Fee increase 2024

Why weren't there any indications from HSB's financial advisors regarding needed increases earlier?

The board got notice of the situation at the start of the budgeting for 2024. Unfortunately we do not have any answer on why there weren't any earlier indications. The major reason for the fee increase is the sharp increase of the interest rates. During the budgeting HSB recommended to calculate with an interest of 5.25% on the loans. By the closing of the books 2022 the costs for interests were 115,000 SEK and the estimated interest costs for 2024 is at around 2 million SEK.

Have you considered the aspect of the association becoming less attractive (and more difficult to sell apartments) with high fees?

It is of course an aspect that has to be considered when raising fees. As it is now, considering the finances of the association and the current environment with high interest rates and inflation, the board's responsibility is to ensure the survival of the association. Unfortunately this will affect individual members more than others, however if the association cannot pay the bills it will have to go bankrupt. Such situation would be even less attractive - for all of us..

Is this seen as a permanent solution, or are the fees going to be reduced again when the financial environment generally stabilizes?

As the buildings turn 70 years old this year, the upkeep requirements increases year by year. Unexpected expenses for liquid damage and other unforeseen events also increase with age. The longer we wait to complete maintenance renovations, the higher the risk of needing emergency repairs, with larger and more complex damages. We are continously revising the maintennce plan and are looking into what actions can be postponed. It is much too early to investigate the possibility of decreasing the fees. We will do what we can to prevent another situation with 25% increases, but we expect needing to increase the fee a little bit each year to be able to maintain or increase the value of our buildings.

We have noted that HSB have not raised their rent more than 8% across the country and they have also done renovations similar to yours.

The mentioned number is for the leased apartments HSB have across the country. It is not the same as the associations being members in HSB. The country's cooperative apartment associations have raised their fees with 7% on average. Most analysts have concluded that, for most associations, this number is generally much too low for long-term financial sustainability.

Why are we raising the fees by 25%?

There are multiple factors leading to the need to raise the fees;

• The fee has not been increased for many years, most recently it was raised by 2%. Due to this, the financial savings for the association haven't kept up, leading to the need to take out loans for renovations.
• We have invested in larger projects to increase energy efficiency, such as window renovations, installing heat recycling for the ventilation and replacing heat exchangers. We've received grants for these projects, effectively halving the investment cost from 20 million SEK to 10 million SEK. These projects will hopefully give us a better energy rating on the buildings which could open up opportunities for both the association and individual members to sign "green" mortgages with lower interest rates.
• We have renovated the elevators in A2. One of the elevators ceased to function during the autumn and needed to be replaced. Since both the elevators use a combined control system, both had to be replaced.
• We have replaced our power meters. The power meters are polled remotely to debit the individual member's usage (IMD, Individuell Mätning och Debitering, Swedish for Individual measurement and debiting). The meters were old, spare parts difficult to procure and started to have errors in the data polled from them. We hopet to be able to provide a login for each member so they can follow their own power usage over time and be empowered to be in control over their usage. The cost for this landed at 400,000 SEK.
• Water, sewer and waste management fees increases by 24%
• District heating fees increases by 15%. We've disputed the fee increase to the district heating board in regards of how the fee is calculated by Stockholm Exergi. It is unclear what the outcome will be at the moment.
• Ground rent fees will increase every year from now on.
• Other service provides increase their fees by around 3% generally.

Our mortgages

• The association has 8 loans. 2 loans with a fixed interest rate and 6 with a floating rate.
• 4 loans were taken 2023.
• Total debt is 38,892,294 SEK.

Detailed numbers will be published in the 2023 activity report.

Upcoming projects

• Facade renovations, new doors and new basement furnishing. All included in the same project and estimated to cost around 4.5 - 5 million SEK per building in today's monetary value. Will be postponed one or a couple of years.
• Lift renovation in A4 and HT2. Expected cost at 2,5 million SEK.
• Heating. Investigations are being done. Considering the heating issues many of the apartments have hade, we might need to advance maintenance renovations. According to the maintenance plan the heating should not need to be renovated for another 10 years. Expected cost to be around 10,000 SEK per radiator. We have around 225 radiators and 15 stems per building.A grand total estimated to around 11 - 13 million SEK. The risks with postponing maintenance actions is expected to be increased amount of liquid damages, raised insurance premiums and continued problems with apartments with broken heating, which leads to increased troubleshooting costs.

The board continues work with the long-term strategic and financial planning for the association. It is a bit too early to say exactly how next year's budget will look like, but we would like to take care of our buildings so they can stay good for many years to come.