Is it wise to buy a property that lacks approvals from the building authorities?

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Many properties for sale lack public approvals, such as the use of rooms for permanent residence or unapproved rental units. Is it wise to buy such a property?

If rooms or additions in a house are not approved, this should be specified in the sales material. Unfortunately, this information is not always clear and might be formulated in intricate ways. If you come across such formulations or phrases you don’t fully understand, it should raise a red flag. Are there unapproved rooms here? This often pertains to basement living rooms and similar spaces, which may lack approval due to small windows or not meeting safety requirements for escape routes and fire safety.

In the new regulations of the Sales Act and the prescribed condition reports that came into effect on January 1, 2022, these issues are addressed more explicitly, and illegalities are required to be disclosed, both by the real estate agent and the appraiser. However, the presentation and ease of detection vary widely, so it’s crucial to be vigilant and perhaps ask the real estate agent additional questions.

Unapproved rental units

Then there are rental units that are not approved but are still being rented out. Is it really that bad? The previous owner has been doing this for years without consequences. Yes, it can be problematic even if municipal building authorities are not enthusiastic about inspections. You could face fines of up to NOK 200,000. As the buyer, you assume all risks related to any illegalities in the property, including unapproved changes such as extensions, non-approved additions, and basement rooms for rent.

Whether the seller has informed about these illegalities or not doesn’t matter much. If you receive fines from the municipality, you will have to deal with the seller and possibly the property insurance company afterward.

It can also be dangerous to rent out rooms that are not approved for permanent residence. According to lawyer Morten Fæste, renting out parts of your own home requires approval from the municipality for the intended use. It’s not just illegal but can be directly hazardous. Rooms for permanent residence must meet stricter requirements for escape routes and fire safety than other rooms in the house.

The best scenario is to rectify the deficiency before sale

Ideally, the seller should address the issue before putting the property up for sale. However, this can take time and money, and sellers may choose to sell the property with illegalities instead. In theory, this should affect the price, but that is not always the case.

As a buyer’s advisor, I, like Consumer Authorities, would advise against buying a property with unapproved conditions. If you do, make sure you understand what the issues are, what it would cost to rectify and seek approval, and whether such approval could be obtained at all. And most importantly, ensure that the additional work and costs are reflected in the price you pay for the property.

Be especially cautious if you intend to use the unapproved rooms for rental purposes.

Why is it allowed to sell properties with unapproved rooms and additions?

Many in the real estate market, including myself, wonder why it’s legal to sell homes with unapproved rooms and additions. Could a rule not be implemented that all properties for sale must be 100% approved, period?

The reason is that building authorities do not have the capacity to inspect all homes, whether lived in or listed for sale.

In single-family homes that are not brand new, you will almost always find that changes have been made since the house was built. This is likely noted in the Condition Report from the Appraiser. Some changes can be significant and undesirable to assume the risk for. Other conditions may have less significance and can be lived with.

You should consult with me about this before placing a bid to avoid taking on unnecessary risks related to illegal conditions in the property.

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The housing market in 2024, update from Boligdama

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When we soon bid farewell to 2023, we can reflect on a year of uncertainty in the housing market in Norway and a global situation that has kept the world on edge. But, as always, life goes on, and for some, that means planning to buy a home.

For those of you who have considered buying a home but put it on hold for a while, 2024 might be the year when the dream becomes a reality. It depends on how stable and predictable the situation feels for those in search of a home.

2023 has been marked by delays and fewer home purchases, primarily due to rising interest rates and uncertainty about home sales. The banks’ tighter lending policies and increased living costs have also made it a challenging time for many.

Even though it has been a buyer’s market with lower prices for a while, we have seen fewer buyers in the game. The fall has been quieter than usual, as I have also noticed as a home purchase advisor, with fewer inquiries.

When prices rise, and bidding rounds become intense, interest in securing the dream home increases. That’s understandable but also a bit paradoxical when we consider the opportunities that may arise when prices fall.

For those with tight finances, my advice is simple: “Hang in there” and avoid further financial exposure.

The peak in interest rates has been reached, but uncertainty and price declines are likely to continue into 2024. The inventory of unsold homes is decreasing, and fewer people are putting their homes up for sale. If this trend continues, the housing market could quickly turn again, with more competition for homes.

For those with flexibility, the first half of 2024 could be a time for good home purchases. The buyer’s market will still offer opportunities for good prices and a good selection of homes for sale.

Some experts predict that home prices may start to rise, especially in larger cities, early in 2024. I’m not so sure that will happen, but we have to keep an eye on it and see what unfolds. What is certain is that the housing market often changes rapidly, so if it takes off, there could be increased demand and higher prices again.

I have the tools and knowledge to help you save several hundred thousand in bid negotiations if you dare to take the plunge!

Precise general advice is challenging to give in these times. But if you’re wondering what’s wise for you, I’m available for non-binding digital meetings.

Wishing you a continued pleasant holiday season and a HAPPY NEW YEAR!

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Is it possible to bid on a property in Norway without having an account with a Norwegian bank?

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I have previously written about how to finance home buying in Norway.   With this blog article I would like to provide some additional information to make the picture complete.

As informed, it’s not possible to get a loan from a Norwegian bank unless you have a D-number from the tax authorities and receive your income in Norway.

If you have the funds to finance the entire purchase, everything becomes much easier.

However, it’s not that simple. You may bump into some problems during the bidding round:

When bidding for a property, the real estate agent wants confirmation that you can finance the offer. Ideally, they would like this confirmation from a Norwegian bank. However, it’s not straightforward because Norwegian banks require you to have a D-number from the tax authorities to open a bank account. No matter which bank you inquire with, you will receive the same response: no bank account without a D-number.

This position seems to be a bit of a “catch-22” situation.

But even without a bank account and confirmation from a Norwegian Bank there is hope:

One possible solution may be to inquire with the real estate agent whether the seller would accept a  confirmation from your home country’s bank, an employer’s statement, or if similar documents may suffice. It’s entirely up to the seller (and the real estate agent) to decide what they are willing to accept as adequate confirmation.

If there are no other bidders in the competition, and the market is somewhat slow, as it is right now, they are likely to approve alternative solutions. If there is a high demand for the property, they will prefer to sell to someone who can provide confirmation from a Norwegian bank.

If such a solution is accepted, the payment for the property will be transferred to the client account of the real estate agent. They will take care of ensuring compliance with anti-money laundering regulations, including confirmation from you regarding the source of the funds.

When the property is registered in your name, you will simultaneously apply for a D-number to establish ownership. With this, you will have the option to open a Norwegian bank account if you wish, for example, to manage the property’s expenses.

This can be somewhat complicated. I’ve had inquiries from people who found the process with the bank account and so on,  so convoluted that they gave up on the whole project of buying in Norway.

But with a little assistance, it can be resolved. Please get in touch with me if you’ve found a property you’re interested in, and I can negotiate and clarify the situation with the real estate agent.

Best wishes
Boligdama – Trude Larsen
+ 47 950 37 330 – trude@boligdama.no
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You can generally feel secure when buying an apartment in a housing complex in Norway.

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I have previously written a blog about legal forms of home ownership in Norway, where I emphasized that both ownership models, cooperative housing associations (borettslag) and joint ownership (sameie), are secure housing options regulated by good laws and functioning effectively.

What I want to share with you additionally is how these housing associations work in practice.

When you purchase an apartment in Norway, you’re not just buying the property itself; you’re buying into a community that is either a cooperative housing association or a joint ownership. The law dictates how these entities should be managed, who is responsible, what decisions are made by the elected board, and what must be discussed at the general meeting or co-owner’s meeting, where all property owners can attend and cast their votes.

What’s great is that the board is composed of people who live in the housing association, and as such, they have a vested interest in running it as effectively as possible. They receive valuable assistance from professional property managers who handle accounting and budgeting, collect common fees, provide assistance with maintenance plans, and organize annual meetings.

Each housing association has its own articles of association that align with the law. In addition, there is the option to have specific rules on certain matters, such as the housing association’s responsibility for maintenance and the individual owner’s responsibilities. For example, in some places, window replacement is the responsibility of the housing association, while in others, it’s the responsibility of the individual apartment owner. Therefore, it’s always advisable to review the articles of association.

When I assist you with your property purchase, I always go through the documents provided by the property manager, including the annual report and financial statements, to check whether the housing association is being run well or if there are specific issues you should be vigilant about. For instance, excessive renting out of units and complaints about noise or significant upcoming expenses that will be passed on to you through common fees.

I find that many foreigners looking to buy an apartment are somewhat anxious about whether the buildings and housing association will be adequately maintained by the board and property manager. This is a healthy skepticism, and we always need to verify, as I’ve described above.

But overall, we are good at managing housing associations and taking collective responsibility in Norway, and the entire system is well-organized through legislation. So, you can generally feel secure when buying an apartment in a housing complex in Norway.

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