No Dark Magic

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How to Buy an Apartment in Sweden: Part 3

Posted at — Jun 27, 2020

Buying an apartment in Sweden doesn’t usually mean owning it. Bostadsrätt means more “the right to reside indefinitely as long as you own a share in the cooperative” than “doing whatever you want with an apartment”. This explains, for example, why you can’t just put an air conditioner on the facade or rent out your flat whenever you feel like it (the latter needs to be approved by the owner association and there has to be a reason like 1 year employment of the owner in another town).

The owner association, or bostadsrättsföreningen (BRF), collectively owns the building(s) and takes care of them. Like any other economic association, it has a styrelse (board) with styrelseledamot (chairman), a secretary, yearly meetings, reports, and so on. The reports describe the financial situation as well as renovation and maintenance plan and other information.

Reading a BRF report

The first interesting thing about a BRF is its size. If it’s small (say, 20 apartments), it might have trouble recruiting enough motivated and knowledgeable people to the styrelse. If a styrelse can not be formed, the BRF might be liquidated and the buildings turned into rentals.

Another thing of note is the year when the BRF was created. That’s often also the year when the buildings were finished, which affects the upcoming renovation and maintenance needs. For example, right about now many BRF:s started in the 60s need to change the pipes, which is a long and expensive procedure. It’s called stambyte in Swedish. Another big and expensive thing is omläggning av tak — redoing the roof.

If the BRF does not own the land under its buildings, there will be something about tomträttsavgäld somewhere in the report, and a date. That date is potentially when the monthly fee for the apartment will increase: the price for renting the land is usually set for a few years, and then goes up.

As for the finances, it’s useful to look at the loan per square meter numbers. According to ekonomifocus, when big construction companies build and create new BRF:s, they start out at 10 000–13 000 SEK of debt per square meter. Thus, the article says, 0–5k/m² is awesome, 5–10k/m² is alright, 10–15k/m² is acceptable for young BRF:s, 15–20k/m² is worrisome, and upwards from 20k is a huge red flag. In the report it will be under something like “lånskuld, kr/kvm” or “belåning/kvm”.

It might be good for the BRF to have some space to rent out to a business, since this usually brings good income. Of course if the renting contract ends and no one new shows up, the gap in the budget might need to be fixed via monthly fee increase for all the members of the BRF. The words in the report will be “uthyrning av lokal”, “årsavgifter lokaler” or similar.

For a deeper analysis of a BRF there’s a paid service One report costs 99 SEK, while getting access to all of them for a month costs 249. If the report is based on older yearly reports of the BRF (e.g. two years old), sending them a new one results in a fast and free update of the analysis. In my case it took one hour on a Sunday. The analysis is in Swedish, but at the very least the grading system is easy to understand: A++ is awesome, and C is terrible. Here’s an example.

Going to an apartment viewing

Different brokers prefer different setups of the apartment viewings. For some, prior registration is required. For some it’s not. Sometimes it’s possible to ask for a private viewing. And so on. This year, online viewings got introduced: the broker walks around the apartment and streams the video.

Here is how a viewing commonly goes. Interested buyers (or just curious people) arrive at the appointed time. There’s a sign or two showing where to go; it has the portrait of the broker, or at least their agency’s logo, on it. Often the visitors have to put on disposable shoe covers. The broker greets and registers every new arrival and hands out a brochure with the photos and description of the apartment (same information as on the broker’s website). Everyone walks around and asks questions from time to time. The owner is not present.

Depending on the apartment and the time, a viewing can be very crowded or it might be just a couple of people. It usually lasts half an hour, but can be a bit shorter or longer.

It’s generally a good idea to look at the things that don’t get on the photographs — floors, ceilings, corners, pipes, windows (do they open easily?). Checking the water pressure is a classic. Swedish websites also advise to check under the carpets and behind the pictures hanging on the walls, but I’ve never seen anyone do that on the viewings I attended. In a public viewing brokers usually don’t show locked shared facilities like bicycle storage or the laundry room, but asking a few questions about those (e.g. what year were the washing machines bought) doesn’t hurt.

If anything was unclear, suspicious or interesting in the BRF’s report on its economy, a viewing is also the place to ask about that. The broker might not have a ready answer for everything, but they’re good at following up and getting back to the prospective buyers about such details.

After the viewing the broker will contact the people who attended and inquire about their wish to make a bid. If a potential buyer wants to make a bid, they need to have a lånelöfte[1] (see the post about getting a mortgage). Since bidding process can often go very fast (in a matter of a few days), it’s a good idea to have the lånelöfte before going to the viewings.

Thinking ahead

Factors important for reselling an apartment:

  • location, including its reputation: if a district is listed in a police report as an “utsatt område” (vulnerable area), expect the price being lower than in the similar building across the street that is technically in the other district

  • size — the smaller, the cheaper

  • balcony or other 'outside' place is always a plus

  • elevator in the building is a plus

  • view, especially if there’s water (lake, sea, etc) might be a great plus.

Also in this series:

1. A loan is the most common case. Buying an apartment without getting a loan comes with its own complications according to, for example, this forum thread. Brokers insist that a bank must participate from the buyer’s side — the buyer can’t just transfer the money from their account as a private person. Banks say anything from “it’s impossible” to “this will cost 7000 SEK” frequently mentioning the anti-money-laundering regulation. The answers “it’s impossible” and “yes, we do provide this service” might come from the same bank, depending on the clerk. Some banks will only agree to provide this service if both the buyer and their spouse will move all their finances/insurances/pensions/etc to them. And on top of all this there are delays which might botch the deal. The most often mentioned solution is a postväxel (money order).

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