Homeowners' association vs housing cooperative

Whether we decide to rent or buy a flat, the amount of the monthly service charge (czynsz) should matter to us, and it largely depends on whether our home belongs to a housing cooperative (spółdzielnia mieszkaniowa) or a homeowners' association (wspólnota mieszkaniowa). That is why today we want to present the pros and cons of both solutions, mainly from a financial point of view, but not only.

To see what trend prevails on the property market, it is enough to mention that year on year the number of flats under the aegis of housing cooperatives has fallen by several hundred thousand! So where do homeowners' associations have the advantage?

Operating costs

In this respect a homeowners' association clearly has the advantage, which is connected with the fact that a cooperative employs many full-time staff (a president, administration, cleaners, a caretaker). As a result, their salaries are paid out of residents' service charges, which are on average 50-100% higher than the rates agreed by association managers.

As members of a homeowners' association, we bear only the costs of current repairs, more serious renovations, keeping the building clean and, where applicable, running a lift. All investment decisions are taken by association members at meetings, attended by representatives chosen from among the residents. In this way they decide their own fate and how their own money is spent, choosing, for example, the best and most cost-effective offer. On the other hand, housing cooperatives – by virtue of their size and many years of experience – can negotiate more attractive rates in tenders.

Governance structure

The management of the two bodies is completely different. While a homeowners' association operates on simple rules, a housing cooperative is much more complicated to run because of the organisational structure imposed on it. First of all, there is a Supervisory Board, whose members are elected at one of the general meetings. They receive remuneration for their work, paid from cooperative funds. All decisions take much longer because of the complicated structure.

A homeowners' association, which is not obliged to appoint a Supervisory Board, functions much more efficiently, so its operating costs are automatically lower, which affects the amount of the service charge.

An association also operates more openly, because every member can have a real influence on the decisions taken. The larger our share, the more our vote counts. Flat owners – through their resolutions – look after the common good (not just their own), bearing collective responsibility. Because a homeowners' association has no Supervisory Board, it can manage its financial resources better.