Buying a Swedish co-op flat? 5 numbers that reveal a weak association

Every housing association ("bostadsrättsförening") in Sweden must print 5 key figures in its annual report. You find them in the directors' report, usually in a table called the multi-year overview ("flerårsöversikt"). They take five minutes to read and say more about the association's finances than the agent's brochure.

The requirement comes from chapter 6, section 3 a of the Annual Accounts Act ("årsredovisningslagen"). It applies to financial years that started after 2022. The Swedish Accounting Standards Board ("Bokföringsnämnden", BFN) sets out how each figure is calculated in its guidance BFNAR 2023:1.

The report must show each figure for the latest year and the three years before it, so you can see the trend. Terms you do not recognise are explained in the dictionary.

A worked example

Here is an invented association to show how the figures fit together:

• 2,000 square metres of flats, all owned as co-op flats
• SEK 30 million in loans
• SEK 1.8 million a year in monthly fees

You are looking at a 60-square-metre flat with a monthly fee of SEK 4,500.

1. Annual fee per square metre

The association's fee income divided by the floor area held as co-op flats. In the example this is SEK 900 per square metre per year. Compare it with similar associations nearby. A low fee is not always good news. It can mean the association saves too little or borrows to pay for maintenance.

2. Debt per square metre

The association's interest-bearing loans divided by the total floor area, co-op flats and rented flats together. In the example this is SEK 15,000 per square metre.

Your share of the association's debt is about SEK 900,000 for a 60-square-metre flat. That debt does not show up in your own mortgage, but you pay its interest through the fee.

3. Savings per square metre

This figure shows how much money the association has left for future maintenance. BFN calculates it as the year's result plus depreciation, plus the cost of scrapped components, plus the year's planned maintenance. The total is divided by the full floor area.

The bottom line can show a loss even when the association is saving money. Depreciation is a cost, but no money leaves the account. That makes savings a better figure to look at.

Read it next to the maintenance plan. If new pipes or a new roof are due in five years, the savings must cover them. Otherwise the association has to borrow more or raise the fee.

4. Interest sensitivity

This figure shows what happens to the fee when interest rates rise. BFN calculates it as the association's loans divided by the year's fee income. In the example the ratio is 30,000,000 / 1,800,000, or about 16.7.

Annual reports often show it as a percentage, here about 17%, because it shows how many per cent the fees must rise if the rate goes up 1 point.

How to read it: if the association's interest rate rises by 1 percentage point, its interest cost goes up by SEK 300,000 a year. That equals 17% of the fees. If the whole increase went into the fee, your monthly fee would rise from SEK 4,500 to about SEK 5,250.

Also ask when the association's loans come up for renewal. The notes on debt may show it. An association that fixed its rates when they were low can face a large rise when the fixed term ends.

5. Energy cost per square metre

The association's costs for heating, electricity and water divided by the total floor area. It shows how exposed the association is to energy prices. If heating, electricity or water is not part of the fee, the annual report must say so. You then pay that cost yourself, on top of the fee.

Other things the report must state

BFN requires more disclosures that are worth knowing:

• Whether the association has an up-to-date maintenance plan.
• Whether it owns the land or holds it on a site leasehold ("tomträtt"). With a leasehold, the report must say when the ground rent is renegotiated.
• If it made a loss, what that loss means for its ability to pay for future commitments.

How to use the figures

The law does not say which levels are good or bad. Compare with other associations and with the association's own earlier years. A few patterns deserve an extra question to the agent or the board:

• Debt per square metre has grown several years in a row.
• Savings are low while the maintenance plan shows large projects in the next few years.
• Interest sensitivity is high and the loans are due for renewal soon.
• There is no up-to-date maintenance plan.

An association with weak finances may have to raise the fee. That affects both what you can afford and what the next buyer will pay when you sell.

Sources

• Act (2022:1028) amending the Annual Accounts Act, Swedish Code of Statutes
• BFNAR 2023:1 on additional disclosures in housing associations' annual reports, Swedish Accounting Standards Board

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