The documentation that the association is required to draw up, such as cost estimates and economic plans, are a very important part of any newbuild project. We can help you prepare these documents.
Preparing cost estimates and economic plans is an important procedural stage within the framework of tenant-owner apartment newbuilds. A cost estimate is a preliminary calculation for a newbuild project for tenant-owner apartments drawn up by the Board of Directors of the tenant-owners’ association. The cost estimate shall, amongst other things, include information on the tenant-owners’ association, a description of the property/properties that the association owns or intends to own, the association’s acquisition cost, and details of financing and of the association’s operating costs and revenues. The cost estimate shall also include an economic forecast for the tenant-owners’ association’s first sixteen years and a sensitivity analysis showing the tenant-owners’ association’s sensitivity to increases in interest rates and inflation. The anticipated charges for the tenant-owner apartments are calculated on the basis of the information provided in the cost estimate.
Once the cost estimate has been prepared, it shall be reviewed by two certifiers appointed by the Swedish National Board of Housing, Planning and Building. The certifiers act as guarantors that the information presented in the cost estimate is based on valid and well-supported data and seems sustainable. The certifiers’ review results in a certificate stating that the cost estimate contains the information of importance in assessing the tenant-owners’ association’s operations, that the calculations made are valid, and that the cost estimate seems sustainable.
It is not until the cost estimate has been granted a certificate by the certifiers that the tenant-owners’ association may begin signing so-called advance agreements whereby the tenant-owners’ association and an advance signatory may enter into an agreement on the future leasing of a tenant-owner apartment. Any advance agreement signed before the advance signatory has received an offer containing 11 specific information points, and before there is a certified cost estimate, is invalid.
The preparation of a cost estimate usually occurs at a relatively early stage in a newbuild project and several years may pass before the building can be occupied, and the information contained in the cost estimate may, therefore, change as the project proceeds.
Once a cost estimate has been certified and the tenant-owners’ association has entered into an advance agreement, work begins on the economic plan. The economic plan is a continuation of the work carried out in the cost estimate but includes considerably more precise details than the cost estimate. The economic plan is a technical and financial description that is designed to enable the assessment of the tenant-owners’ association’s operations. The information contained in the economic plan shall not, unlike that in the cost estimate, be preliminary and shall, rather, be based on actual circumstances.
The economic plan must be certified by certifiers and then registered with the Swedish National Board of Housing, Planning and Building before a tenant-owners’ association may enter into so-called leasing agreements and let a tenant-owner apartment to an acquiring party. The certification occurs in the same way as for the cost estimate, the only difference being that the economic plan must, after certification, be registered with the Swedish National Board of Housing, Planning and Building. A letting agreement entered into without a registered economic plan is invalid.
We have been assisting our clients throughout the process of preparing cost estimates and economic plans since 2000. Preparing hundreds of cost estimates and economic plans has given us wide-ranging experience of the entire process and means that we can guide you from the first draft of the cost estimate to the final registration of the economic plan. Our extensive experience has given us good contacts with certifiers and technical experts, enabling us to handle all the issues that may arise.
We also provide a rolling programme of courses for clients and external parties on the best way to draw up cost estimates and economic plans, the factors that must always be taken into account, and how to avoid mistakes.
Whether your company is launching its first newbuild project for tenant-owner association apartments, or whether it has been working in this area for many years, we can guarantee that we possess the cutting-edge expertise needed to ensure that your specific project achieves the optimum results.