Generally anyone can buy property in Norway. However to be applicable for Norwegian financing, you need to be legally allowed to live and work here either on a Visa or residence permit.
Buying property in Norway is easy, and if you are needing a place to live, generally cheaper than renting. However, if you don’t know the system, it can lead to some nasty surprises.
Here’s our guide, based on what we’ve learned so far.
Step 1. Get loan approval
Step 2. Choose a house
All properties are listed on finn.no.
There are generally two types of properties in Norway:
Selveir (most desirable)
This is where you own the building, and are responsible for its maintenance. A selveir (translated: Self-owned) can be a freestanding house, or a duplex-type building.
Apartments are typically not selveir.
All selveir properties require you pay 2.5% stamp duty (Omkostninger) of your purchase price on day of takeover (Banks will not provide financing for this, so it’s important you have the savings for this, in addition to your deposit.).
This is a share type arrangement, common in large apartment blocks. There is no stamp duty, but you can pay anywhere from 1000 – 5000+ NOK in monthly ‘property management’ and other fees. Because of this, Aksje/andels are generally cheaper than selveirs. But, you can expect to pay upwards of 40,000 NOK a year in administration costs. It is effectively a cheap rental with a really high bond (your deposit). This type of property will not gain in value as much, but because they’re cheaper, can be a good first step into the property market.
We decided to go for a Selveir.
Step 3. Assessing the house
Norway has numerous strict regulations with regards to buying and selling property, some of which New Zealand really could benefit from. As a seller of a property you are legally obligated to disclose all known defects, or defects you would be expected to know about. If you do not, the buyer can take you to court for up to 7 years after the sale, and you, the seller, will be held liable and expected to pay for the repairs. So, if you buy a ‘leaky’ building which was not disclosed to you, you will be entitled to have a previous owner pay for the repairs. However, this is still a little stressful, so what is common is the buyer and seller take out insurance for this scenario, at 5000 NOK for 7 years (approx 200 NZDs per year). If there are any serious defects on the property which you were not aware of, your insurance company will go to court, and pay for repairs, regardless of whether you are the buyer or seller.
This all means that when it comes to selling a property the prospectus is incredibly detailed, listing all work ever done – every defect, every possible issue imaginable. It’s like looking at someone’s complete medical records, qualifications and employment history since birth, but for a house. Unlike in NZ, the real estate agent doesn’t give you a crappily printed, dubious one page flyer, but rather a 30 page book, which is available one week before the viewing/open home.
So, as a buyer you know exactly what you are getting into, and don’t require additional building reports, lim reports, or market valuations.
You read the prospectus and if you like it send a link to your bank to confirm financing, then view the house. If you still like it, you are now ready to bid.
Step 4. Buying the house
All houses in Norway are sold by a type of ‘auction’. The ‘asking’ price for the property is the officially registered market value. This is not the same as rateable value, CV, or anything else which is vaguely related to market value but completely out of touch with reality.
Theoretically, a property should sell at this valuation, or maybe just a little higher if there are two interested bidders. Of course occasionally buyers still go nuts, and pay many 100,000 NOK above this. This is not a smart move. Banks know this as well. If you bid more than 15% above the valuation, you may not be able to get finance on a small deposit. Check the small print.
If, at the viewing, you decide you like the property, you sign a basic, but binding sales contract provided by the real estate agent, and put in a bid of 1NOK. Bids on the property will start at 12 the following day. The seller decides which bidder wins, usually this is the highest bidder, but doesn’t need to be. With each bid, you can specify conditions such as handover date, or what is to be included in the property, for example in our case furniture and white-ware. So, the seller may chose to go with a lower bidder with no conditions, and an earlier handover date.
Bidding can be done in person, but is usually done by phone, while you’re at work, shopping, or otherwise going about your daily business. Depending on demand, bidding can take a few days. Bidding closes 24 hours after the last bid, or when the seller accepts an offer.
Step4. Finalizing the sale
Once you have won the bid, you will sign the official sales contract, insurance, and a few other documents together with the seller. The real estate agent is required by law to take you through everything (albeit all in Norwegian of course). This will take at least an hour. Once you have the signed final sales contract, you take this to your bank, and they take over everything from there (including all property taxes). You/Bank pay the purchase price on the agreed takeover date. (Some real estate agents may request you pay a 10% deposit on signing of the final sales contract, this is ok, but is not that common).
Step 5: Overtagelse (Takeover)
The last step of the sale is the official take-over. On the agreed takeover date, you will meet with the real estate agent, and previous owner, and go through the property, and also receive the keys. This will take maybe half an hour, and should be straight forward.
Below is a checklist to go through as provided to me by a Norwegian colleague.
- If you and the seller don’t agree upon something, that should be noted in the “overtagelses”-document. Demand a discount/cost of fix. If he/she agrees, the amount must also be specified in the document.
- You both note down the value on the electricity meter. Just take a quick picture of it as well, so you have proof. In case of disputes later on
- Make sure you get all the keys
- Remind the seller to change their address both with the government, and to any private company they are listed at.
- Make sure you have “innboforsikring” (contents insurance) etc
- Make sure the seller has paid all the municipality-fees (sewage, water, etc.)
- Make sure you know where the water intake is, and that you are shown how to turn the water for the entire house OFF in the event that you need to do that.
- Get information on parking
- Get information as to what day of the week the trash is collected
- Check attic / basement for funny smell or signs of water/moist damage.
- There should be fire extinguishers AND fire alarms throughout the house. If not, ask the seller to supply or get a discount
- If you are not happy with the cleaning that’s been done, you can demand that they come and re-clean. You can do this as many times as you want, until you are happy. Or you can ask for a discount, so you can have professionals to do it.
You have now bought a house!