Fees increased three times more among condominium associations

A new analysis by Nabu among 2,300 condominium associations shows that 30 per cent increased their fees between February 1 and the end of July 2023. The average increase was 11.7 per cent. In the same period last year, only 10 percent of associations raised their fees, then at a rate of 4.9 percent.

Most condo associations typically raise their fees on January 1st, but it is clear that more and more condo associations are raising fees when it is financially necessary. In many cases, this will likely happen when loans expire and are negotiated, entailing increased costs for associations. This year, their fees tripled between February 1 and the end of July, compared to the same period last year. In addition, the average increase more than doubled.

– There is high activity and it is noted that associations are affected and take action when rescheduling loans. It’s also good that they are raising the fees because we know there are a lot of people who need to do this. However, we estimate that the increases do not fully compensate for the increases in costs that have occurred as a result of higher interest rates, increased maintenance costs and increased costs due to higher inflation, says Jonas Gustafsson, financial management expert at NABU.

Nabu has previously reported on the need for associations to raise their fees by more than 40 percent on average to meet cost increases due to inflation, increased maintenance costs and the new interest rate situation. Last week, the Riksbank raised its key interest rate by 4 percent and widened its interest rate path, meaning associations need to expect higher costs for the foreseeable future.

-We will likely see further fee increases during the year as loans expire. Then it is important for condominium associations to review their finances and assume that the coming years will be difficult. The Board of Directors has a great responsibility and needs to make courageous decisions that affect the private finances of the members. Jonas Gustafsson says clear communication with members is important so they know the terms and understand the need for potential increases.

Housing associations must do this to ensure correct fees:

• You have an extra reserve to face future years of uncertain interest and cost situation.
• Review fees annually taking inflation/costs into account.
• Obtain a complete and up-to-date maintenance plan with associated financing plan to see how large allocations will be needed over time and distribute costs evenly between members – current and future. If the association has sufficient savings, there is also a reserve in it to cover higher costs in the short term.
• Using the calculated interest rate, which is the estimated long-term average interest rate the association’s finances can handle when determining fees – look no further than current interest rates on loans.