There has never been such strong price growth in the rental market in the fourth quarter as last year. Rental prices rose by 7.5 per cent overall in 2022.
– The increase is mainly due to inflation (price rise). Then the interest rate rises, which makes it less profitable to rent out. This in turn results in fewer rental properties, which pushes prices up, says Henning Lauridsen, managing director of Eiendom Norge, to TV 2.
EXPECTED: The rise in prices in the rental market was no surprise to Geir Skogheim in Utleiemegleren. Photo: Jonas Been Henriksen / TV 2
Geir Skogheim, managing director of Utleiemegleren, is not surprised by the price increase.
– We have seen this coming. When we saw that there were fewer secondary homes on the market, we were concerned about that. In this sense, we are happy that the equity requirement for secondary homes in Oslo is being reduced.
In the past, you had to have 40 percent equity in order to buy a secondary home in Oslo. From 1 January this year, the special requirement was removed, and you now only need 15 per cent equity, on a par with the rest of the country.
– I hope it will lead to more small and medium-sized investors coming back to and buying in Oslo.
Missing more action
Although he is positive about the change, he wants to see more action from the politicians. Skogheim believes they must look at the taxation of secondary homes.
The asset value of secondary homes (typical rental homes) will be increased from 95 per cent of the market value in 2022 to 100 per cent of the market value in 2023. You must therefore pay more in tax for these homes this year.
INCREASED PRICES: Rental prices in Norway rose by 7.5 per cent last year. Photo: Håkon Mosvold Larsen / NTB
– The government is pursuing a policy that pushes prices up. Those who own second homes are often seen as rich and who can afford to be taxed and have all these expenses. But they also have to pay all other increased expenses, in addition to being heavily taxed.
– But aren’t you rich if you have the opportunity to buy a secondary home to rent out?
– Of course you can say that, they have the money for it. But what is being rich? Is it wrong to have worked and earned enough to invest in a secondary home? Housing has been something that you can invest in just to earn a little extra, says Skogheim.
SMALL AND BIG ARE INVOLVED: Geir Skogheim is afraid of an undiverse market if only the big rental companies get a chance on the market. Photo: Jonas Been Henriksen / TV 2
Skogheim believes the rental market needs more small and medium-sized investors.
– The big landlords are often more cynical and want to push prices up. The small and medium-sized ones tend to have other values than taking the highest possible rent, says Skogheim.
Excludes tax change
TV 2 has contacted the Ministry of Finance for a comment, which further refers to Per Martin Sandtrøen, parliamentary representative for the Center Party and member of the finance committee.
He tells TV 2 that it will not be relevant to reduce the tax for secondary housing.
– We have that tax to take care of the welfare state. We want a policy that will reduce social differences, and this tax is something that helps to finance the community in Norway. It is perfectly legal to own several homes, but then you must also contribute by paying tax.
THE WELFARE STATE OF NORWAY: Per Martin Sandtrøen (Sp) believes that the tax on secondary homes is an important contribution to the treasury. Photo: Odd Arne Hartvigsen / TV 2
Sandtrøen points out that the most important thing they are doing now is to pursue a policy that prevents prices and interest rates from rising too much.
He says that it will now become less profitable to buy secondary housing, and then demand will decrease. It may benefit another group.
– The demand to buy more homes will decrease. It will make it easier for those who have not bought a home to enter the housing market, says Sandtrøen.
