What is the difference between a condominium and a rental property?

If you live in an apartment in Sweden, you probably live in either a rental property or a tenant-owned property. But what is the difference between a tenant-owned apartment and a rental apartment, and which type of housing is best for you? Here you can read about the differences between these types of housing, who is responsible for what and what a tenant-owner association is.

What is a rental property?

A rental property is a home that you rent from a property owner. When you rents a rental apartment you sign a contract which, in most cases, is valid until further notice, and pay an agreed rent to the landlord every month. A landlord can increase or decrease your rent if this is allowed by your rental contract. When you rent an apartment, you do not own the apartment and are not a co-owner of the property. Therefore, you cannot make major changes or renovations to the apartment.

A property owner can be a municipality, a private individual or a company. It is the property owner's responsibility to maintain the apartment and repair any damage that occurs. As a tenant, you are not responsible for the maintenance of the property or apartment, but you need to keep the apartment in good condition. When you move out, you will be inspected and have to pay compensation for any damage you have caused while living in the apartment.

A rental apartment is a good choice if you either can't afford the down payment for a condominium or if you only need temporary accommodation, for example if you are only in the city to study for a certain period of time. A condominium is a bigger investment and a better choice when you know you will be staying for a long time.

What is a condominium? 

When you live in a condominium, you own a share of the housing association you live in. As a homeowners you have the right to use and live in the apartment and can sell your apartment to someone else at any time. However, the new owner must first be approved by the housing association before the sale can go ahead.

In a condominium, you have much greater responsibility for the home than in a rental property. The tenant-owner association decides what you, as the owner, must provide and pay for when it comes to maintenance of the apartment. In most cases, the association takes care of everything that is outside the floor area of the apartment, such as heating, electricity and water pipes. Everything that is in the apartment is your responsibility, which also means that you have the freedom to renovate, repaint or make other changes to the apartment, as long as this is approved by the association first.

Even common areas such as laundry rooms and bike rooms are in most cases managed by the association, which usually has employees or volunteers to maintain the property. To cover these costs, all owners pay a monthly fee to the association.

In a housing association, the members often get to vote on the decisions taken by the association. A vote may be necessary, for example, if the association wants to invest in a new booking system for the laundry room, install charging stations in the parking lot or replace parts of the facade. 

What is the difference between rental and ownership? 

The main differences between rental and home ownership are the freedom and responsibility you have as a resident. In a rental apartment, you are something of a long-term guest who only has to ensure that you leave the apartment in roughly the same condition as when you moved in. You have limited freedom when it comes to making changes to the apartment. Your landlord is responsible for ensuring that everything in the property and in your apartment works, and it is also the landlord who replaces broken appliances and other products belonging to the apartment.

In a condominium you have more freedom and can, for example, tear down a wall to make a room bigger, renovate the bathroom and install underfloor heating or replace the floor in the kitchen. But you are also responsible for everything in your apartment, such as white goods and plumbing. 

Another major difference is financial: in a rental property, you pay a specific rental cost each month and no major financial investment is required to move into a rental property. However, if you buy a condominium, you need to pay a cash deposit and take out a mortgage and pay both a monthly fee to the association and pay back the loan to the bank. The advantage of this is that if you sell your condominium, you can make a profit and get more for your apartment than you paid when you moved in. 

Advantages and disadvantages of renting

Advantages of renting:

• You are not responsible for the costs that may arise if something needs to be repaired or replaced in the apartment.
• You can terminate your contract and move whenever you want. 
• No cash deposit or other major investment is required to move into a rental property.

Disadvantages of renting:

• You usually have no right to make changes or renovations to the apartment
• You need to ensure that the apartment is in the same condition when you move out as when you moved in.
• Since you don't own the apartment, you can't sell it and share in any profits.
• The landlord decides what happens in the property and can increase your rent.

Advantages and disadvantages of home ownership

Advantages of condominium ownership:

• You have the freedom to make major changes or renovate the apartment. 
• If your apartment increases in value, you can sell it and make a profit.
• You can participate in deciding when the association will make improvements to the property.

Disadvantages of condominium ownership:

• You are responsible for all white goods and other essential items in the apartment.
• You need to make a down payment and take out a mortgage in order to buy an apartment.
• If you want to move, you will need to arrange the sale of your apartment or pay an estate agent to do it for you.

What is the role of the housing association?

In a rental apartment, you pay rent and your landlord maintains the property and most of your apartment. But why do you have to pay a monthly fee when you live in a condominium?

The monthly fee is often a relatively low amount, compared to a normal rent, and goes to the housing association. As the association is responsible for the management of the properties and the area of the housing association, they have expenses that need to be paid. These expenses are shared between all the co-owners living in the association and this is the monthly fee.

The housing association is responsible, for example, for maintaining the property's facade, parking, garage, cleaning in and around the property and common areas such as laundry or sauna. The association is also responsible for ensuring the property is kept in a modern condition and decides when major renovations or upgrades are needed to keep the property fresh and prevent the value of the apartments from decreasing. As a co-owner, you get to vote on these major decisions.