(edit title) Confused about bostadsrätt How does the avgift work? Options

[byke]

Hrm, but how is this different from having a lower BRF mortgage, then asking people to take out higher mortgages? Their avgift is certainly lower, but their mortgage payments ... (show full quote)

Hrm, but how is this different from having a lower BRF mortgage, then asking people to take out higher mortgages? Their avgift is certainly lower, but their mortgage payments higher. Either way, they are paying a (roughly pro-rata) share of interest payments on the conversion loan. You say this passes the cost on to later tenants, but since the avgift affects the value of a flat, doesn't this mean the value of the flat is lower with a higher avgift, so later tenants have to pay a larger share of the conversion loan, but will have a lower mortgage, as well? The two approaches seem (roughly) equivalent to me. ... (hide full quote)

Not really,
If conversions were regulated so that such where tenants were forced to pay close to actual market value for their new place when a BRF is setting up a new building association in an old building. Then the actual purchase price of the flat could then go into the BRF resulting in a smaller mortgage for the house, and in turn a lower "avgift".

Usually what happens is a private building has X amount of tenants.
They form an association, and if they get the backing of X amount of tenants in the house they can go to the owner of the building and demand (by law) that they sell the building to the tenants. In order to form a BRF.

However what is fairly common is that to get an agreement from all the tenants of the house to make such an investment (rather than continue to rent) is a "Nice Price" so that it goes through. Had this price been close to market value instead at the time of change over, you would then see lower mortgages on the house building itself. Which intern would result in lower avgift.

Personally I would like to see that any BRF conversion by pre existing tenants need or require by law that a separate appointed apartment valuer be brought in to value the apartments in a building wishing to convert into a BRF so that tenants must pay at least 75% of the market value when buying into such.

[Yorkshireman]

If conversions were regulated so that such where tenants were forced to pay close to actual market value for their new place when a BRF is setting up a new building associatio ... (show full quote)

If conversions were regulated so that such where tenants were forced to pay close to actual market value for their new place when a BRF is setting up a new building association in an old building. Then the actual purchase price of the flat could then go into the BRF resulting in a smaller mortgage for the house, and in turn a lower "avgift". ... (hide full quote)

It doesn't need regulating, BRF members are free to agree this is advance, and at any time if there is a majority can always input further capital to reduce loans. On the other side, there are many cases in Stockholm where the BRFs were badly managed and members had no choice but to put in more capital!

You miss the point though.
A BRF is a form of a company. The members provide the starting capital according to the level agreed, and the BRF company may also top up that with loans to the purchase value of the property. As a company it manages it's finances (and property) part of that includes maintenance, and capital repayments, on the loans. This is done via the monthly fee.

Once the BRF owns the property, it is like saying that the shares are now on the open market. The value will change depending on market conditions.

Usually what happens is a private building has X amount of tenants.They form an association, and if they get the backing of X amount of tenants in the house they can go to the ... (show full quote)

Usually what happens is a private building has X amount of tenants.
They form an association, and if they get the backing of X amount of tenants in the house they can go to the owner of the building and demand (by law) that they sell the building to the tenants. In order to form a BRF. ... (hide full quote)

No. This is not possible.

BRF's can be formed beforehand, but they cannot force the owner to sell the property. The law states the BRF has 1st right to buy when the owner decides/wants to sell.

It is possible that You refer to some local communities that owned renting properties and introduced a local policy where if the tenants wanted to create a BRF they would sell the properties to them.

However what is fairly common is that to get an agreement from all the tenants of the house to make such an investment (rather than continue to rent) is a "Nice Price&quo ... (show full quote)

However what is fairly common is that to get an agreement from all the tenants of the house to make such an investment (rather than continue to rent) is a "Nice Price" so that it goes through. Had this price been close to market value instead at the time of change over, you would then see lower mortgages on the house building itself. Which intern would result in lower avgift. ... (hide full quote)

Yes. that is the intention, to reduce the monthly fee, whilst also buying an asset on which You pay interest, and hoping it appreciates in value. At the same time, rents that had a profit portion going to the owner, now goes into the total BRF which uses it either to make capital repayments, or rennovations and improvements that a normal landlord may not. ie. You have more control on what is done.

My BRF for example we have short, mid and long term plans, and that also includes reductions of monthly avgift as any surplus income, not planned into future rennovations is used to make capital repayments. We manage around 5% reduction each year.

Personally I would like to see that any BRF conversion by pre existing tenants need or require by law that a separate appointed apartment valuer be brought in to value the apa ... (show full quote)

Personally I would like to see that any BRF conversion by pre existing tenants need or require by law that a separate appointed apartment valuer be brought in to value the apartments in a building wishing to convert into a BRF so that tenants must pay at least 75% of the market value when buying into such. ... (hide full quote)

If You don't like the price don't buy.
Just like buying shares, if You think the company is issuing shares at too high a price compared to potential earnings and debt level, don't buy! It kind of implies that when a company is going for IPO it should not be allowed to set the share value! or that the founders of the company should not be allowed to profit!

Hmmmm ... should this also be so for new houses? That an independant valuer should re-value the house before anyone can buy it, regardless of what the owner/builder wants for it?

Value is whatever someone is prepared to pay.

[byke]

Hmmmm ... should this also be so for new houses? That an independant valuer should re-value the house before anyone can buy it, regardless of what the owner/builder wants for it?

Do houses have the same restrictions and regulations as those with flats and rentals?

/Pointless reference to attempt association.

[Yorkshireman]

BRF's are not restricted to apartments, there are many Radhus developments that are BRF run/owned.

Other houses, not in BRFs, You are personally buying the property. And it's value is whatever You or anyone else is prepared to pay for it. If you take a mortgage to pay for it the house is used as security (just as in a BRF when that has loans). If You choose to sell though it is normal practise for the purchaser (and their bank) to insist that all debt the house is used to secure is cleared. However, there is no rule that says You cannot buy or sell a house with debt. It is between people and the bank etc...

For a bostadsrätt mortgage the security is the share in the BRF, not the apartment itself. And the BRF's loan it is the total property. This is why You have to be sure the BRF is run well!

Renting is different, and today is controlled with regards just what can be charged, but that will change if the new proposal with regards subletting comes into force as those renting out will be more free to set the rents they charge (eg. today someone in a Bostadsrätt, if subletting, cannot add into a rent charged their interest payments on loans, in the future they can), and Hyresnämnden basis will be changed so to use the starting point as being the total cost + some, for the one letting the apartment, rather than todays rule where they look for similar rented accomodation and rent rates and only the actual use-cost (eg. Monthly fee + electricity etc..).

eg. Very Simple example, no profit taking, no utilities included, rented apartments around have same rent.
If today there is an apartment where the monthly fee to the BRF is 3000:-, and the bostadsrätt owner has a loan of 1.000.000 @ 4%. If sublet, they could charge approx 3000:-/m. Net result is that the owner still has to pay their interest charge of 3334:-/m.

However, under the new proposal, the owner could charge 3000 + 3334 as this is the real cost per month for them. = 6334:-/m, regardless of the fact that something similar has been rented nearby, elsewhere, for 3000:-

[Puffin]

BRF's are not restricted to apartments, there are many Radhus developments that are BRF run/owned.

indeed You can also get BRF villas - I used to live near one development which was detached 3-5 bedroom houses between 110-150 sqm - it is the ownership form rather than the property type

[byke]

I am sure their are BRF villas, but the point of rent regulation which has been in law for many years (regardless if you believe in it or not) was to ensure "fair" rents.

And if individuals have been able to privatize and profit from such by being able to purchase apartments at under market value and offset costs to future tenants through inflated "Avgift" while the original owner is able to make a huge profit when they move on ... then this law has in many ways failed (yet again).

[Bender B Rodriquez]

Renting is different, and today is controlled with regards just what can be charged, but that will change if the new proposal with regards subletting comes into force as those ... (show full quote)

Renting is different, and today is controlled with regards just what can be charged, but that will change if the new proposal with regards subletting comes into force as those renting out will be more free to set the rents they charge (eg. today someone in a Bostadsrätt, if subletting, cannot add into a rent charged their interest payments on loans, in the future they can), and Hyresnämnden basis will be changed so to use the starting point as being the total cost + some, for the one letting the apartment, rather than todays rule where they look for similar rented accomodation and rent rates and only the actual use-cost (eg. Monthly fee + electricity etc..).

eg. Very Simple example, no profit taking, no utilities included, rented apartments around have same rent.
If today there is an apartment where the monthly fee to the BRF is 3000:-, and the bostadsrätt owner has a loan of 1.000.000 @ 4%. If sublet, they could charge approx 3000:-/m. Net result is that the owner still has to pay their interest charge of 3334:-/m.

However, under the new proposal, the owner could charge 3000 + 3334 as this is the real cost per month for them. = 6334:-/m, regardless of the fact that something similar has been rented nearby, elsewhere, for 3000:- ... (hide full quote)

Yes, they can. There is no rule today that says you can just charge the avgift. An owner of a bostadsrätt can charge as much as an equivalent rental would cost. It does not matter how big the fee or the loans are.

If an owner of an bostadsrätt pays 3000 in fee and pay interest of 3334 and the corresponding rental costs 5000, the owner can charge 5000.

[Visit]

Now I am getting a little confused.I have always been curious about how the avgift and interest payments factor into the rental rate.

With existing law, for simplicity's sake say the interest payment is 3000 SEK and the avgift is 4000 SEK, if the apartment is rented out, can the rent be 7000 SEK or even 8,000 SEK if the prevailing rental rate for an apartment of that size, according to that city and area's prevailing rate is 8,000?

The talk about the current proposal to change the existing law, how likely is that to be passed soon?

[Bender B Rodriquez]

Yes, it is the rent for corresponding rental flats that set precedent, usually according to the rent that bigger housing companies charge. If furniture is included one can add another 10-15%.

[Yorkshireman]

Yes You can add a %age for furniture, but one cannot factor in the intrest.

Here is Hyresnämdens view of use-value:

http://www.hyresnamnden.se/Amnesomraden/Sk...yra/Bruksvarde/

It even states clearly they do not care about build cost, running cost or maintenance.

Which is why, if you set a rent that is higher than something similar, they will look at what You included in the cost of rent, and see it was interest on loans... then they will reduce it down to a similar level to something else.

This will change in the new legislation, since the base starting point will change from that determined by Hyresnämnden as use-value, to being the real cost for the person renting out the apartment.

[rty777-NL]

I'm still confused. Okay, so let's say I have completely paid off my mortgage, and that now I'm "only" paying 3000 SEK per month to the bostadsrätt. No mortgage anymore.

Can't I now rent out my apartment for more than 3000 SEK per month? What's the limit?

[Puffin]

You can rent out your apartment for what a similar rental apartment in the area is renting

however under existing regulations - you can only rent the apartment temporarily with the associations permisiion in most BRF

[byke]

I believe if you rent to a Buisness, rather than a private individual you can charge more rent.

[rty777-NL]

You can rent out your apartment for what a similar rental apartment in the area is renting however under existing regulations - you can only rent the apartment temporarily wit ... (show full quote)

You can rent out your apartment for what a similar rental apartment in the area is renting
however under existing regulations - you can only rent the apartment temporarily with the associations permisiion in most BRF ... (hide full quote)

This entire thing has started to sound like one big scam to me. Yet another scheme to enslave people.

Everyone already knows that mortgages are just a scam from top to bottom. (Well, for those who don't know that, I have found this short video to explain it in a wonderful way.)

It's starting to sound like bostadsrätt is yet another scam on top of that - a scam that can only be kept afloat because everyone is completely clueless about it.

Correct me if I'm wrong about bostadsrätt though. If I can't even rent out as I wish an apartment that I've poured millions of SEK into, are there any other benefits at all? For instance, do I own shares of this BRF and get paid dividends (just like stockholders get dividends)?

[Puffin]

You are buying into a housing cooperative - like a New York Coop

If you want more flexibility and freedom to own/rent out you buy a villa