The Effect of Profit Requirements on the Maintenance Costs of Housing Companies in Sweden

There has been a growing debate about the increasing level of under-maintenance in the Swedish housing stock especially in properties constructed under the ìmillion dwellings programî in the late 1960s. A review of the literature reveals various factors that affect the level of housing maintenance and its cost. Among the factors mentioned is the focus on either cost minimizing or profit maximizing depending on the whether the property owner is a private company or a municipal company. Swedish private housing companies tend to have lower costs in the maintenance of their properties as compared to their municipal owned counterparts. Do the above results confirm the idea that maintenance costs are an effect of profit requirements by the company management? The regulations governing financial reporting in Sweden stipulate what can be included in maintenance costs and thus can be used when making comparisons on the levels of maintenance in different companies. To test the hypothesis on profit requirements the cost levels reported in a number of private and municipal housing companies together are analysed. The same is done for another group of municipal housing companies only. A multiple regression of a model from balanced panel data on maintenance costs in the companies under study appears to reveal that profits have no effect on the level of costs of the maintenance carried out.