This property ownership model sounded too good to be true: Samägandet

When I read about it, I almost felt an urge to use it and buy a new apartment myself!

Samägandet (Shared ownership model) is offered by major property developers in Sweden like JM, HSB, and OBOS (they call it differently, however).

What does it really mean?

The model allows you to buy only  part (at least 50%) of the apartment, while the developer owns the remaining share until you eventually buy it out.

It looks great in the brochure:

-          As you only buy 50% (or more) of the apartment, you only need 50% of the first instalment.

-          You pay the developer a “co-ownership fee”, based on their share of the property and rental prices in the area.

-          This model applies only to selected flats in newly built houses, sold directly by the developer.

-          You are required to gradually buy the remaining shares until you own your home fully.

However, after digging deeper, here’s what it actually means for the buyer:

-          The price of the remaining shares will follow market growth – meaning you will often pay more than if you had bought the entire apartment upfront.

-          You can’t purchase shares whenever you want: some developers allow it only one year  after moving in, others only after 5 years. Most also charge an administrative fee for each share purchase.

-          If the property is sold, profits or losses are shared between you and the developer according to your ownership percentages. 

-          This model is counted for 10 years. If you haven’t bought all remaining shares by then, you may be forced to sell the property (OBOS says that they may not use this right).

Conclusions

This model can to be truly a great opportunity if you don’t have enough savings for the first instalment and do not plan to stay in the property long-term.

It feels less attractive when you realise that the money you could have used to amortise your mortgage is instead paid as “rent” to the developer.

And of course, the possibility of being forced to sell your home doesn’t make it more appealing.

Knowing all the facts—would you choose this ownership model?