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PROPERTY

The key things you need to know about Norwegian housing associations

Many houses and apartments in Norway belong to a 'borettslag', or housing association. For the uninitiated, they can be pretty confusing. Here are the key things you need to know. 

Pictured are apartments in Oslo.
This is what you need to know about housing associations in Norway. Pictured are apartments in Oslo. Photo by Marla Prusik on Unsplash

What is a borettslag

A borettslag is a Norwegian housing association with a cooperative ownership structure. A borettslag typically consists of a series of apartment blocks but can also include terraced houses and detached homes. 

Housing associations are their own legal entity rather than a type of home. A housing association is a legal entity in a similar way a limited company is a legal entity. The association will have operating costs, debts and shareholders. 

Those in these housing associations don’t directly own their homes. Even when a property in the association is “sold”, the cooperative still owns the property. Instead, the owner indirectly owns the property as they become a shareholder of the association when they buy into an association. 

You have the exclusive right to your home by being a shareholder. This essentially means that only you can live and do what you wish (depending on the rules, more on that later) with the property, even if the association owns the specific house or property you “bought” when you become a shareholder. 

As a shareholder, you can also have the first refusal on any homes for sale in the association.

They come with rules

Buying into a housing association comes with other perks, such as using the common areas. In parts of Oslo, many blocks have large communal gardens for residents, for example. 

When buying into a housing association, you must follow the association’s rules. For example, there usually are rules on when you can have work done to your house, noise limits and when you will need to vacate the gardens at night. You’ll generally get the rundown on all these when you buy or rent a property in the association. 

If you plan on letting your property out, then there may also be restrictions on how long you can rent it out for, or needing to have lived in the property for a set amount of time first. 

They also come with fees

Okay, we aren’t really selling the concept to you by leading with the rules and fees. When you buy into a housing association, you are expected to pay several fees. These range from having the floors in communal areas cleaned to municipal fees, insurance and porter fees. These are referred to as felleskostnader (shared costs). 

If you are renting in a housing association, the owner is supposed to include any of these joint costs in the overall rent and not add them separately. 

Some buildings will also come with a common shared debt. This includes the original building costs and any upgrades or repairs, such as solar panels or new roofing. Payments on the shared debt are included in the common and shared costs. If you’re a shareholder in an association (i.e. bought into one), you can pay down your bit of the joint debt faster to lower the overall monthly costs. 

Trine Dahl-Pettersen, real estate agent at Eindom 1, previously told The Local that looking into a housing association’s finances is key when buying in Norway. 

“For instance, if they (the association) are planning to replace the roof of the block the next year, you will read about it in the sales documents. It is important to consider whether you can afford a property also after potential add-ons,” she said. 

READ ALSO: Key mistakes to avoid when bidding on a house in Norway

There is one notable discount

When you buy a share in a housing association, you, from a legal standpoint, aren’t buying real estate as there isn’t a transfer of land or property. This means that you do not need to pay stamp duty, or dokumentavgift, on the property. 

Stamp duty is 2.5 percent of the property’s value at the time of the sale going through. This means that with a four million kroner housing association share, you’ll save 100,000 kroner on stamp duty. 

Is buying and selling in a housing association complicated? 

Despite all the rules, fees and nuisance listed above, buying into and selling out of housing associations in Norway is pretty much the same as a freehold property. 

The main thing when buying is to check through the association’s finances. These will be featured prominently in the sales documents. You will also need to ensure that you can afford the shared costs and debts and the final sale price. 

Selling is even more straightforward, it’s pretty much the same as selling a freehold property in Norway. 

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PROPERTY

The hidden extra costs when buying property in Norway

Buying a home in Norway comes with a few more costs than the list price. Here are some additional outlays you should consider before purchasing a Norwegian house or apartment. 

The hidden extra costs when buying property in Norway

Purchasing a house or apartment is usually the highest value purchase one can make in life. However, with such large figures involved when buying a house, it is easy to overlook some of the more hidden but still pricey costs that you’ll have to cover to make a house your home. 

Below, we’ve listed the most important you need to know about. Some of the costs you’ll need to pay every month when you purchase a home, others can put a serious dent in your budget- or jeopardise the purchase if you overlook them. 

Fellesgjeld

Many homes in Norway, especially apartments in Oslo, belong to a housing association or borettslag. A housing association in Norway is a legal entity similar to a company or business, where buyers purchase a share and get the exclusive right to live in a property within a block. 

That’s because you buy into the housing association rather than the property itself. But, much like a company, housing associations also have overheads and debts. 

Fellesgjeld is the shared or collective debt of the association. The joint debt includes original building costs and renovation works, such as a new roof that have taken place. The instalments and interests are paid monthly. So when buying into a housing association, you will need to consider the joint debt payments as part of the price. 

READ MORE: The key things you need to know about Norwegian housing associations

Felleskostnader

Felleskostnader is the shared monthly repayments on the collective debt that residents of housing associations pay. However, there are a number of other costs included in these monthly repayments, such as municipal fees, porter services, cleaning communal areas and building insurance. 

One more thing to note is that you will need to pay municipal fees wherever you decide to call home. 

Renovation costs 

Fixer-uppers may seem like the best way to grab a bargain, but beware, renovating certain rooms in Norwegian homes can cost an absolute fortune. 

Bathrooms and kitchens in Norway need to have the work signed off by the municipality and be completed by a qualified tradesman- this means you’ll likely need to get the professionals in. Bathrooms, as an example, cost an eye-watering amount to have renovated: between 200,000-300,000 kroner, due to the requirement for them to be done to wet-room standard. 

Dokumentavgift

This is a not-so-hidden cost as plenty of countries have stamp duty. When you buy a freehold property (one that isn’t part of a housing association), you will need to pay 2.5 percent of the purchase price to the state. However, homes in housing associations are exempt from this.  

Banks rarely offer additional financing for stamp duty, so it’s worth taking this cost into account when purchasing the home. For example, a house with a sale price of four million kroner will cost 100,000 kroner in stamp duty- so always save a little bit of budget left over to cover this cost. 

Tinglysingsgebyr

You will also need to pay a land registration fee when purchasing a property. When submitting this online, it will cost 540 kroner. If you prefer not to do things digitally, then you can expect to pay 585 kroner to file the paper form. 

The fee for buying into a housing association is slightly cheaper. Following the land registration, you will need to pay the stamp duty. 

Getting drawn into a bidding war

Plenty of homes in Norway have an asking price where bids will begin rather than a set cost. 

When buying a home, the true cost will likely be significantly above the asking price. 

Getting drawn into a bidding war can increase the price of a house significantly. 

Bids in Norway are more or less legally binding. If you bid outside your means, you could find yourself in trouble. 

To avoid getting pulled into a bidding war, you should consider purchasing a new build- which are sold for a set fee. 

READ ALSO: Six key tips to survive the bidding war when buying a house in Norway

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