Merry Christmas and a happy home buying year

Av: Dato: English

Christmas and a new year is coming. Time to look a little bit back, but mostly forward

New rules for home buying in Norway from 2022

As you probably know new rules come into action from 1.1.22.  The buyer will be better informed on the state of the property and other factors that are important for the deal.

But there will also be more information to read and interpret and a danger of “information overflow” for the buyer.   And the duty of inspection has been tightened. Therefore, you must be aware of not missing important information before you give a bid. The bid is binding in Norway, remember.

I am ready to help you with going through all the sales material on a home you want to buy and ensure you that no questions are unanswered.  If you do not read Norwegian well, I think it is unresponsible to give bid on a property.

So just contact me if you need my help. It is not as expensive as you think, and essential for securing you investment.

Next year I will collaborate with a surveyor and expert in construction to help you to find out how you can renovate a property, change it a bit and what it will cost.  It is quite rare that the property is designed and renovated exactly the way you want it.  Because the bid is binding it is essential to know that you are able to do the changes you need BEFORE you give a bid.  So far, I have been able to help my customers in some extent, but with this collaboration the advice and help will be really professional and substantial.

Price development in 2022

The statistics for 2021 shows that the prices have increased with 6% in Norway.  In Oslo it has increased with 2,5%.  Oslo had a very big increase in 2020 and in 2021it has been a correction.  But still the prices in Oslo are on a very high level.

The experts forecast a moderate price development in 2022.  2,5 to 3%.  This is due to expected increase in mortgage interest.  Also the high energy prices will influence on people’s purchasing power.  It was a very active housing market in 2020, and some experts believe that many people will stay steady for a while, without further moving.

I also believe in a moderate price development.  This is a better situation when you want to buy.  Then the bidding rounds will be calmer and a bit more predictable.

2022 will be a good home buying year

I have finished a good year.  Many new customers.  To help people to secure the investment of their life gives me a lot of energy and joy.  Many English speakers have approached me for help with the home buying.  You are welcome to contact me for a digital meeting for discussing your possibilities on the Norwegian Housing Market and how I can help you.

I will celebrate Christmas in my winter cabin in the mountains.  With my children and grandchildren.  Very sad with restrictions this year also, but I am happy to have the family around.

Merry Christmas and happy new year

From Boligdama

Do you want a free booklet about home buying in Norway, click here.  New edition.

 

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Legal forms of home ownership in Norway

Av: Dato: English

Norway has two types of home ownership.  Both are good functioning and well organized and protected by law. But still is it important to know a little bit of about the differences before you buy a home in Norway.

Self-owned house or apartment

Detached houses are always self-owned registered in the Cadastre (Matrikkel in Norwegian).

It is registered with a property number (Gårdsnummer Gnr in Norwegian) and a sub number (bruksnummer Bnr in Norwegian) When the bank lends money for purchase of the house, a mortgage is registered in this number In the Property Register (Kartverket in Norwegian)

If it is an apartment building the property (Gnr and sub number) are divided into self-owned apartments with a section number (S.nr in Norwegian) for each apartment.  And the bank registers the mortgage on the section number in the Property Register.

Cooperative – co-owner apartments

The property is owned by a housing cooperative.  That means that legally the co-owners or unit holders owns the building and property together.  But each of them has exclusive right of use of their apartment.  Exactly the same rights as in a self-owned apartment.  Except for some restriction regarding rental.  You cannot rent out the apartment the first year, and after that it is restricted to three years.

So, if you want to buy a property for rental use you should go for a self-owned apartment.

Besides from this it is more or less the same as self-owned.  The bank registers the mortgage on the common Gnr and Bnr for the property and the unit number of the property.

You are equal protected by the law in both forms of ownership.

Both types of property are sold on the free market.

For self-owned property you have to pay a stamp duty of 2,5% of the purchase amount.  This does not apply to co-owner apartments.

Shared debt in joint property ownership

When you see an add for an apartment in Norway, especially if it is a co-owner apartment, you may see this:

Prisantydning: (Asking price)         5.500.000

Fellesgjeld (Common debt)               400.000

Total pris (Total price)                     5.900.000

 

The bidding round will concentrate on the asking price.  You shall not pay the common dept amount.  But you will take over this common debt if you buy the apartment and pay it down through the common cost to the housing cooperative.

If you want a mortgage in Norway to purchase the apartment, be aware that the bank will regard the common debt as a “burden” on your hand and deduct if from your maximum mortgage sum.

A bit complicated but important to know.

Let me try to explain with this example:

 

This is the overall differences between ownership types in Norway.  A lot of details are not discussed here.  But hopefully you will understand the most important.

And remember, both ownership forms are perfectly safe to buy.

 

 

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What are the penalties for a walk-away buyer?

Av: Dato: English

As you hopefully know the bid on a property is binding in Norway.  There are no regrets. But what will happen if you walk away after giving a bid?

I got this question from a reader of my blog:

Thank you for your cool articles on boligdama.no
I keep hearing about the biding process being binding. Where can I read about the penalties for a walk-away buyer? If you could point me towards a website or Norwegian legislation(even if not in english), that would be great!

Thank you and keep up the great work!

Best, Jon

 

It is a very good question, and I am glad that Jon asked.  Because it is quite common knowledge in Norway how this work, I didn’t think about explaining this to my English speaking readers.

It is a violation of the law to walk away from the purchase deal

Because the bid is binding it is a violation of the law for the buyer to walk away from the deal or purchase.

This is according to the Norwegian “Avhendingsloven” or the Disposal /Alienation Act)

Which sanctions or demands will the seller have if the buyer breaks or walk away from the purchase or fails to fulfil the agreement that is done by the bid: 

  1. Demand that the buyer fulfils the agreement
  2. Cancel the purchase
  3. Claim compensation for failure to fulfill the agreement
  4. Held back the take over of the property to the buyer
  5. Demand payment of default interest (when paying the purchase to late)

This is a private law matter.  But this law, “Avtaleloven” has a very strong position in the Norwegian legal system. The government will not come after you if you break a deal like this.  But the other part in the agreement, the seller, can take you to court if you don’t fulfil your obligations made through your bid.

The outcome of these regret/walk away cases will vary.

If it is just a matter of pure regret, the seller will, with assistance from the real estate agent, insist on the fulfilment of the purchase.   And maybe go to court.  Where you probably will lose and have to pay the legal costs for both parts.

If the seller agrees to sell it again through his real estate agent, he will most likely claim compensation for extra cost.  Or maybe he has to sell to a lower price.  Then you will be responsible for the gap between your bid and the new sales price.

In some cases the buyer might have trouble to fully finance the purchase.  This should not really happen, because the realtor are obliged to check this before he approves the bid on behalf of the seller. In these cases the seller often approves the buyer to walk away.  But he will make reservations that he will claim compensation if he has to sell it again to a lower price. And for additional costs for the resale.

And then the “party” maybe continues:
The seller claims the realtor for not doing his job when checking the finances…….

Most Norwegians are aware that the seller has a very good case if the buyer walk away from the sales agreement (after the binding bid). Despite of this we have some cases of regret and attempt to try to withdraw from the purchase.

So, please be aware!

Don’t give a bid if you are not certain that you really want the home:

You will either be forced to go through with the purchase, and maybe sell the home yourself, or pay compensation for any loss that may arise for the seller.

 

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Be aware of new regulations for home buying in Norway from 1.1.2022

Av: Dato: English

From 1.1.22 a new regulation is being introduced in Norway.  The seller, and the realtor, will be obliged to give more detailed information about the technical standard of the home in the sales material.

The seller may be responsible for incorrect and missing information to the buyers.  He or she has this responsibility also today, but so far court decisions have only made the seller liable for damages if the damage or misinformation amounted to at least 5 percent of the value of the home.  This is a lot of money, and therefore the seller has been imposed to give compensation to the buyer only in a few cases.

In the new law the limit for compensation is decreased down to NOK 10.000.

For this reason, the seller must be much more careful to give ALL the information about the property. He must , through the realtor, order a condition report from a technical expert or surveyor.  The government has made a regulation of how this inspection must be implemented and the contents of the condition report.

The purpose is better protection of the buyer.  This is a good thing in my opinion.

Be aware of the new rule about buyers’ duty to inspect !

As a home buyer  you must be aware that the new law has a rule on the buyers’ duty to inspect before giving a bid.  If you miss some information in the sales material or the technical report, or miss other information given on the viewing,  you cannot complain after the bid has been accepted by the seller.

So, the duties goes both ways in the new law!

My concern as a home buying concultant is to protect the buyer.  I am therefore prepared to help my customers to examine the new technical reports carefully and warn them about risk elements.

If you do not master Norwegian, I will warn you to buy a property without help to translate and interpret all the written material.  This is and will still be,very complicated, even for Norwegians.

Because as I have told you before the bid is binding in Norway.

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