Condominiums and housing cooperatives
From 1988 the subsidy was 75% of the interest rate in the first five years, 50% in the next five years. The interest rate was legally capped at 19.5%. Later both the subsidy and the interest rate declined: in 2011 the interest rate was around 4-5% in the first five years, 8-10% in the next five years as a result of 70% and 35% interest rate subsidy respectively. Currently the interest rate is typically around 5-8% with the 70%-35% subsidy scheme. The loans can be used for the renovation of any part of the building in common ownership.
These loans are quite beneficial for a lot of communities but were hardly used between 1988 and 2005, as even if the loan was provided to the homeowners’ association (HOA), the banks required liens on all individual apartments. It became popular as a source of co-financing for the major grant scheme (see: “Panelprogram) introduced by the government in 2001. From 2005 the major collateral became the pledge of the account of the condominium or cooperative, with some additional deposits. However, a significant number of buildings affected by poverty are still excluded: buildings with a high rate of inhabitants having arrears; buildings owned by the local/district municipality. Buildings are required to have a renovation fund which they have started four years before applying for the interest rate subsidy (or within 90 days after the establishment of the condominium). Further problems include a slow assessment process, and some banks requiring a high deposit from the condominiums.
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