Over the past year, the arrears of housing associations have significantly increased, with more than 60 percent of property managers estimating this rise. The main reason for apartments being taken over by housing associations is the neglect of payments. Housing companies usually set aside funds for unexpected expenses and unpaid fees for a few months of maintenance.
The increase in housing associations’ arrears coincides with a rise in interest rates and the cost of living, which has pushed residents’ expenses beyond their limits. According to a survey conducted by the Land Management Association, around 65 percent of property managers reported an increase in arrears in the past year. This worrying trend is particularly evident in municipalities experiencing a decline in population.
The economic downturn in recent years contributes to the growth of arrears, which is linked to the sudden increase in interest rates and rising living expenses. Housing associations have raised maintenance fees by nearly ten percent on average this year, reflecting the financial strain on residents. Neglect of payments remains the primary reason for apartments being taken over by housing associations.
The increase in fees has led to concerns among residents, especially those under 25 years old, about the impact on their finances. While worries about rising costs persist, housing associations are collecting less money as a buffer for repairs and unexpected expenses. This lack of financial reserve limits the ability of housing companies to respond to emergencies and carry out essential maintenance tasks.
Despite the rise in arrears, the Landlords’ Association does not predict an increase in bankruptcies among housing associations. The association believes that as salaries increase and interest rates stabilize, residents will adapt to the higher cost of living. As a recommendation, housing associations should have a buffer of 2-3 months to cover unexpected expenses.