Botkyrkabyggen, a Swedish affordable housing provider, faces a significant challenge. Buildings constructed in the 1960s and 1970s require renovations of water and sewage pipes, which means that approximately 8,000 out of the company’s 10,800 flats need maintenance within a short period of time. Due to the absence of government subsidies for Swedish affordable housing providers, Botkyrkabyggen chose to apply for the Kommuninvest loan for social sustainability in 2020.
The need to ensure social sustainability in renovation projects
In many parts of Botkyrka, where Botkyrkabyggen is the largest landlord, the tenants have low incomes. Botkyrkabyggen’s renovation strategy aims to prevent significant rent increases. Given that many tenants have low incomes, Botkyrkabyggen is committed to ensuring their ability to afford rent after the renovation. The company is taking necessary steps, aligning with the three dimensions of sustainability outlined in the UN Agenda 2030: environmental sustainability, social sustainability, and economic sustainability.
The refurbishment strategy at Botkyrkabyggen includes:
- Installing new plumbing, bathrooms, and electrical systems;
- Modest rent increases;
- Preserving materials that are in good condition.
The total value of Botkyrkabyggen’s properties is approximately 1,365 million euros. The return on equity stands at 4.2%, and the loan-to-value ratio is 19%. However, financing certain investments remains a challenge, as some of them must be funded through loans. This challenge is one of the reasons why Botkyrkabyggen chose to apply for a Kommuninvest Loan for social sustainability.
Botkyrkabyggen’s buildings and a park in Fittja
What is Kommuninvest?
Kommuninvest is owned by 280 municipalities and 14 regions in Sweden and offers secure and cost-effective financing to its members and customers. Customers include Swedish municipal companies like Botkyrkabyggen. With Kommuninvest, customers can borrow more securely and affordably than each company could individually. Additionally, the local government sector can enhance its expertise in financial management when working together.
Last year, Kommuninvest lent a total of approximately 43 billion euros to its members. With Social Sustainability Loans, socially oriented investments can be financed in a way that promotes improved governance, measurement of effects, and follow-up. Kommuninvest provides support both before the application and throughout the loan’s term.
“I truly believe that working for sustainability – in all its dimensions – is vital for companies. The sustainable business is the only business,” says Chris Oesterlund, CEO of Botkyrkabyggen.
The outcomes of Botkyrkabyggen’s loan for social sustainability
An overview of Botkyrkabyggen’s Loan for Social sustainability:
- Project for Kommuninvest Loan for social sustainability in the autumn 2020
- 380 apartments in Fittja and Storvreten
- Total investment: 147 million SEK (~12,7 million euro)
- Loan from Kommuninvest: 100 million SEK (~ 8,7 million euro)
Botkyrkabyggen’s buildings in Fittja
The impact reported to Kommuninvest 2022:
- Increased market value
- Margin, return of at least 3.5%
- Increased well-being in the home after the renovation
- Reduced costs for repairs
- Circular thinking with minimal efforts in renovation
- Rent increase: 13-15% (goal 13-15%)
- No re-locations due to eviction or installment plan due to rent increase (goal 0)
- Workplace controls included in the projects to ensure safe working environment