The initiative to establish a housing co-operative can come from a number of sources.

The initiative can come from tenants already living in housing or in need of housing. Tenant management, short-life and self-build housing co-operatives are usually this type of grass-roots initiative. Service agencies, such as CDS Co-operatives, play a crucial role in supporting these types of initiatives by providing the training and professional support such initiatives need in order to succeed.

The second way in which new co-operatives can be established is by the promotion of co-operative housing projects by a specialist service agency such as CDS Co-operatives. This tends to be the route for establishing a new housing co-operative where the demand for new rented housing is high and it is not possible to identify the people in need of housing who will be housed in the co-operative. Most of the new-build housing co-operatives developed by CDS Co-operatives were established in this way, with the support of the local authority in the area in which they are to be built. Many new co-operative members have never heard of a housing co-operative before they are nominated to live in it, but generally their response is positive and the co-operative becomes highly successful.

The third way is for a co-operative to be positively encouraged by a local authority, which sees the social benefits the ownership and management of housing by a co-operative may bring. There are many local councillors who are members of the Co-operative Party as well as the Labour Party who wish to encourage the formation of housing co-operatives. An example of this is the creation of Redditch Co-op Homes by Redditch Borough Council.