meet the high demand for affordable flats, it is endeavouring to grow further. ‘We are therefore constantly looking for potential housing projects,’ adds Hanspeter Käppeli.

Landlords should remain fair
This autumn, the Zug housing cooperatives were approached by the owners of a four-family house in the Guthirt district to see if they were interested in buying it. This required an application with a letter of motivation and a description of how the cooperative intended to deal with the existing residents in the future. The application from the Cooperative for Non-Profit Housing (Gewoba: Genossenschaft für gemeinnützigen Wohnungsbau) was convincing, and they were awarded the contract for the purchase.

‘The owners had managed the building as a fair tenancy for years. It was very important to them that this would continue after the sale,’ explains Gewoba Managing Director Esther Keiser on enquiry. The most challenging part was integrating the tenants into the cooperative afterwards.

‘As Gewoba requires one co-operative member to live in each flat, we first had to motivate everyone to register with us as a member and purchase the necessary share certificates,’ said Esther Keiser. The more traditional rent deposits then became apartment share certificates. Esther Keiser: ‘If you were to ask tenants today, not much has changed for them. With the exception of one party, the rental agreements remained as they were, and the rents are still comparatively very moderate, and will remain so.’

‘Co-operatives enrich the housing supply’
‘There are owners who prefer to forego maximum profit in favour of long-term solutions. Thanks to them, cooperatives can build or buy affordable flats and rent them out,’ says Esther Keiser. Although many cooperatives could pay market prices for properties, they would soon reach their limits if properties are sold to the highest bidder.

‘The reason for this is that the rents charged by the  cooperatives are based on the principle of cost rent (Kostmiete),’ she continued. This means that they are just high enough to cover all the actual costs and investments.

‘Every extra franc that has to be paid for the land has a direct impact on the rent,’ adds Esther Keiser. She is certain that selling the land to a cooperative would not only benefit the people who will live in the new development in the future: ‘Cooperatives enrich the housing offer, for example, with communal areas, beautifully designed outdoor facilities and playgrounds that can also be used by the neighbourhood.’