The calculations in the financial plan are reviewed by two independent certifiers, certified by the Housing Authority. The task of the certifiers is to check factual information in the plan and assess that the plan is financially sustainable.
Here we have put together some frequently asked questions and answers about conversion
Can I buy my apartment below the market value and not have to pay a cash deposit? Why?
Answer: Yes, in almost all cases you buy your apartment for 70-80% of what a broker has valued your apartment at and can thus avoid a cash deposit because you have an excess value in your apartment that the bank considers as collateral. The reason why you pay less in the event of a conversion is partly that it involves a complete property purchase where the condominium association, as its own legal entity, takes out a loan that covers part of the total purchase price. But also because you take an apartment from a regulated and closed market to an open, free market where you are the only speculator. Since there are no more speculators, no bidding takes place either.
How many must vote yes for a reshuffle to be possible?
2/3 of all tenants with first-hand contracts (housing rights association members) must vote yes at a purchase meeting for the association to be able to purchase the property.
How long does a conversion take?
Every conversion is unique, but on average you can say that it takes between 6-9 months to carry out a conversion. Sometimes it goes faster and sometimes it takes longer.
Is it really cheaper to live in a condominium?
Yes, in almost all cases. Statistics Norway recently did a survey that shows that renting is the most expensive form of housing compared to living in a condominium or villa. In the event of a conversion, we always aim for your monthly cost to be as low as possible, and with the current low interest rate, it will almost always be that way. Add to that that the monthly cost that you have in a condominium you partially pay back to yourself (amortization) and that you get back 30% of the interest cost, via the so-called the interest deduction, i
in connection with your declaration.
Can I continue to rent my apartment if there is a conversion?
Obvious! The only difference is that, in the event of a conversion, you get the housing association as the landlord. Otherwise, rent regulation takes place via negotiation as usual.
If I vote yes at the purchase meeting, does that mean that I have bought my apartment then?
Voting yes for conversion to a condominium does not mean that you have committed to buying your apartment. You vote for the association to buy the property, you get an opportunity to buy your apartment. The actual purchase of your apartment is only completed when you pay for it.
Can I receive housing allowance even after the conversion?
Yes, but it will possibly change somewhat. We recommend that you talk to Försäkringskassan to find out what it looks like for you.
What possibilities do I have to borrow the full amount?
Great opportunities. This is because you can buy the apartment significantly below the market price and then you can normally borrow the full amount.
Is it possible to stay as a tenant after the conversion?
Yes, if you don’t want to buy your apartment, you can stay as a tenant. The housing association then becomes your new landlord. Your rights and obligations are regulated just as before in the rental legislation. The association is usually a better property owner because it is more
motivated to create a good living environment.
Can the association raise my rent when they have bought the property?
No, the association follows the same negotiation rules as other landlords. This is regulated by law. The negotiation takes place with the Tenants’ Association.
How is the property maintained after a conversion?
The management of the property will be handled by professional managers that we, together with the housing association, will buy. There should be no difference for you as a resident – only for the better in such cases.
Can I get a loan as a student or pensioner?
The bank assesses the size of your income and since a conversion usually means that you buy more than the market value, it is rarely a problem if you have managed your current monthly cost. If you also have a relative who can act as a creditor
that is also an advantage.
Is it possible to share my ownership with someone else?
The basic rule is that the apartment is let to the contract holder, but usually you can distribute the ownership as you wish. Most associations usually have as a rule that the person on the contract must own at least 10 percent of the apartment. It is the association’s board that decides this.
Our property has premises. What happens to these?
If you have premises in your property that are rented out, these will continue to be rented out under the same conditions as before. Premises that are vacant are the association’s responsibility and can then decide whether to rent out the premises or convert them into homes to sell
or rent them out. Premises are often a good rental income for the housing association.
Do condominium owners pay rent?
No. What you pay is an annual fee (which is divided into monthly payments) to the association. The fee must cover maintenance, operation, tax, etc. In addition to the fee to the association, you pay amortization and interest on your bank loan.
Your monthly cost consists of
Annual fee
Amortization
Interest
How do I know that I will be able to afford a loan for my apartment?
In the case of a conversion, you are usually offered to buy your apartment for approx. 70-80% of the market value. This means that you can borrow up to the entire purchase price and you do not have to put in your own cash deposit/down payment. It is common for your monthly cost to be approx
such as your existing rent and if you have managed your current housing costs, it should not be a problem to get a loan provided you do not have payment complaints or major debts. The bank makes the assessment at the time of the loan application. The bank can only lend up to 85% of
the market price, but in connection with restructuring the stake is almost invariably lower than 85% of the market price, which enables the bank to lend for the entire stake
When can I sell the apartment?
You can sell the apartment as soon as the association has received title. If the apartment is sold in the same year that the association takes possession of the property, the tax is 30% of the capital gain. If the apartment is sold the year after the year the association takes possession of the property, the tax is 22%
the sale profit. (There are exceptions to this rule. In so-called non-authentic condominium associations, the capital gains tax is always 30%)
Can only new and well-maintained properties be converted?
No! Most of the properties that are converted have a maintenance requirement. The need for maintenance becomes a basis for negotiation when the property is to be purchased. A condominium association must also explain in the financial plan how the maintenance needs are to be solved financially. This leads to a transformation in many cases resulting in the properties undergoing renovation and refurbishment.