The last day to submit to the landlord a complete notice of interest in conversion approved by the landlord is 31 December 2019. Consequently, it is crucial that the tenant owned cooperative housing association submit its notice of interest well in advance of the end of this year.
The City of Stockholm has set a limit for the number of conversions. If you live in an area where many other conversions are in progress, no additional conversions may be allowed in that area. The City of Stockholm has decided that the option to convert will end once the percentage of rental apartments falls below 60 per cent or the percentage of rental apartments owned by the City’s three municipal housing companies falls below 50 per cent. If this should happen, all tenant owned cooperative housing associations that are affected will be informed.
The City of Stockholm actively monitors the interest in conversions in the areas selected. If many associations are established in an area, the date by which a correct, complete and approved notice of interest is received by the landlord can be a factor in determining which associations will be given an offer to purchase the property in question at a given price, before the process is terminated in a given area.
What is a conversion?
Converting a property from tenancy to tenant-ownership means that tenants of the property join together and establish a tenant owned cooperative housing association that buys the property from the landlord. Being the tenant-tenant-owner gives you a great deal of say in your housing accommodations, but living in your owner-occupied apartment also means greater responsibility, not only for your owner-occupied apartment, but for the entire property.
Areas where there is an option to convert
The option to convert applies to rental apartments owned by one of the three municipal housing companies, Familjebostäder, Stockholmshem or Svenska Bostäder and located in one of eleven selected areas.
There are some of these rental apartments that may not be converted. Some of the exceptions include new buildings and those that are important to the housing companies and the City of Stockholm for strategic or engineering reasons.
All tenants that live in properties for which conversion is possible have received information about this by mail from their landlord.
- Hässelby Gård
What does it cost to convert a rental property to tenant-ownership?
In order to determine a price for a property, the City of Stockholm needs to do an appraisal of the property. This is done by an independent company of appraisers chosen through a procurement tender proceeding by the City of Stockholm. Before the appraisal can be done, the residents are required to establish and register a te tenant owned cooperative housing association and submit a notice of interest. It is not until the tenant owned cooperative housing association has formulated a financial plan, that the cost of tenant-ownership of any give apartment can be known.
The appraisal of the property takes into consideration factors such as the condition of the property, the future need of renovation and the area in which the property is located. The price for a property that needs to be renovated will therefore be less than the price of a renovated property.
The housing costs in the case of an owner-occupied apartment consists of interest and amortization on the tenant-owner’s residential loan, if any, as well as a monthly service fee that covers the association’s costs for its loan on the property, operating expenses, repair and maintenance. It is a bank or lending institution that determines whether you will be given a residential loan.
A conversion requires knowledge
Converting a property from rental apartments to tenant-ownership requires a great deal of knowledge, and the process can be a difficult one for those who do not have the relevant experience. As a result, many tenant owned cooperative housing associations choose to retain the assistance of a conversion consultant or someone with similar expertise. The cost of a consultant varies, depending, for example, on how many apartments the association will own. As the City of Stockholm does not recommend any particular consultants, the tenant owned cooperative housing association will be responsible for finding one.