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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. 

Pictured is a home in Norway.
These are the hidden costs associated with purchasing a home in Norway. Pictured is a home in Norway. Photo by redcharlie on Unsplash

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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PROPERTY

Rising rents and a shortage of homes: Why now is a hard time to rent in Norway

High demand and a shortage of properties has led to a tight rental market in Norway. The Local spoke to housing experts in Norway on the factors making it difficult for prospective tenants to find a place to call home. 

Rising rents and a shortage of homes: Why now is a hard time to rent in Norway

Now can feel like a particularly tough time to rent in Norway. Rising rents, high demand and shortage of properties have made the current market particularly tricky to navigate. 

Financial newspaper Finansavisen recently reported that, at the end of June this year, there were 45 percent fewer rental properties on the market compared to 2021. 

READ ALSO: Gloomy forecast for Norway’s rental market

Jardar Sørvoll and Kim Astrup, both researchers at BOVEL, the centre of housing and welfare research at Oslo Metropolitan University, who specialise in the Norwegian property market, told The Local that a lack of houses for rent was causing significant problems for the property market in Norway. 

“The supply of rental housing in the largest cities is not sufficient, and this contributes to increasing rent levels,” the researchers told The Local. 

Sørvoll and Astrup said that current market conditions mean that foreigners and those without much of a network in Norway’s big cities suffer as a result. 

“The importance of personal contacts also means that ‘the outsiders’, such as immigrants or other groups who have few relatives or acquaintances, have difficulties finding a home in the private rental market in urban areas. Moreover, there are reasons to believe that some groups, such as certain immigrants and low-income households, experience discrimination,” the researchers said. 

Shortages weren’t the only thing making it difficult to rent in Norway at the moment. The cost of renting in Norway is also becoming more expensive. During the second quarter, the cost of renting in Norway’s four biggest cities rose 4.2 percent compared to a year ago. 

Typically, landlords can raise the rent for tenants in line with inflation for those who have been renting with them for over a year. Inflation currently being at 6.5 percent means existing tenants should anticipate steep rent increases too. 

Norway’s government has previously told The Local that it was not considering a rental market cap to protect tenants against rising costs. 

READ MORE: Norway’s government rules out a temporary rent cap 

Kjetil J. Olsen, CEO of Husleie, a platform where landlords can manage tenancies, told The Local that rents were going up as landlords’ overheads have increased significantly over the past year. 

“The steep increase of rental prices we see in the Norwegian rental market is a result of the toxic cocktail we predicted last fall, consisting of increased wealth taxes, the higher taxable value of secondary homes impacting landlords renting out, and the now new reality of increased interest rates and expensive electricity. The result of this ‘cost increase’ sadly ends up with tenants. We are now seeing price levels that we have never seen before in Norway,” Olsen said. 

What can be done to address the issues? 

Olsen said that reverting changes to taxes which see those with second homes charged more could help alleviate the problem. 

“While not the solution to everything, we believe more in reverting the increased taxes that were imposed in 2022,” the CEO of Husleie told The Local when asked whether a rent cap could be a solution. 

The researchers at BOVEL said that the government should look at ways of stimulating the market and that policymakers needed to outline solid plans for the property market. 

“We believe that the government should seriously consider stimulating the supply of rental housing. This may contribute to creating a larger and more transparent rental market that is easier to access for immigrants and less prone to sudden shortages and large price increases. Currently, Norway has no grand policy strategy for the rental market in particular or the housing market in general – either in the short or long term. But creating such a plan may be a good idea,” Sørvoll and Astrup explained. 

What is the government doing? 

Minister of Local Government and Regional Development, Sigbjørn Gjelsvik, told The Local that the government understood that now was a tough time to be a tenant in Norway. 

“The Norwegian rental market works well in many ways, but we are now in a situation where the rental prices are under more pressure than usual. The students are back after two years of corona restrictions, and the prices in society rise in general,” Gjelsvikm said. 

Gjelsvik added that the government wanted to work together with tenants and landlords to ensure the safety and emergency exit regulations were adequately met and that it wanted to reduce student housing queues and facilitate more homes being built to ease pressure on the market.

He added that the government would unveil more plans for the housing market in 2024. 

The government will present our housing politics in a white paper to parliament in 2024. In this process, we will take a closer look at the challenges in the rental market,” Gjelsvikm said. 

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