Bústaðir to raise rent amid criticism in Faroe Islands

Bústaðir, the social housing company in the Faroe Islands, is set to increase rent, a decision met with criticism. A report from the research firm Januar indicates that for Bústaðir to maintain long-term sustainability, certain conditions must be met. Notably, no new properties can be constructed until the completion of existing housing projects, which are expected to finish by 2025.

The projections from Januar reveal that Bústaðir’s sustainability hinges on several modifications, including the necessity to enhance operational efficiency. From next year, after the last of the existing units are completed, rents are planned to rise by 10% over two years, followed by a 2% annual increase.

The calculations assume a fixed interest rate of 4.6% and a repayment period of 30 years. Should interest rates surge to 6.5%, the sustainability and cash flow of the housing fund could be jeopardized without further rent increases to cover rising costs, as outlined in Januar’s report.

Jógvan Ósá, the director of Bústaðir, confirmed that the organization plans to refinance its loans. Alongside these developments, Januar also warns that should the recent trend of price inflation continue, further revisions to the housing fund’s projections may be required.