Roman Vasilenko, Doctor of Economics, President of the International Business Academy (IBA)
For most Russian families, owning a home remains one of the most significant financial goals. The issue is not only the price per square meter. Just as important is how a person can achieve this goal, how accessible the chosen financial instrument is, and what they will ultimately have to pay for the financing.
For many years, mortgages have remained the primary answer to this question. But the market does not have to be limited to a single mechanism. The more diverse the range of tools available for purchasing housing, the more options people with different financial circumstances have.
It is in this context that housing cooperatives should be considered.
In 2014, I began working on a project in this field. Ten years have passed since then. During this time, tens of thousands of cooperative members have gained practical experience participating in the system, while I have had the opportunity to observe how it operates in different regions of Russia — not in theory, but in practice.
Over ten years, one’s view of a model inevitably changes. Initial expectations give way to more measured conclusions. It is now possible to speak not only about the potential advantages of cooperation, but also about its real limitations.
Today, I would formulate the main conclusion as follows: housing cooperatives should be viewed neither as a miracle solution nor as an alternative that is inherently incapable of working. They are a mechanism in their own right that can complement the existing market, provided they operate under clear rules and are managed professionally.
Comparisons between mortgages and cooperatives are often framed as a search for a winner. In my view, however, this approach is fundamentally misguided.
A mortgage addresses the housing need through bank lending. The buyer uses their own funds for the down payment, obtains the remaining amount from the bank, and then repays the debt and pays interest over many years.
For someone who qualifies for this arrangement, the advantage is obvious: the apartment can be purchased immediately even though the family does not yet have the full amount needed to pay for it.
But access to credit depends on a range of conditions. The size of the down payment, the level and verifiability of income, age, credit history, employment status — all of these factors can influence the bank’s decision.
In addition, long-term borrowing comes at a cost.
For example, if an apartment costs 8 million rubles and the mortgage is taken out for 20 years at an annual interest rate of 12%, total payments could reach approximately 21 million rubles.
This does not mean that a mortgage is inherently a poor financial instrument. It allows a family to address its housing needs much earlier than it would be able to if it had to save the entire purchase price on its own.
At the same time, this example illustrates another important point: a buyer should assess not only the price of the property, but also the cost of the money used to purchase it.
In a cooperative model, the relationship works differently.
Participants join a common system. Each person builds up their share, while collective resources are used to address the housing needs of cooperative members in sequence.
When one participant becomes able to purchase a home, the system does not stop there. The flow of funds continues, allowing the housing needs of subsequent members to be addressed.
Even after receiving an apartment, a participant continues to fulfill the obligations stipulated by the cooperative’s rules. Their subsequent payments become part of the overall mechanism and are used to keep the system moving forward.
This is a fundamental difference from conventional bank lending.
A bank provides its own funds to a client and is compensated for the use of its capital through interest. A cooperative is based on pooling the resources and capabilities of its members.
For this reason, the economics of a cooperative cannot be assessed solely through the lens of conventional bank lending. Its internal structure is different.
But a different structure does not mean an absence of risks. It means a different set of risks and requirements.
Cooperation implies interdependence among people.
A participant does not exist within the system in isolation: its operation is influenced by the actions of other members, overall financial dynamics, and the quality of management.
This creates an interesting effect. On the one hand, a sense of shared responsibility emerges. People come together around a clear common goal — purchasing a home.
On the other hand, it is precisely the collective nature of the model that makes transparency essential.
A prospective member should know in advance how their payments are calculated, how the collective resources are used, what happens after a participant acquires a home, and what factors can affect the time it takes to achieve their own goal.
A long-term financial system cannot be built on trust alone. Trust must be supported by clear rules, accessible information, and effective oversight.
Housing cooperation is sometimes presented as an unusual or exclusively Russian experiment. History tells a different story.
In various countries, collective approaches to addressing housing needs have existed for decades.
In Switzerland, cooperative housing occupies a significant position within the housing sector. Zurich, in particular, is well known for the widespread adoption of cooperative housing.
Austria and Sweden also have a long history of collective housing models.
Germany has been developing building-savings mechanisms since the 19th century. Their basic principle is to establish a financial foundation in advance for the subsequent purchase of a home.
In Latin America, the cooperative idea has acquired an even broader social dimension. In Uruguay and Brazil, such organizations in many cases combine housing construction with the development of sustainable communities and social infrastructure.
Russia has its own tradition as well. During the Soviet period, housing construction cooperatives were used as one of the mechanisms for obtaining housing.
The idea of pooling resources to achieve a housing goal is therefore not new. The challenge facing modern Russia is a different one: determining how this principle can be adapted to a market economy and modern requirements for financial operations.
One potentially strong element of the cooperative model is the opportunity to approach the issue of initial savings differently.
For a mortgage borrower, the down payment can be a significant barrier. Even with a stable income, a family may not have the necessary amount available precisely when the need for a home arises.
A cooperative system allows a member to build up their share gradually. A person does not necessarily need to have a substantial amount of capital upfront in the same way as with a standard mortgage transaction.
However, it is important to avoid misinterpreting this point.
Gradually accumulating funds does not mean that financial obligations disappear. They are simply distributed differently over time.
Therefore, the advantage of cooperation should be seen not as an “absence of costs,” but as a different way of structuring the path toward home ownership.
The absence of a conventional interest rate in a cooperative mechanism is often cited as one of the arguments in its favor.
It is true that the structure of expenses differs from that of bank financing.
But it would be a mistake to make this the sole criterion for choosing between the two.
Every financial system has a cost. A cooperative involves administrative expenses, specific contribution structures, and other elements that need to be taken into account.
Therefore, a prospective member should ask a broader question: how much will the entire journey from joining the system to fulfilling all financial obligations ultimately cost?
It is total costs, rather than the presence or absence of a particular line item in a calculation, that make a meaningful comparison possible.
This approach also protects people both from unjustified optimism about cooperatives and from overly superficial criticism of them.
Ten years have made it clear that the prospects of cooperation depend not only on its internal economics.
The legal and organizational environment in which a particular cooperative operates is also extremely important.
There are currently general rules governing consumer cooperatives. However, the specific nature of housing cooperation requires a more precise approach.
Organizations that formally belong to the same category can differ significantly in the way they operate. For an ordinary citizen, it can be difficult to understand these differences.
This creates a dual risk.
On the one hand, cooperative members may suffer. On the other, improper practices by individual organizations can damage the reputation of the entire sector, including those that operate responsibly.
Therefore, the purpose of regulation should not be limited to stronger oversight. It is much more important to create a system in which market participants can clearly understand in advance the requirements governing an organization’s activities, the responsibilities of its management, and the mechanisms available to protect their interests.
The collective model has another characteristic: its operation depends on the movement of funds and the sequence in which members’ housing needs are addressed.
If the inflow of new participants slows, this can affect the pace of the system. For those expecting to receive housing later, waiting periods may become longer.
This should not automatically be interpreted as a disadvantage of cooperation. Rather, it is one of the characteristics of its economic mechanism.
But this is precisely why an organization must explain more than just the favorable scenario to prospective members. It needs to show the factors that determine how quickly participants move through the system.
People should make their decisions with a clear understanding of potential limitations in advance, rather than encountering them after the fact.
As the number of participants grows, management requirements inevitably become more demanding.
Banks operate under strict regulatory supervision, and their activities are accompanied by numerous mandatory procedures.
Cooperatives may operate in a different regulatory environment, but this should not become an excuse for weak oversight.
A large organization needs its own safeguards: internal audits, regular financial reporting, independent oversight, and clear communication with cooperative members.
For a mature system, these are not unnecessary expenses or bureaucracy for its own sake. They are the infrastructure of trust.
If housing cooperation is to become a long-term component of the housing market, its development needs to move forward in several areas simultaneously.
Participants need to understand exactly which rules apply to housing consumer cooperatives.
It is equally important to define the responsibilities of management and establish clear mechanisms for protecting cooperative members.
The less uncertainty there is, the easier it will be for a citizen to evaluate a particular organization before joining.
Cooperative members should receive regular information about the organization’s financial condition.
This is not only about annual or final reports. Participants need to understand how the system operates and how collective funds are being managed.
In this context, transparency should become a normal part of day-to-day operations.
Different approaches to improving the security of members’ savings can be considered.
Potential instruments include insurance for cooperative contributions, guarantee funds, and other forms of protection.
The specific structure requires separate discussion, but the principle itself is clear: the greater the financial risks faced by an individual, the more important it becomes to have mechanisms in place to limit those risks.
Government regulation should not be the only source of requirements for the industry.
The professional community can develop its own standards, introduce self-regulatory mechanisms, and establish higher standards of transparency.
For a mature industry, it is more beneficial to establish its own quality standards than to constantly catch up with new regulatory requirements.
The development of housing cooperatives does not mean that bank lending should be abandoned.
For one family, a mortgage will be the optimal solution. They may have the necessary down payment, documented income, and willingness to take on a long-term loan.
For another family, the same conditions may be unattainable or simply unsuitable.
That is why it is more reasonable to speak not about replacing one model with another, but about expanding the range of available options.
Mortgages and cooperatives can serve different purposes. Having several mechanisms available makes it possible to take into account a broader range of people’s financial circumstances.
Ultimately, it may not be one particular model that benefits from this, but consumers themselves, as they gain more options for addressing their housing needs.
Over the past decade, I have become convinced that a good idea alone is not enough for a socially oriented business.
It is possible to create an attractive concept, bring together a large number of people, and offer a solution to a genuinely important problem. But in the long term, a system will survive only if its participants understand the rules and can see that those rules are being followed.
This is particularly important for housing cooperatives. Here, we are dealing with people’s money and with one of the most important goals in their lives — owning a home.
That is why I see potential for the cooperative sector in Russia, but its future is directly linked to raising the overall quality of the industry.
What is needed are clearer rules, transparent financial information, effective oversight, professional management, and additional mechanisms for protecting participants.
Entrepreneurs working at the intersection of business and social objectives should pay particular attention to this principle. Reputation is not built through attractive promises. It emerges where an organization is capable of speaking honestly not only about the advantages, but also about the limitations of its own model.
After ten years of practical experience, my conclusion is this: housing cooperation can become a sustainable part of the Russian market if its economic foundation is supported by responsible management, transparency, and clear rules.
Only then can cooperatives cease to be perceived as an unconventional way of purchasing housing and take their place among the genuine tools for addressing the housing challenge.