Co-op Housing Society….A game changing act

  Co-op Housing Society….A game changing act 

Also published in Times Realty

Besides creation of housing for middle class, cooperative housing societies have had a much bigger achievement. They have ensured a resilient and sustainable democratic framework for the nation. 

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It is AGM times for many Co-op Housing societies. The functioning of cooperative housing societies more often than not gets attention due to the disputes among the members. However, amidst this cacophony what gets lost is the big impact that the various Cooperative Housing Societies Acts (CHSA) and other regulations like the Apartment/Condominium Ownership Acts etc. have created by providing a clear definition of property rights. 


A decco of the Indian housing history is essential to appreciate the gravity of their contributions. Till late 1950s, urban housing for the middle class was restricted to tenanted premises and plotted developments.  Due to the geographical constraints associated with the latter, group housing projects became the optimal choice for middle class housing in metros and other large cities.


The most severe need for group housing was then felt in Mumbai. Firstly, due to geographical constraints (airport, ocean, national park etc.) and secondly due to the huge influx of migrants. Till then for most Indians, co-habitation was largely restricted to living with the people from the same community. And accordingly, we have had localities with community-based names like Sikh Mohalla, Parsi Colony, Hindu Friends Society, etc. 



But influx into Mumbai from across India created a situation of completely diverse people living together. This phenomenon became one more reasons for an urgent need to clearly define rules of co-habitation as well as for property rights in a group housing scheme. This involved :


·      Clear definition of ownership rights in individual housing unit 

·  Delineation of responsibilities of owners (sharing common costs, upkeep of common structure etc.) 

·      Easy transferability  of property rights and creation of mortgage   

·      Setting up a mechanism for settlement of disputes among owners. 



Since the lawmakers realised that the above was possible only through a cooperative approach among the owners, the first legal structure for ownership of property rights in a group housing scheme came through the Maharashtra Co-operative Societies Act, 1960


The landlord-tenant relationship, prevalent then, provided the middle class only with the rights to occupy and use the premises but not to have any ‘permanent’ rights like mortgage, transfer, sale, redevelopment etc. The new act addressed all these issues and created property rights for middle class which was till then a prerogative mainly of the rich and the landlord class. Thus it was a big moment in the political history of India.



Coming to NCR - the post-partition demand for housing ( largely driven by the migrants from Pakistan) was addressed mainly through plotted developments. However, the Delhi Development Act, 1958 put permanent brakes to any further role for private sector in plotted development or in group housing. Thus, DDA and unauthorised colonies remained the major source of fresh housing. Since none of the two addressed issues with respect to free transferability and clear definition of property rights we saw the dominance of parallel economy. Thus, regulations like CHSA had limited role to play. It was with the birth of Gurugram in 1980s that organised group housing came in a big way in NCR,


When Gurugram was  developed, the working class got the opportunity to buy from developers like DLF, a permanent legal dwelling for themselves which could easily be mortgaged to the Housing Finance Companies (HFCs).  Developers were in turn able to use these sale receipts to fund construction of offices and IT Parks which they would rent out to corporates who would employ the working class and thus enable the working class to pay for the mortgages to HFCs. Further, using monthly receipts from these mortgages, HFCs were able to offer fixed deposit schemes to retired people wherein the retirees could have safe monthly income. Thus, a clear definition of property rights enabled a sustainable eco-system which had reliable avenues for savings, capital transfers, capital formation and employment generation. The reduced role of parallel economy provided significant gains to the government revenues. 


But the story of CHSA does not end here. Besides a sustainable economic system, such Acts have also provide larger political dividends to the nation.


If US, Canada, UK, Germany, Japan and Australia can boast of a robust democratic nation, a large part of the credit goes to their strong middle class. India and Pak were created at the same time. One of the biggest reasons for the lack of a strong democratic system in Pakistan is absence of a robust middle class. In India, regulations like CHSA have  been able to create property rights and thus a strong middle class. This in turn has ensured a resilient and sustainable democratic framework for the nation. 



Therefore, if before flaring up petty issues among members in social media, residents of condominiums and housing societies can appreciate the larger benefits to the eco-system, it is quite likely that we will hear of housing societies more for harmony than for harassment.







-       Deepesh Salgia 




  1. Dear Deepesh,
    An interesting connection you have made between the housing finance companies, developers, corporates and the retired people benefitting in Gurugram. Think about writing on Mumbai's redevelopment and the role of housing societies.

  2. Thanks for the interesting feedback. Will surely mull over your suggestion.


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