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www.nbbl.no
Access to Capital in the Norwegian
Co-operative Housing Sector
Henning Lauridsen November 2015
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www.nbbl.no
The Co-operative Housing Movement in Norway
17.08.2018Side 2
The Co-operative Housing Federationof Norway (NBBL)
Co-operative Housing Association
44/925 000 individual members
Housing
Co-operative
Housing
Co-operative
Co-operative Housing Association
Housing
Co-operative
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www.nbbl.no
Provide the Shareholders with Housing
17.08.2018Side 3
Co-operative Housing Association
Members of the Co-operative Housing Association
1. Membership is mandatory to be a shareholder in a housing co-op
2. The principle of seniority
Housing
Co-op
Housing
Co-op
Housing
Co-opNew Housing
Co-op
925 000 Members
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www.nbbl.no
Business Management Agreements
17.08.2018Side 4
The Co-operative Housing Associations have business management
agreements with 90 % of the Norwegian housing co-ops
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www.nbbl.no
The Type of Housing for Which Capital is Needed
17.08.2018Side 5
Tenure Model
• 99 % ownership
• 1% other (rental homes etc)
Target Population
• 925 000 members (18 % of Norway’s population)
Type of Construction
• 79 % flats (mostly mid-rise buildings)
• 21% other (row-houses, semi detached houses etc)
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www.nbbl.no
The Purpose for Which Capital is Needed
17.08.2018Side 6
New Development
• New co-ops
• 3470 dwellings built in 2014
• (13 % of total production in Norway)
• (1% other (rental homes etc)
Renovation of Existing Housing Co-ops
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www.nbbl.no
Sources of Capital
17.08.2018Side 7
New Development
• Private commercial lenders
• Government loans (The quality has to be better than the
minimum level in the Planning and Building Act)
Renovation
• Private commercial lenders
• Government loans
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www.nbbl.no
What are the Barriers?
17.08.2018Side 8
New Development
• Equity for a construction loan
Renovation
• Easy to access capital
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www.nbbl.no
What can be Done to Overcome the Barriers?
17.08.2018Side 9
New Development
Our solution:
• Insurance against losses from unsold homes (NBBL
Fulltegningsforsikring AS)
• Covering economical losses for the Co-Operative Housing
Association (BBL) as a result of unsold apartments at the
completion of the project
• Makes it possible to finance 100 % of construction
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www.nbbl.no
What can be Done to Overcome the Barriers?
17.08.2018Side 10
Criteria
• Policy holder - A Co-operative Housing Association (BBL)
associated with The Co-operative Housing Federation
(NBBL)
• The housing co-operative has to be managed by the BBL
(Business management agreement with the BBL)
• Pre-emption for members of the BBL when first listing the
sale
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www.nbbl.no
What can be Done to Overcome the Barriers?
17.08.2018Side 11
Process: Project Study
• Inspection of the property
• Market analysis
• Budget & account analysis
• Meeting with the players
• Follow-up during the building process and after completion
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www.nbbl.no
What can be Done to Overcome the Barriers?
17.08.2018Side 12
Process: Identify and Prevent Risk
• Replacement of unserious/risky players
• Price differentiation
• Change/adapt the units to the target group
• Requirements of equity
• Market test
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www.nbbl.no
What can be Done to Overcome the Barriers?
17.08.2018Side 13
Insurance
Costs Associated with Unsold Units
• Capital costs
• Monthly common expenses
• Price reductions
• Additional marketing
• Other promotions
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www.nbbl.no
What can be Done to Overcome the Barriers?
17.08.2018Side 14
Tariff
Standardised Condition
• 30 % of the units sold in å pre-sale period
• Premium 1.0 – 2.0 % of total sum insured
• Deductible 1.0 – 2.0 % of total sum insured
• Requirements for market budget after pre-sale period
• Premium kick back if all units without loss for the
insurance company