The rental rates for 2012 is established

2011-12-14

The agreement means that housing rents will be increased by 2.15% from  January 1, 2012 for the 5,584 apartments that SGS owns.

There is also an increase of 2.15% for the rent on the 534 apartments on Dr Linds Gata, Ekbacka, Brahegatan, Kustgatan, Sten Sturegatan and in Gårda Fabriker that we rent from other property owners and then sublet.  

The rent for parking spaces and garages will be increased by SEK 20 per month from January 1, 2012, except for Olofshöjd where the rent for the parking spaces will be increased by SEK 30 per month.

The rental levels in the other 1,000 residences that we rent from other property owners and then sublease have not yet been established, as the rent is established are for each individual property between the owner and the tenant association and these negotiations have not been concluded.

For our own properties, as well as for the properties we lease and then sublet, the IT fee will remain unchanged at SEK 140 per month, as will the fee for cable TV at SEK 40 per month.

SGS Studentbostäder’s business operations are operated on a commercial basis in competition with other housing associations and property owners, with the difference however that our foundation is non-profit and hence does not have as its primary goal the attainment of profits.

Our only sources of income consist of the rent we receive from our tenants and we do not receive any additional financial support or subsidies from either municipalities nor the national government or universities to specifically hold down the rents for student housing.  The rents which are established in the negotiations with HGF should allow for adequate depreciation and required repair and maintenance work.  During the negotiations, all budgeted costs for operations and maintenance of the holdings in our property portfolio are reported and discussed.

The national government of Sweden has decided to phase out interest subsidies and as SGS has built more than 2,000 new homes in the past 10 years, this will have a significant impact for us.  We will lose a total of SEK 11 million annually in income.  This means that we will incur cost increases of 1% per year between 2007 and 2012.

The majority of our student housing is now more than 30 years old and requires significant expenses to maintain them.

We are therefore tirelessly working to continue to implement the maintenance plan adopted by the Board of Directors which means that more than SEK 500 million will be spent on maintenance and investment over the 2007-2016 period.

It is often expensive measures which are required, such as renovation of concrete structures, kitchen and bathroom refurbishment, repairing roofs, and replacement of water pipes and wastewater drainage pipes.

We note that the costs for our utilities consumption were relatively high during the past year, this despite the fact that our energy savings program has seen positive results.  The reason is that we have to pay more for the electricity consumed.  The loss of interest subsides, increased maintenance costs, higher utility bills, and an increasing interest costs is negatively affecting us, while on the other hand the energy saving measures undertaken by SGS will have a positive impact in 2012.  Market interest rates have remained at a low level, however during the autumn they have gradually increased.  Our present interest costs will in principle remain unchanged during 2012 as we have fixed interest rates.

We are well aware that rents are a heavy burden on students' finances, but as SGS does not earn any significant profits and has a significant amount of capital investment to protect, we are forced to raise rents at the same rate as our costs increase.

Gothenburg, December 14, 2011

Mats Odersjö, CEO