A few weeks ago I wrote that after almost five years in Norway, we are looking at buying a house. The last few weeks have been a whirlwind of emailing listings back and forth, zooming in on photographs, researching areas, examining survey reports and of course, checking out houses in person.
Here's what we've learned! Note: this is not intended to be an exhaustive guide! Use our experience as a starting point for your own research 🙂
Options for home ownership
In Norway there are two main types of house purchase. Self-owned (selveier) houses are straightforward: you own the property. Purchasing a property in this way incurs a 2.5% purchase tax (dokumentsavgift), which is equivalent to stamp duty in the UK. However unlike in the UK, the tax is due on the entire amount of the final selling price. If the property is in a development such as a block of flats or strip of terraced houses (rekkehus), there will be some shared costs (felleskostnader) to cover maintenance and cleaning of shared areas, but they are typically low.
A popular alternative is shared ownership (andel) typically in the form of a housing cooperative (borettslag). Essentially you become a shareholder in the cooperative and buy the rights to live in a specific property. As the borettslag itself owns the properties, you have to pay a significant monthly amount in “rent”, which covers the shared debt (fellesgjeld) on the construction costs, interest on other loans, maintenance charges, and in some cases energy, heating and TV costs. Decisions about the development are taken by an elected board of the borettslag members.
This cost structure means that although the actual sale price is lower, your monthly outgoings can be just as high (and in some cases actually higher) as a self-owned property. Put simply, the shared ownership concept isn't necessarily cheaper, but it does allow more people to purchase property because of the low sale price.
Note: there are other ways to buy a property, but these two are by far the most common.
Regardless of the form of purchase, you will need a mortgage unless you are very wealthy! In almost all circumstances, you will need a security deposit of 25% of the sale price. The one big exception is for those under 34, for whom some banks will offer a mortgage with a 15% deposit.
Lesser deposits used to be common but are now impossible to get, although I think there is some flexibility if your parents are willing to use their own property as security. There's also options open if you need to borrow the deposit amount, but that's something we didn't need to investigate.
As described in the previous post, we have already been to the bank and been given a maximum amount that we are pre-authorised to bid. Both forms of purchase have their pros and cons and we are considering both in our search.
To date we've seen three properties: two shared ownership and one self-owned. The viewing process is the same for nearly all properties. Properties are advertised online (the main hub for this is finn.no but there are other places). The listings are thorough complete with photographs (usually at least 20) and detailed descriptions of the property.
The sales prospectus is a snazzy printed brochure containing the same information as in the listing, plus all legal documentation such as the property survey (this is paid for by the seller and already done before the viewings), and any contractual agreements especially with shared ownership. Any and all issues with the property are revealed in this brochure.
You can order a prospectus or pick one up at the shared viewing event, known as a visning.
Typically, a visning lasts just one hour and is held on a weekday evening or a Sunday afternoon. Interested parties can explore the property and ask questions of the estate agent and the current owners if they are present. If you are interested, you add your name to a list and you will be kept informed of the bidding process.
The viewing process can be stressful if there's a lot of people there, but you just have to ignore everyone and make sure you see everything you want to see and ask every question you want to ask. It's also important to take a good look around the neighbourhood, of course. For one of the properties, I took a trip around the area a week before the viewing to get a sense for what it would be like to live there.
We were interested in all three properties we viewed, so we placed our names on the lists. Even if you're not interested, it's a good idea to do this as it means you receive updates on the bidding process via text message.
If you are interested, you must move fast. But that's for next time 🙂