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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. 

Published: 9 August 2022 14:30 CEST
Updated: 23 August 2022 15:58 CEST
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

How not to buy a house in Norway: Five pitfalls to avoid 

Buying a home in Norway comes with many challenges, from the dreaded bidding rounds to the small print. Here are some of the mistakes you need to steer clear of. 

Published: 17 April 2024 12:00 CEST
How not to buy a house in Norway: Five pitfalls to avoid 

Norway’s property market moves quickly, and most homes do not spend too long on the market. 

Furthermore, rising property prices can make it feel like it’s constantly getting harder and harder to get on the property ladder. 

However, despite rising prices and the market’s breakneck speed, it’s important not to rush into things and end up making a massive mistake. 

Not sorting your paperwork 

Before you are ready to start putting in offers on houses, you will need the mortgage offer from the bank. Therefore, you should fix this before really getting stuck into viewings. 

Banks in Norway offer mortgages of up to 85 percent of a home’s value, with a 15 percent deposit required. 

They will also stress-test your finances against interest rate raises and consider factors such as your income and any existing loans you may have. In Norway, your debt typically can’t exceed five times your income when purchasing a property. 

Once you’ve got an offer, you can approach other banks to see if they will better the offer you received, and after this, you are ready to begin searching as you know what you can afford. 

READ ALSO: What foreign residents in Norway need to know to get a mortgage

Not reading the small print 

There is quite a lot of important small print when purchasing a house that will cost you big time if you don’t properly read it. 

All homes in Norway generally come with an in-depth report on the property’s condition, and in most cases, the buyer is responsible for uncovering flaws in the property. 

During a condition report, an appraiser will check for deterioration on the property, assess the materials used in the construction and thoroughly evaluate the home for any areas where maintenance will be required in the immediate or near future. 

Pay particular attention to things like the electrics, plumbing, kitchen, bathroom, and moisture damage, as repairs to these can be incredibly expensive. 

Then there’s the information about the housing association to which many, but not all, homes in Norway belong. 

It is crucial to check the association’s monthly costs and shared debt, as well as any future plans for major renovations that could increase those costs. 

Being able to tell a well-run housing association with healthy finances from one in a more perilous position can make or break whether a home is for you.

READ ALSO: How to analyse a Norwegian housing association’s finances

Showing the realtor your proof of funds 

Banks issue proof of funds certificates (Norwegian: finansieringsbevis). However, you should never show this to the realtor selling the property. 

This is because it will reveal how much money you have available, and as the realtor is working for and being paid by the seller, they will do what they can to ensure a higher price for the seller. 

Bidding on homes that you aren’t quite sure about 

Once you have your mortgage offer or proof of financing, you can put in offers on homes. 

Be warned, though. You shouldn’t just put in bids to be involved and get a feel for the market. 

You also shouldn’t put in offers on “maybes” either, as all bids in Norway are legally binding. 

This means that you could end up having to buy a property you put a speculative bid on if it is accepted by the owner. 

Agents do their utmost to prevent people from bidding on more than one home at a time, but some offers can slip through the cracks, so you also need to make sure you only bid on one property at a time. 

You also need to make sure you don’t offer more than you have, as you will be expected to follow through with the purchase. 

It is incredibly difficult to back out of a home purchase in Norway, and if you do manage to wriggle out of the process, it will likely end up costing you quite a lot of money. 

Not having money for the other costs 

Given that property is typically the largest purchase of most people’s lives, it’s easy to lose track of the smaller costs. 

One of these is stamp duty (dokumentavgift). When buying a freehold property in Norway, you will need to pay 2.5 percent of the purchase to the state in stamp duty. 

Banks in Norway don’t offer financing for stamp duty. So it’s worth remembering that you will need to pay this cost. 

One advantage of buying into a housing association is that you will not need to pay stamp duty. 

READ MORE: The hidden extra costs when buying property in Norway

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