Financing major repairs in apartment buildings through infill development

Abstract

Purpose The purpose of this paper is to study views of owner-occupiers concerning infill development as a mechanism for financing major repairs in apartment buildings and financial benefits they require from the infill development for accepting it near their homes (on the plot of their housing company). Design/methodology/approach The data used draws upon a survey of 894 respondents concerning residents’ views on infill development in Finland. The required financial benefits from the infill development were questioned in both relative proportions of the expenses related to major repairs and concrete monetary sums. Findings First, the findings indicate that the financial benefits owner-occupiers require in order to accept infill development are significant, covering about two-thirds of the costs of major repairs during following ten years or over 75 percent of an (imagined) upcoming pipeline repair. Second, approximately one-fifth of the respondents regard that no economic benefit is enough to make them support infill development. Third, people’s decision-making concerning infill development is complex, involving also many other factors than monetary. Practical implications This paper provides insight into the feasibility of infill development as a means to finance major repairs from the perspective of owner-occupiers. The paper has strong policy implications as it highlights the significance of the public authorities and their policies in enabling the infill development. Originality/value This is the first academic study to focus on owner-occupiers views and financial requirements for the infill development as a means to finance major repairs in apartment buildings.

Land policy conflict profiles for different densification types: A literature-based approach

“…This also applies to densification (Meijer and Jonkman, 2020). Here, the legitimacy of land policy concerns the questions of how effectively and efficiently the policy achieves its objectives (e.g., Mäntysalo and Saglie, 2010;Hartmann and Spit, 2015;Muñoz Gielen et al, 2017;Tasan-Kok et al, 2019), how densification is allocated (e.g., Jehling et al, 2018;Jehling et al, 2020), who benefits financially from densification and how the benefits are distributed between public and private actors (e.g., Puustinen et al, 2017;Biggar, 2021), how power is distributed, how transparent the process is, and how public accountability is ensured (e.g. Gerber, 2016;Tasan-Kok et al, 2019;Biggar, 2021).…”

“…Thus, negotiable contributions can be regarded as trade-offs between added density and the appropriate level of public compensation (Biggar, 2021). Negotiable contributions can be used to incentivize densification (e.g., through reductions in planning gains) in areas under political pressure to densify the urban structure (Puustinen et al, 2017). The legitimacy of case-by-case negotiations on incentivized contributions can, however, be questioned due to equality dilemmas both between landowners and between landowners/developers and municipal citizens (Mäntysalo and Saglie, 2010;Valtonen et al, 2018;Biggar and Siemiatycki, 2020;Biggar, 2021;Puustinen et al, in press).…”

“…Densification can also occur on sites under single ownership, such as those owned by real estate investors. Compared to the previous types, this type is distinctively owner-driven development but preconditioned on planning regulation and sometimes policy measures, such as financial incentives and process-oriented assistance and information steering (e.g., Puustinen and Viitanen, 2015;Puustinen et al, 2017). The size of the target area is typically a single site, the scale of the development is smaller, and the development is less strategic and policy objective-oriented (despite being formal) than in type 2.…”

“…The main motivation for land and apartment owners is economic. For apartment owners especially, a key motivation for densification is often the financing of major repairs in the existing, mature building stock (Puustinen and Viitanen, 2015;Puustinen et al, 2017). For the municipality, the motivation is policy-driven and economic, as the development contributes to densification objectives and cutting expenses through lowered infrastructure costs, for example (Hamilton and Kellett, 2017;Puustinen et al, in press).…”

The distribution of perceived advantages and disadvantages of infill development among owners of a commonhold and its’ implications

“…Proportion of respondents opposing and supporting infill development if it covered * of the costs of major repairs in the housing company over the next ten years. 'Cannot tell' responses are excluded(Puustinen et al 2017) …”