A 'Third Way' Between Buying or Renting? Swiss Co-Ops Say They've Found It

Summary

A few blocks from the shores of Lake Geneva, Claude Waelti shows a visitor his apartment in one of the most desirable neighborhoods of Lausanne, the Swiss city with sweeping views of the French Alps across the lake. It has two bedrooms, a small office, a south-facing balcony — and it costs 1,760 francs (about $2,200) a month, around half the typical rents in the area.Switzerland is notoriously expensive, but affordable apartments like Mr. Waelti’s can be found in cities across the country. Known as cooperatives — though distinct from American co-ops — they are built and run by nonprofit organizations and represent a kind of “third way” beyond the classic rent-or-buy choice.Advocates say the model could reshape how the world thinks about affordable housing, particularly in the biggest cities.The details will seem foreign to many in the West, where building home equity is baked into the system. But the central idea is simple: What if homeownership had no profit motive and no capital gains?In Switzerland’s member-based cooperative housing, new residents buy shares to gain admission to the building and get one vote in the corporation regardless of how many shares they own. The co-op uses the money to maintain the building, keep rents below market rate and, often, provide communal amenities like child care.When a resident moves out, their shares are returned at face value. There is no capital gain.While most Swiss co-ops finance themselves, newer ones are often helped to their feet by the government, which offers land at cheaper rates and low-interest loans, and sometimes buys shares in return for housing for low-income residents. Rents are calculated strictly on a cost basis, meaning there’s no developer or owner seeking revenue.“There isn’t this aspect of chasing profits,” said Isabelle del Rizzo, the Secretary General of Armoup, an association of cooperative housing in the French-speaking region of Switzerland. And unlike in a typical rental building, where an owner c...