Andelskrone and maximum price in cooperative housing explained

When you look at cooperative homes, pricing follows a different logic from that of owner-occupied homes. The Danish Cooperative Housing Associations Act sets a ceiling on the price, called the maximum price (section 5 of the Act). It is the highest amount you may pay for a share. In practice the price may be lower, but it may never exceed the ceiling.

The maximum price is calculated from the association's own choices and figures. It mainly concerns the valuation principles and the andelskrone that the general meeting sets based on the finances and the distribution keys. The decisions in the minutes and accounts show how the figures fit together.

Improvements and fixtures can be added on top, if they are calculated according to the rules. Receipts and descriptions of the work make it easier to show that nothing has been set too high.

You will learn to read the key information form (nøgleoplysningsskema) correctly and find the relevant figures directly in the association's documents. Use the articles of association, the latest accounts, the key information form and the minutes of the general meeting. They show the andelskrone, debt, provisions and any restrictions on price.

The examples here are for illustration and are not specific advice on buying or selling.

Why a cooperative home is priced according to a maximum price and not like an owner-occupied home

The price of a cooperative home is not set the way it is for an owner-occupied home. Owner-occupied homes are sold freely, with the market deciding the price. Cooperative homes instead follow the Cooperative Housing Associations Act (section 5), which sets a maximum price, that is, a ceiling on what you may pay.

A share is not a separate home, but an undivided interest in the association's total net assets. The price therefore depends on the association's finances, not on the individual home's market value. The association controls the price through its articles of association and decisions at the general meeting. This is where the andelskrone is determined, which is the basis for calculating the value of each share from the accounts.

In practice, the price is set like this:

1. The association chooses a principle for valuing the property

2. The net assets or equity are calculated according to that choice

3. The andelskrone is calculated as the net assets divided by the sum of all distribution figures

4. The maximum price per share is calculated on that basis

5. Additions or deductions are made for improvements, movables or defects and shortcomings according to the rules of the Act

The association's debt also plays a part. A fixed or variable interest rate and the repayment profile affect the net assets and thus the andelskrone. Even if the property's market value is unchanged, changes here can move the price.

The legislation has no official minimum price. The price can therefore be below the maximum price in quick sales or special circumstances. Factors such as view or location do not raise the ceiling, but they can influence what a buyer is willing to pay within the ceiling.

If you want to check the figures, look in the key information form and the annual accounts. They show both the valuation principle and the current andelskrone, which is the basis for the pricing.

What the andelskrone is and how it is set in the association

The andelskrone tells you what each unit of the distribution figure in the association is worth. It is set at the general meeting and is based on the association's total net assets, that is, assets minus debt and provisions. If you know the andelskrone and your home's distribution figure or deposit, you can work out an approximate value of your share.

The andelskrone is typically calculated by taking the association's entire net assets and dividing by the sum of all distribution figures. The distribution figures often follow the size of the home or the original deposit. The exact method is set out in the articles of association or the founding document. Two flats of the same size can therefore have different distribution figures depending on the rules in your association.

The property's value is not the only factor. The size and terms of the debt matter a great deal, for example whether the interest rate is high or low, and whether repayment is fast or slow. The operating result in the accounts also affects the net assets, along with provisions for future maintenance or legal cases. All of this goes into the figures behind the decision.

As a rule, the general meeting sets the andelskrone once a year, at the same time as it approves the annual accounts. If it is changed, the new rate applies from the date stated in the minutes. Check meeting dates and documents. Some associations have internal ceiling rules in their articles of association, so even when the net assets grow strongly, the price per share can be held down within the set limits.

Find the current andelskrone in your association's latest annual accounts or budget material. The figure is often also in the minutes of general meetings. If several figures appear, it is normally the approved, dated amount that applies.

Note that improvements in individual homes are not included directly in the andelskrone. They are assessed separately under the legislation and your articles of association.

The four legal valuation principles, and why the choice affects the price

Since 15 April 2024, the law has given the association four ways to set the value of the property. They are set out in section 5(2) of the Cooperative Housing Associations Act. 1) The acquisition price, that is, what the association paid for the property. 2) A valuer's assessment, where a valuer assesses the cash market value as a rental property. The assessment may be no more than 42 months old. 3) The most recently determined public property value. 4) The same value adjusted in line with changes in Statistics Denmark's net price index. The association can add to the value any improvements made to the property after the acquisition or the assessment (section 5(4)).

New public property values are no longer determined for properties owned by housing cooperatives. The most recently determined value is therefore usually based on the 2012 price level and can lag far behind the market. That is the reason for the indexed method. If the property has never had a public valuation, the association cannot in practice use the two public methods. The acquisition price often gives more stable prices, because it is based on historical figures with documented changes. It is, however, less flexible in the event of large market swings.

The valuer's assessment must be carried out by a valuer who, among other things, holds the Diploma in Valuation (Diplom i Vurdering) and has at least two years of experience valuing residential rental properties. The report describes the method, market data and assumptions. Many associations have it updated regularly within the statutory interval, so that the figures reflect current conditions.

The general meeting chooses one principle, and the choice applies to the whole association. It is recorded in the annual accounts as the basis for calculating the net assets and thus the andelskrone. A change also requires a decision at the general meeting plus documentation, e.g. a valid valuer's assessment.

The choice matters a great deal. The net assets are calculated using the chosen principle, so the andelskrone is affected directly. This in turn governs the maximum price at which shares may be sold.

How the maximum price is calculated, step by step

To find the maximum price of a cooperative home, you start with the association's total net assets. That is all its assets minus debt and provisions. The value of one share is calculated via the “andelskrone”, which is the net assets divided by the sum of all distribution figures. Your share's value is found by multiplying the andelskrone by your home's distribution figure or deposit, depending on the association's rules. The ceiling on the price itself is set out in section 5 of the Cooperative Housing Associations Act.

In practice it works like this: the association first chooses a valuation principle for the property, e.g. public valuation or a valuer's assessment. Then assets and liabilities are carefully calculated, that is, what the property and other assets are worth and how much debt there is. Adding and subtracting the figures gives you the total net assets.

The andelskrone is set by dividing these net assets by the sum of all distribution figures in the association. If you multiply the andelskrone by the home's own distribution figure, you get the value of the share. On top of this come improvements and specially fitted fixtures, when they are calculated according to the rules. Ordinary wear and tear does not qualify for an addition.

Defects and shortcomings in the home, e.g. illegal installations or damage, can lower the price under the rules of the Act and the articles of association.

An example: an association has net assets of 10 million kr. (X), and the sum of the distribution figures is 5.000 (Y). The andelskrone is then 2.000 kr. (Z = X/Y). If your flat has a distribution figure of 20 (A), the maximum price before additions and deductions is Z × A = 40.000 kr. The example shows the method, not realistic prices.

Certain items affect the net assets, e.g. reserves decided by the general meeting and provisions for future repairs. As a rule, the maximum price follows the most recently approved andelskrone in the minutes of the general meeting. The timing of general meetings can therefore move the price ceiling.

Waiting list and administration fees fall outside the maximum price itself, but they can be extra costs of the purchase. The seller's own costs, e.g. for an estate agent or administrator, may not be passed on to you (section 5(15)). Check the association's articles of association.

In short: choose a valuation principle, calculate assets and debt, find the net assets, calculate the andelskrone, multiply by your distribution figure, add approved improvements and deduct documented defects.

Improvements and fixtures that can lawfully be included in the price

Improvements in a cooperative home are things that raise the standard or function of your home. That is, work or purchases that add value. Ordinary maintenance does not count towards the price. Painting in the same colour or replacing worn parts with something equivalent counts as upkeep, not as improvements. The Act distinguishes between improvements and the home's state of maintenance (section 5(1)).

Think of a new kitchen or a modernised bathroom. A balcony, new windows or insulation of the facade or roof are generally part of the association's property. If you have paid for them yourself, however, they may count as your improvement. Maintenance such as painting walls or replacing fittings with the same type does not normally lead to a price increase.

The Act does not require receipts for improvements, but they are proof of what the work cost. Keep invoices, dates and a clear description of the work. Without proof, the association may, under its articles of association, reject your addition. Make sure your paperwork is in order.

The value of improvements falls over time. Under section 5(13), improvements are valued at the acquisition price less depreciation due to age or wear, and an expensive kitchen therefore gradually loses value in the calculation the older it gets.

Fitted movables and fixtures count in some cases. Examples are made-to-measure cupboards built for the home. Ordinary movable items, such as washing machines or furniture, do not normally count.

Illegal installations or work without the required permits are not approved as improvements. They may instead trigger a deduction for rectification.

Many associations offer standard forms and guidelines for calculating improvements. Ask the administrator or board for the seller's list and all relevant documentation before you sign.

Larger shared improvements to the property, for example a new roof financed by a loan, affect the association's net assets and thus the andelskrone. They do not result in individual additions to each share.

The key information form as your checklist for price, andelskrone and debt

The key information form (nøgleoplysningsskemaet) is a mandatory document that gives you the most important information about both the association and the share you are considering buying. It is set out in the Cooperative Housing Associations Act (section 6) and in the executive order on the duty to provide information when selling cooperative homes, which specifies the requirements for content and timing. The seller must hand the form over to you before the agreement is entered into, so you can read it before you commit.

The form must be filled in on the templates approved by the Minister for Social Affairs and Housing, which are annexed to the executive order. The association reports the information to the key information system run by Social- og Boligstyrelsen (the Danish authority for social services and housing), so that it is standardised.

As a buyer, you should especially check these fields in the form:

• Chosen valuation principle: acquisition price, valuer's assessment, public valuation or indexed public valuation

• The home's share value and distribution figure, from which you can calculate the andelskrone

• Calculation of the maximum price for your particular share

• The value of improvements and fitted fixtures in the home

• Debt items including the remaining term on loans

• Loan types, next interest rate adjustment and any financial agreements such as interest rate swaps

The information in the form must match the annual accounts and the minutes of the general meeting. If discrepancies arise, get a written explanation or confirmation before signing, so you avoid surprises later.

The form also shows future matters such as planned renovations or new loans and provisions that may affect the andelskrone going forward. You therefore get not only a snapshot but also an indication of possible price changes.

The form's key figures are stated in average kroner per m² of share area, e.g. the association's profit before repayments for the last three years and the debt less current assets. If such figures are missing, ask the association for supplementary documentation.

Incorrect or incomplete information in the form can have legal consequences. If in doubt, seek individual advice from an expert before the transaction.

If the price exceeds the maximum price, here is how you can proceed

You need to know the rule: the price of a cooperative home must not exceed the maximum price that follows from section 5 of the Cooperative Housing Associations Act. If the price is above the limit, the transaction is in breach of the law. There is a fixed framework for how you proceed in such a situation.

As a buyer, you are entitled to get back the part of the purchase price that exceeds the maximum price. Interest can be part of the claim. The right to demand the price reduced and an overpayment refunded is set out in section 16(3) of the Cooperative Housing Associations Act. The claim becomes time-barred under the ordinary rules of the Limitation Act, and the burden of proof normally lies with you. Collect documentation by comparing the key information form with the annual accounts and the minutes of general meetings. Also make sure you have proof of improvements and movables, so the calculation is correct.

Get a written statement from the board or administrator to support your claim. Do not withhold payment without agreement, but instead start with a formal claim, refer to the relevant provisions, and attach your documentation.

Errors in the price often arise from confusing distribution figures or using outdated andelskroner. Sometimes correct depreciation on improvements is missing, or movables are confused with improvements.

If an overpayment is established, both the seller and the association may end up liable for the repayment. As a rule, your claim is directed at the seller (section 16(3)), while any liability on the part of the association is decided case by case.

If you are in doubt about the pricing, seek prompt, individual advice from a lawyer or another relevant professional. That is the best way to protect your rights.

How to find the figures in your association and check the calculation

Getting a grip on the figures in your housing cooperative takes a bit of legwork. Fortunately, the answers are in the association's own documents, which show how the price is set. The maximum price depends on the legislation, the association's choice of valuation method and the andelskrone that has been set. You can find all of that yourself in official papers. The task is to gather information from several sources and check that it all fits together.

Here is a short guide to finding the most important information yourself:

1. Latest annual accounts: See which valuation method the association uses, the balance sheet with assets and debt, and the equity. The andelskrone is often stated here. Get the accounts via the residents' portal, from the administrator or by asking the board.

2. Minutes of the general meeting: These show the decision on the current andelskrone and any changes. Check the date from which the new rate applies.

3. The key information form: For your share, the form shows the maximum price calculation, improvements and movables, as well as key figures such as loans and interest rates. Ask for the latest version, completed specifically for your flat.

4. Valuation report (if relevant): If a valuer's assessment is used, ask to see the report. Look at the period of validity and the assumptions the assessment is based on.

5. Distribution figures: Compare the figures in the articles of association or the schedule of flats with those used in the key information form's calculations, to make sure everything tallies.

6. List of improvements with invoices: Go through the approved improvements with documentation such as invoices and notes on depreciation. If documents are missing, it can be hard to get the addition approved.

The price of a share is allowed to be lower than the maximum price, and it can be negotiated within the limits of the law. The ceiling set by law must never be exceeded.

The maximum price follows fixed rules based on legislation and decisions in your housing cooperative. By reading these documents yourself, you get a clear insight into the pricing without guesswork. If doubts arise along the way, seek individual advice from an expert before you sign.