An andelsbolig (housing co-operative share) is a good alternative to owner-occupied flats — if you can get hold of a sound one. Co-operative homes, especially for students, can be a really good way to get a foothold in the housing market and start saving, which you can later use for a down payment on an owner-occupied home. If you're considering buying a co-operative home, read on here and get plenty of good advice to prepare you better.
It's always a good idea to team up with a buyer's advisor who can be on your side throughout the entire purchase process.
Need sparring for buying a co-operative home?
In this buyer's guide you can read about:
- What is a co-operative home?
- Costs and housing fee
- Your rights as a co-operative shareholder
- 3 shortcuts to a co-operative home
- What to be aware of when buying
- Co-operative homes as a parental purchase
What is a co-operative home? A housing co-operative (andelsboligforening) is an association that has established itself and bought a property. The association thus owns and runs the property.
As a co-operative shareholder, you therefore own a share of the building and thus also the collective assets.
Do note, however, that as a co-operative shareholder you have the right of use to a home in the property, and therefore do not directly own the specific flat you have acquired.
Co-operative home loans: costs and housing fee for co-operative homes. Your costs in connection with a co-operative home are typically split into two. Unless you've bought your share in cash, you'll have costs to your bank, where you've taken out a loan, as well as the housing fee (boligafgift), which covers the association's operations. The housing fee includes, among other things:
- Payments on the association's loans
- Renovation / maintenance
- Taxes
- Heating and water consumption
- Administration, including operations — e.g. caretaker, administrator, auditor and any board fees
This is why there's typically a link between a low housing fee and a high andelskrone (co-operative share value) — so you shouldn't only look at the purchase price itself; the housing fee in particular is important to keep an eye on. A low housing fee is usually a sign of sound finances, without large and expensive loans in the association. That's why the individual share is also worth more. Your housing fee can therefore also vary if unexpected costs arise that haven't been saved for or anticipated — for example, a sudden roof replacement.
You should therefore make sure to look into a co-operative association's finances before buying. If there is a maintenance plan in place, it will also help give you a good overview of the condition of the building.
3 shortcuts to a co-operative home: find your new co-operative home. Sound co-operative associations are very hard to get hold of, and they rarely come up for sale on the open market, such as property portals or through an estate agent. Of roughly 100,000 co-operative homes in Copenhagen, there are currently only around 51 co-operative homes publicly for sale.
1. Put yourself on the internal waiting lists
Many co-operative flats are sold via waiting lists, so it's a really good idea to sign up. Some places may have requirements for who can sign up, and there may be a small annual fee.
Waiting lists are not a quick solution, since there can be many people ahead of you. This means it can take several years before there's an opening in a desired association.
2. Check DBA, private sales and social media
Since many co-operative homes are sold privately and rarely go through an estate agent, you should keep an eye on private sales sites, where co-operative homes that aren't taken via waiting lists are regularly listed for sale.
There are also many Facebook groups where people trade back and forth.
3. Swap with another flat
This last option can generally only be used if you already own a co-operative home. Maybe you'd like something bigger or smaller — in many cases there's an opportunity to swap with others. It could even be an entry point into the owner-occupied market.
What should you be aware of when buying a co-operative home? There's quite a bit to be aware of when you start a co-operative purchase process.
Get your loan and financing in place
It's a good idea to have your financing in place so you're ready to act when you find the right share. Precisely because the market moves so fast, it's usually those who are best prepared who get the best outcome. When you approach the bank wanting financing for a co-operative home purchase, the bank will often review both your finances and the co-operative association's finances.
You should also be aware that when buying a co-operative home, you cannot take out a realkreditlån (mortgage credit loan) — since that only applies to owner-occupied homes.
Read more about co-operative home loans here
Check the association's finances
Once you've found the right co-operative home, it's also important to have the co-operative association's financial condition checked. There are some warning signs you should pay particular attention to. These include if the co-operative association:
Has postponed important maintenance projects. Has no savings for maintenance. Has large loans with a repayment-free period.
It's important that you have an overview of the association's finances, because as a co-operative shareholder you share in the association's income — and thus also the association's debt. You can spot these warning signs by reviewing the association's documents, such as the annual accounts, minutes from general meetings, the articles of association (vedtægter) and other key information.
Does it feel overwhelming? Seek financial advice or other housing advice, such as from a buyer's advisor, to take out a loan and review the accounts of the association you're looking at. That way you'll be thoroughly prepared. A financial advisor can secure a home loan that, in most cases, is far better than what you would typically be able to get on your own at the bank. Most importantly, a financial advisor can translate the enormous amount of data in an accounts statement or loan offer into plain language.
Read more about how the bank looks at your debt and payment history when you want to borrow
Talk to the neighbours
A chat with your potential new neighbours is a good way to get a feel for the association. They can give you useful information about the association and what's good and bad about it. But most importantly, you'll also get to meet your possible future neighbours.
Co-operative homes as a parental purchase (forældrekøb). If you're buying the share as a parental purchase, make sure to check the articles of association to see whether it's allowed. In some associations, the co-operative shareholder themselves must live in the home. In that case, you may instead need to lend your child the money to make it possible.
You can read a detailed guide about parental purchases and what to be aware of here.
Your rights as a co-operative shareholder. As a co-owner of the collective assets, you have a say in setting the rules for your association.
This happens at the general meetings, which are typically held once a year. Here, proposals, changes and finances are put on the agenda, and changes are normally decided by simple majority.
This is why it's important to attend the general meetings, so you get a say in decisions about your collective assets.
All the rules that are decided are collected in what's known as the articles of association (vedtægter). The articles of association are therefore the rules and guidelines for how the association should be run, as well as the rights and obligations of each individual shareholder.
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