From 2026 all housing associations report under K3 — how to read the annual report

Starting from the financial year beginning after 31 December 2025, all Swedish housing associations (bostadsrattsforeningar/BRF) must report under the K3 accounting framework. The Swedish Accounting Standards Board (Bokforingsnamnden) made the decision in June 2025, and it affects over 25,000 associations that previously applied K2. In practice, this means that associations that recently showed a surplus may now show a deficit, without a single krona having actually changed.

It sounds strange. It is not strange once you understand what changed.

Why K2 could be misleading

Under K2, the building was treated as a single unit and depreciated on a straight-line basis, often with a useful life of 100–120 years, corresponding to roughly 1% per year. Major maintenance was expensed in the year it was carried out, but in all years without major works the low depreciation created a surplus that could give a false impression of financial security. The ongoing wear on roofs, pipes and windows did not appear in the income statement until it was time to actually replace them.

K3 instead divides the building into components with individual useful lives. Exact lifespans vary depending on material, construction and condition, but as an illustration the breakdown can look like this:

Component	Typical useful life
Structural frame	60–100 years
Roof	30–50 years
Facade	30–60 years
Windows	20–35 years
Pipes and plumbing	40–50 years
Lifts	25–35 years

Sweden’s Public Housing Association (Sveriges Allmanytta) recommends approximately 2.2% per year as a general benchmark for component depreciation, compared with roughly 1% under K2. The average depreciation rate is therefore roughly double.

Worked example: BRF Exempelforeningen

An illustrative association, built in 1975, with 3,000 sqm of residential space and a book value for the building of SEK 50 million:

	K2	K3
Depreciation per year	SEK 500k	SEK 1,100k
Revenue	SEK 3,200k	SEK 3,200k
Other costs	SEK 2,500k	SEK 2,500k
Result	+SEK 200k	-SEK 400k
Cash flow	+SEK 700k	+SEK 700k

The result turns negative. The cash flow — the money that actually moves — is identical. Depreciation is an accounting cost, not a disbursement. Think of it as finally seeing the full bill after dinner. The food cost the same all along.

Which key figures to look at

Since 2023, several key figures are mandatory in housing association annual reports. Cash flow and savings say more than the result line alone.

The most important metric is savings per square metre. It is calculated as the adjusted result divided by the association’s total area (tenant-owned and rental space combined). Adjusted result is defined in the Annual Accounts Act (arsredovisningslagen) as the year’s result plus the year’s depreciation, disposals and planned maintenance. If savings exceed SEK 250–300 per sqm per year, the association’s finances are generally considered sound. Below SEK 120 per sqm you should be cautious. Industry median values have historically been significantly lower than the recommendations, showing that many associations have saved too little.

Also look at debt per square metre. Below SEK 5,000 per sqm is considered low leverage. Above SEK 10,000 per sqm is generally considered high. Newly built associations can be at SEK 12,000–15,000 per sqm when new, but older associations are expected to have amortised their debt down.

Finally, you want to see a current maintenance plan, preferably updated within the last few years and ideally with a 50-year horizon. An association that does not know what needs fixing has rarely set aside enough money. The same key figures are good to bring into a mortgage calculation, where the monthly fee is often one of the heaviest items.

Who is affected the most?

Older buildings without completed renovations are affected the most by K3. It makes visible that pipes and roofs are approaching the end of their technical service life. Associations that under K2 had artificially low depreciation, and therefore apparent surpluses, are now affected by reality showing up in the accounts. Banks already base their credit assessments on cash flow, savings and leverage rather than the result line.

For a complete picture of the housing association’s finances, including the key figures that determine whether the fee is sustainable, you need to look beyond the individual financial statement.

With a housing association health check you can analyse the association’s finances with K3 in mind — cash flow, savings, leverage and interest rate sensitivity gathered in one assessment. BoKalk produces that picture for you.

Register your interest and get access at launch

Christoffer, founder BoKalk