The aim behind co-operative, or ‘co-ownership', housing
associations is to give tenant-members some of the benefits enjoyed
by owner-occupiers by treating them collectively as such. A co-
ownership housing association normally consists of a number of
persons who collectively own a group of houses or flats, the cost
of which has been financed on mortgage. The association holds the
legal title to the land and is mortgagor; the members occupy the
dwellings under short tenancy agreements or leases from the
association. All members of the association have to be tenants or
prospective tenants and all tenants have to be members of the
association. Rents payable to the association are fixed at a figure
to cover the member's share of the total annual outgoings,
including mortgage interest payments and repayments of capital.
On joining the association, a member will normally have
purchased a share of nominal value and sometimes also repayable
loan stock to the value of, say, 5% of the cost of his house or
flat. When he leaves, he surrenders his lease to the association
and is repaid his loan capital (if any). If he has occupied his
house for not less than three years, he will also receive a premium
which takes into account his share of the capital repayment made by
the association and any increase in the market value of his
property at the date of leaving. The premium should be regarded as
consideration for the disposal of an interest in the property
previously occupied by the outgoing member and therefore within the
scope of CGT. In most cases, however, exemption will be due under
TCGA92/S222 (private residence relief - see CG64200 onwards).
