Housing Cooperative - residence and ownership

Unprecedented changes are taking place around housing. And they are not just good. The value of housing is declining in many localities, and as an investment, it seems to be certain only in large cities. In the case of old housing companies, it has even been predicted a situation in which the aim is to get rid of the flats even by giving them away for free, because the costs rise and, for example, it becomes more difficult to obtain repair financing.

The Financial Supervision Authority recently tightened the terms of the building loan, which made it difficult for many families to obtain a loan. The reduction of the loan ceiling to 85% means a higher deductible. In localities suffering from depopulation, the conditions may already be unreasonable if we think young families at the beginning of building their lives.

Safely on rent

At the same time, young people's attitudes towards ownership have changed. There is no longer a desire to commit to owner-occupied housing. Rental housing is an easy and safe option. The downside of renting is the cost of living. A home investor naturally wants to get a return on their investment. This, of course, means that the rental price consists of financing and maintenance costs (or maintenance charge) plus the margin desired by the owner. Because the risk is with the owner, he also calculates the margin on the investment. Rental housing is, therefore, a safe option, but also the most expensive.

We calculated an example in Rovaniemi based on the stated rent of a newer apartment and the sale price of a similar apartment. 47.5 m2 apartment rent 765 € / month and the financial costs of the apartment for sale in the same block and the management charge a total of 704 € / month. This relationship reflects pretty well the price formation in general. The margin is, therefore, about 8%. The rent security deposit in the example is a typical one-month rent (0.5% of the apartment price). The tenant, therefore, pays that he is not responsible for the apartment other than as specified in the lease, and he enjoys the tenant's rights. You get rid of when you announce you are leaving. The security deposit will be refunded on departure, and no one else will wait.

Housing cooperative - an intermediate form of owner-occupied and rented housing

In addition to ASO apartments, there is also a lesser-known alternative between owner-occupied housing and rental housing, the housing cooperative. A housing cooperative is a model of housing in which the tenant is a member of the cooperative. The tenant pays the rent to himself and is involved in determining the rent. The establishment of a housing cooperative takes place as a group building. Hannu Rossinlahti, Director General of the Housing Financing and Development Center ARA, says that the housing cooperative is suitable for those with a high threshold for owning a hard-earned owner-occupied home.

The objects of the example calculation are the so-called refinement sites, where the construction company assumes all risks and responsibilities for construction. This, of course, means that the company also wants coverage for this risk. The price difference between buying a group building and buying a flat can be up to 20%. Even shoulder bank builders have difficulty accessing the cost of group building.

The buildings to be built in the cooperative model are owned by the housing cooperative. The cooperative applies for financing and collaterals to carry out the construction. The member pays the cooperative about 10% of the deductible for the construction costs of the apartment to be built for him. This ensures that the cooperative can apply for funding for the final costs.

In a housing cooperative, the price of rent is determined as in the rental market in general. Members pay the cooperative's financing and maintenance costs in the form of rents. The margin they decide for themselves. In the example calculation, the rent margin is about eight%, while in a cooperative it is likely to be between one and two. In a cooperative, however, the margin comes for its own use in a reserve fund or, for example, for joint acquisitions. All tenant rights apply to members and can be removed by notice.

The following table shows the calculation of 25-year costs for different types of housing for a similar OCT financed by a bank loan. Table only available in Finnish at the moment

Housing expenditure Comparison. Compared to the construction itself, the housing costs will be more than 81.020 euros cheaper in 25 years with the Älykylä solution. If you invest the money you save in an alternative investment with an average return of 5.6%, your savings over 25 years will total € 200.344 (return € 119.342).

The housing cooperative model is being implemented in the Älykylä -smart village. In Älykylä, a housing cooperative is just one way to reduce the cost of housing. The savings come from the sum of many factors.