The rents are set in two stages. The first consideration is that rental income is to cover AF Bostäder’s costs. The second consideration is how the costs are to be divided between the individual properties.
At AF Bostäder we are sometimes asked: How are rents set? In two stages is the answer. The first consideration is that rental income is to cover AF Bostäder’s costs. The second consideration is how the costs are to be divided between the individual properties.
“The annual cost increases for maintenance, heating, water, staff, external upkeep etc. form the basis for the rent adjustments that take place in January each year,” says Claes Hjortronsteen, Rental Manager of AF Bostäder. “These are negotiated with the tenants’ association in the same way as for most other housing companies.”
The cost structure can be affected by the fact that AF Bostäder is a student housing company. The company has higher maintenance costs than other housing companies, for example. This is because AF Bostäder has a high turnover rate of about 50 %. The normal figure for other housing companies is 10–15 %.
The characteristics of the properties determine how the cost increases are to be divided. To assist in these calculations, AF Bostäder uses the SABO model, which is used by major housing companies in Sweden.
“The model is based on a large number of characteristics, which are valued in relation to each other,” states Claes Hjortronsteen. “The characteristics used and how they are valued varies between different housing companies. At AF Bostäder, ‘proximity to the university’, for example, is valued higher than ‘proximity to the city centre’, which is otherwise the most important location factor.”
“As a student housing foundation, AF Bostäder has the same aims as its tenants – to keep rent levels down. It is good for the customers to know that any profit is not distributed as a dividend, but is always retained within the company. As a result, we have greater possibilities to maintain our position as Sweden’s best student housing company,” concludes Claes Hjortronsteen.