Frequently asked questions

(Lightly updated after the founding day.)

What is this about?

Helsingin Pyöräpaja had to move in 2024 and no suitable locations were available for rental. Long story short, two paja goers in May 2024 bought a 260 m² varastotila (former sähkö-jussi shop) in Kauppalantie 22, Haagan tori. The purchase closed in August 2024, Pyöräpaja moved in as tenant and officially re-opened in October 2024.

The place is one big room plus 2 toilets, 1 shower, kitchen, 2 small rooms, 3 entrances. It can be divided in various ways.

What is a cooperative?

According to the International Cooperative Alliance, «Cooperatives are people-centred enterprises owned, controlled and run by and for their members to realise their common economic, social, and cultural needs and aspirations».

In Finland, a cooperative is a limited liability company regulated by the Osuuskuntalaki (421/2013).

Why a cooperative?

We want a space run according to the values of the community using it. From a legal and tax perspective, a cooperative is the best way to allow that. A cooperative can own assets including real estate in the long term, controlled by an assembly of members who are all equal.

Is this a non-profit?

No. A cooperative is a business which needs to produce a surplus to stay alive. Unlike in a normal for-profit company, the result of the annual operations is measured not just in financial gain but also in benefits provided to the members and stakeholders of the cooperative; moreover, most decisions are taken democratically. Like in normal companies, there are externally imposed limitations such as financing to pay for services from non-members.

Why the name?

We wanted a name generic enough to go beyond the specific associations we’re currently working with, but with some reference to the ideas behind the project: a group of builders taking care of the environment and the community around them.

Since the opening of the space, several folk etymologies have popped up for the name, and we love it. Tell us about yours!

Why the location?

Haaga is logistically one of the most central locations in Helsinki: it’s easy to reach for people coming from the centre, East, West or North. Haagan tori is less than 1 km far from trains and trams (10, 15), and direct buses from Rautatieasema stop there too. The main North-South bike path runs near it (next to the railway tracks). Huopalahti is the only train station in Helsinki (together with Rautatieasema and Pasila) where a majority of local train lines stop (PIALEUY in the train lines chart).

But really, the real estate market brought us here. This area was mostly built in the 1950s and has a few affordable buildings available. The space we bought was the only one available in town which fit our requirements at a reasonable price.

Why now?

Mostly because Pyöräpaja’s rental contract ended in 2024. The seller had a deadline in August 2024.

Financially speaking, the commercial real estate market was in a curious period now after a pandemic, a period of inflation and ongoing increased interest rates. It’s impossible to predict or time the market, but the ECB calculated that it takes about 2 years for interest rate changes to be felt in real estate prices (each 1 % interest rate increase causing a 5 % decrease in prices). Euribor rates went above 0 % in April 2022, were near 4 % for most of 2023 and have been under 4 % all the time since December 2023, so the full impact of interest rate increases should be felt around the end of 2024; and the full impact of the 2024 interest rate decreases should be felt by the end of 2026.

Do you have a business plan?

Yes. We have a plan which makes the project financially sustainable for individual members and users as well as groups using the space. In short, renting about half of the space will cover the maintenance costs, while renting the other half will pay down the bank loans in about 7 years.

What does this mean for my association?

If your association needs a slightly rough space to call home in the long term, you can now have it without having to worry whether the landlord will sell you out next year. For the association, this will be a normal rental with no strings attached.

If you care about the long term prospects, the cooperative suits you too. You will know that the rent is used to keep the space available to the community and not lost to some investor. Interested individuals will also be able to influence big decisions on the space by joining as members of the cooperative (such as raising or paying down debts with banks, doing deep renovations, selling or buying assets).

What about grants?

Grants usually don’t allow to use the cash to purchase real estate or other assets which you could resell later. If you have grants which can be used to pay rent, you will be able to use them for this rental as well. Out of an abundance of caution, you may want to mention in future grant applications that you’re going to rent from a cooperative whose members may or may not overlap with your members.

The cooperative does not plan to raise grants and will not compete with your association over grants because the activities of the co-op are not the same as the activities of the individuals and groups using its spaces. The co-op may look for grants specific to the real estate side, for example for investments in energy efficiency improvements.

Why not buy individually?

In short, we don’t want to be landlords. We just want a better landlord for the associations and social activities we’re involved with or like. Purchasing a space as individuals would put all the weight on those individuals indefinitely and make them practically irreplaceable. (For an individual to quit or change their participation level, you’d need a new real estate transfer, renegotiate the mortgages, pay the transfer tax, etc.)

Why not an association?

Associations are not a good legal structure for holding significant debt. The board members would be responsible for paying debt with their own assets and it’s not fair to ask volunteers to take such a burden.

Why not a limited company?

A limited company (Oy) typically has the duty to make a profit, and that’s not what we want to think of the most. In a limited company, typically money rules everything and whoever owns the most shares calls the shots, everyone else gets nothing unless there is a commercial transaction measured by money.

Who are the founders?

The founders are a small group of Pyöräpaja members.

What do founders do?

The founders have set up the initial legal documents of the cooperative, elected the inaugural board of directors and approved the initial contracts for the space. The board approves new members during the year.

Concretely speaking, an important role of the founders is to provide the initial cash infusion which was used to purchase the property. For bureaucratic reasons (delays in getting the registration approved by PRH), half of the funds for the initial purchase were provided by a loan from one of the members; we want to replace it with a normal bank loan as soon as possible.

The role of the founders will hopefully decrease in the first year as the cooperative gets more members. By the 5th year, we intend to have enough members to pay down the extra shares purchased by the founders, and possibly the bank loan too. At that point, the cooperative will be controlled equally by something like 10 members with 5000 € in equity each, or by 100 members with 500 € each if there’s sufficient interest for that too happen.

What shares are available?

The cooperative is going to provide mainly two kinds of shares: the “normal shares” for voting members, at a nominal price of 500 € each, and supporting shares (non voting) at 5000 € each.

Members need to purchase at least 1 share. “Producer members” have to buy at least 10 shares and are expected to participate in the work needed to provide the services of the cooperative (keeping the lights on, the water running, etc.); they get 20 votes in the general meeting.

Supporting shares can be purchased by non-members and legal entities as well. They act like an equity loan to the cooperative and are supposed to get a small “interest” (if the assembly approves the distribution of surplus/profit after the end of the year). They can be redeemed only after 5 years.

This structure is typical of a “consumer cooperative” where the members engage both in the production and in the consumption of the cooperative’s services. An example which has inspired us is Oma Maa luomuosuuskunta.

Are shares a donation?

No. Shares are a financial asset and they’re worth their nominal price, until further notice. However, you should not count on getting your money back, because shares will be locked up for several years and because the cooperative may lose money and “burn” its capital (the bank gets paid first).

Why the restrictions on shares?

Members and shareholders in a cooperative typically have the right to quit and get their money back (after a waiting year), usually at the nominal price of the shares they purchased. However, the cooperative will not have enough cash to pay back shares as long as it’s still paying down the loan to buy the property; it would be a financial risk for everybody to be forced to quickly raise additional cash to pay back some members, and in the worst case the cooperative could be forced to sell the property at bad conditions to get the cash. To avoid or reduce such risks, members will only be able to quit the cooperative 3 years after joining.

What do producer member produce?

Since August 2024, producer members have been primarily responsible for performing basic updates of the space (such as replacing old lamps with energy-efficient LED lamps), keeping the space open when necessary etc. However, people active in Pyöräpaja have been doing most of the heavy lifting in the spaces used by Pyöräpaja itself.

How are funders and major shareholders rewarded?

Mostly with the experience coming from the additional work and from potentially going bankrupt.

The law and the bylaws provide for various ways to distribute surplus to members but by default everyone gets back just the nominal price of their shares. Supporting shareholders may have additional rights in certain conditions.

We’ve been partly inspired by Nathan Schneider and the Exit to community model.

What about the others?

In cooperatives there are ways of raising capital other than selling shares for cash. So-called sweat equity could be granted to participating members doing some exceptional amount of work which saves the co-op substantial cash (like, redoing the wet areas and pipes when it will be needed, hopefully no earlier than ~2050).

What if the profits are not what expected?

In such matters, the board makes a proposal and the assembly of members decides, so we don’t know exactly what will happen; we’ll decide together.

If profits are higher than expected (for example due to a lower than expected vacancy rate), things are rather easy. In the first 7 years we’ll just accumulate reserves for bad times, or pay down the loans in advance. Starting in year 2032, the surplus can be distributed to members, for example as discounts on the services (which they may decide to assign to the renting associations). If the extra profits are significant and structural, the cooperative may waive rent increases, renegotiate rentals on cheaper terms, or find other ways of giving back.

If profits are lower than expected, things can get more complicated, depending on how severe the cash shortage is. In general, the shareholders will absorb the losses. The co-op is starting with about 50 % equity and 50 % debt, plus promises of more shares to be purchased by the founders if necessary, so the shareholders can absorb losses and cash shortages for several years. If the co-op never turns a profit, debts will be paid by selling more shares. If the co-op constantly loses money (for example, if rents don’t even pay for the ~9000 €/year in maintenance fees), the initial shareholders will be wiped out and future shareholders will own all the capital.

Is this a Ponzi scheme then?

Not more than the general stock market.

What if the space goes unused?

If the spaces goes unused in the long-term, for example because the city suddenly decides to offer better spaces to everyone for zero rent (which would be great!), the co-op may decide to shut down. The meeting of the members will authorise the board to sell the property and then an extraordinary meeting of the members will need to approve the dissolution of the cooperative, as well as the criteria according to which any remaining assets will be distributed. (Probably it would be in proportion to the number or value of the shares.)

Can I join?

Yes! You can join as member if you’re interested in supporting the cooperative’s activities for the next several years. Choose what kind of shares you want, depending on how involved you want and can afford to be. The board will decide on your application swiftly.

What members do you need?

We especially need more producer members to help the cooperative provide its services. We need you if you have experience in anything that goes into a real estate operation, for example:

Legal matters
Accounting
Interior design
Service design
Art and decoration
Electrical work
Plumbing
Woodwork
Masonry
Energy efficiency renovations
General contractor jobs
Accessibility
Communication
Community management
Event management

We also need members who simply use the space, for example for meetings or storage. For example, if we had 50 members each buying 2 shares, we could pay back the bank loan and stop worrying about half of our cash needs. Members could then use a good part of our space according to their needs as part of their membership benefits, without a need to put a price on everything.

Is this inclusive?

Not as much as we’d like. The baseline in our society is that buildings are owned by faceless corporations or privileged individuals; the purpose of our cooperative is to improve over this baseline. Eventually, the cooperative’s property will be equally owned by all those who use it. At the beginning, the purchase had to happen quickly due to the personal circumstances of the seller, and that could only happen with a small group betting their own cash.

Renting space is a far less momentous decision and we hope each group will have time to discuss and decide in a way that makes everyone happy.

Is this authoritarian?

Private property is theft and real estate is classist, but the cooperative strives for the most egalitarian result possible. In our current capitalist society it’s impossible to eliminate or neutralize private property and its poisonous effects. The best we can do is to fragment private property until it’s innocuous, but still governable by those who live it (as in the best practices for the governance of the commons).

As for your association or project planning to use the space, the cooperative will be just another landlord. Running those projects is where most of the activity and direct participation is and will continue to be.

When you start a new craft, you often need to spend quite a bit on new tools. Real estate is an expensive hobby: acquiring the necessary tools requires quite a bit of cash upfront. The cooperative helps us share and redistribute this burden, and this is the lowest amount we could get to (considering that all the initial capital comes from the members).

Is this going to alter the power structure in my association?

There are such risks, but we believe the cooperative structure reduces them.

Legally, the cooperative is just another landlord. The main power of the landlord is to increase rent at the next renewal. Terminating the rental is an equal threat for both sides (Graeber and Wengrow say that the right to walk away was what kept indigenous societies in North America free).

In daily operations, the cooperative cannot walk into your space and boss you around, because it’s an abstract entity. Individuals may show up representing the cooperative, but they’ll need to state in advance that they’ve been authorised to do so and that they have a valid reason, for example to show some area to a new tenant. Most days, if you meet those individuals, they’ll be just themselves.

Initially it may be hard to distinguish the cooperative from its individual members, if there are so few. After a few years, when there are enough members, the individuals will matter less. If you live in an apartment building and you meet your neighbour on the staircase, you both have the same right to use the staircase, no matter whether either person owns shares in the company owning it, and you don’t need to worry about your neighbour bossing you around.

What about conflict of interests?

Some members of the cooperative will provide services to the co-op and purchase other services from the co-op (like renting one room for personal use). This is the essence of mutual aid and cooperation. The assembly of the members is ultimately responsible for ensuring that such activities and exchanges happen in a fair way, suitable for the co-op’s goals.

Some members of the cooperative are also members or participants in the activities of the associations which are expected to rent part of the spaces: that’s the reason they care.

On the associations’ side, it may be advisable to reduce the risks of confusion by making sure that the legal representative signing the contract, as well as anyone participating in a board decision to authorise it, not be at the same time members, board members or shareholders of the cooperative (or family members with one).

Is this an investment?

No.

If the cooperative manages to balance its cash flows, after 7 years there will be a paper profit equal to the amount of bank loan paid down. In practice, such profit will not be distributed to members unless for some reason the cooperative shuts down, sells the property and distributes the cash remaining after the dissolution.

Supporting shares may manage to pay an interest rate sufficient to make them not a loss compared to inflation, but holding them still means losing money compared to the average return on the stock market (even without considering the higher risk of losing the entire capital).

Is this my retirement plan?

Definitely not. As Piketty explains and the ECB measured, most wealth in our society is locked in real estate, mostly housing. To “climb the property ladder” towards your old age, open an ASP account now, even if you can save only 50 € every now and then; if you can hope to be a permanent employee and live in the long-term with one partner, the financial and tax system is all set up to push you in this direction.

What are the tax implications for members?

If we have 4 shareholders or less, we’ll likely have to report them as beneficial owners of the property.

Other than that, tax implications are rather limited for the first 7 years because the cooperative will probably distribute no surplus to the members.

However, if you’re a Finnish citizen and you plan to move or work outside Finland, check Vero’s Finnish citizens and the 3-year rule. If you’re not a Finnish citizen, check the tax treaties. If you’re a USA person, good luck.

Again, joining the cooperative doesn’t make you any richer, so in principle it should not affect your eligibility for student benefits or other benefits.

However, as mentioned in the previous section, some members may be considered beneficial owners of the property. See for example Kela’s Assets affecting basic social assistance or ask information from the relevant authorities. Next time you apply for some benefit (like the general housing benefit), you may have to declare your shares as assets; you can explain than they can’t be liquidated for at least 3 years and that they produce no income. If you rely on benefits, we don’t recommend joining with more than 1 share unless you received an active confirmation from the authorities that it’s going to be fine.

Are there other risks for board members?

Board members have a number of responsibilites towards the law, way too many to cover in this document. If you’re interested in being a board member, we’ll have a chat about your situation and we’ll make sure to find professional guidance for you. Generally speaking, the biggest risk is that we go bankrupt and you end up tied in legal proceedings or sanctions of some sort which will impair your ability to start or manage businesses or get loans for personal purposes. If you already own your own home and you are a salaried employee, you can worry less.

I’m pro-capitalist, is this for me?

Sure! The Bank of Finland informs us that the long-term yearly return on investment for commercial real estate is about 4 %. By joining the cooperative as producer member, you can prove this is compensation for valuable work rather than just a feudal privilege.

I’m anti-capitalist, is this for me?

Sure! See above, this is as close to abolishing private property as it gets. If it’s not enough, be the revolution you want to see! We can’t promise socialism in one building.

Are you all crazy?

You’re forgiven for wondering.

Is this a model for others?

We hope so. As recently discussed by YLE, thousands of buildings are demolished in Finland every year. Finland is one of the EU countries with the highest demolition rate (Huuhka et al., 2014).

While it often makes sense in the long run to rebuild from scratch to improve energy efficiency, it takes decades to pay back the carbon costs of a new build. Extending the useful life of a building can reduce emissions in the short term.

When we find a new use for a “lower quality” space in an older building which would otherwise be unused, we help reduce the maintenance costs for all users and owners, and extend the economically useful life of the building.

What’s the carbon impact of the cooperative?

Let’s assume that carbon impact is roughly proportional to money created (or economic activity). Most money is created by commercial banks when providing loans. The cooperative will reduce carbon impact in the long term if it manages to reduce the amount of financial transactions (as described above); in the short term it may have the opposite result, just like investing in energy efficiency renovations has a carbon cost which is paid back over many years.

Going stakeholder by stakeholder:

as for the producer members, purchasing shares in the cooperative can either reduce their carbon impact (if it replaces more money-making savings like investments in the general stock market) or increase it (if it replaces money-losing savings like banknotes kept in a mattress);
as for the seller from whom the property has been acquired, the purchase probably increases their carbon impact as they’ll have more cash to spend or save, and this effect will be cancelled over time as the cooperative pays down the loan from the bank (unless the seller uses the cash to pay down a debt of their own, in which case total money creation at purchase will be zero);
as for participant members, their carbon impact is reduced by a decreased need to produce income to pay for rent;
as for other tenants including participating projects/associations, their carbon impact in the short term is the same (as rental conditions are broadly similar to those with a usual landlord), but in the long term it’s reduced by the decreased need to produce income to offset the risk of rent increases or eviction;
as for the members and supporters of said associations, their carbon impact can either decrease (if they can reduce their financial exchanges with the associations) or increase (if they reduce their donations to the associations and increase their spending), but in the long term it should decrease, especially if they join as participant members of the cooperative as well.

What’s the law?

See Osuuskuntalaki, or maybe start from the advice by PRH (Osuuskunnan perustamisilmoitus) and Pellervo (Starting a Cooperative in Finland).

Do other such co-ops exist?

Co-ops are less popular than they used to be in Finland, although the legislation remains favourable.

In our research on Finnish cooperatives active in the forestry and real estate sector in early 2023, where we were looking for cooperative ways of managing carbon sinks, we found little more than 200 active cooperatives, of which less than 60 relevant for our interests. There are a handful projects for the construction of new apartment buildings with a cooperative structure, but other than that the examples are rare: Asunto-osuuskunta Käpylä is from 1921; Lapinlahden tilajakamo Osk focuses on larger property rented from the city; Pöllökartano is an interesting case from 2014.

What about other co-ops?

We must mention Osuuspyörä/Töölön Pyörää, a worker cooperative going strong since 2015. We love them!