Not in general, that’s a topic beyond the scope of this blog, but what about rent? Have you ever wondered where does the money you pay every month go, and how the amount is decided?
Through most of my previous experiences renting an apartment, rent has always been something slightly mysterious, unilaterally defined by the owner and which was never discussed. Not that it is more flexible with TYS, but at least the status of TYS, which is a non-profit foundation, makes it much easier to understand how the rent is used, and why it amounts to a certain price.
Felix (Abo365) and me had the chance to meet with Tuula Kanervisto (TYS’ financial manager), who provided us all the information needed to understand where every euro given to TYS go (and more). So without further due, here is how your rent is used.
The rent, euro by euro
For the purpose of this blog post, we will use a 18m², non-furnished studio in the student village west, for which the rent is currently 290,30 euros per month.
Here is where the money goes:
87,90 euros go to repairs
This might seem a relatively high amount, but repairs (not to be confused with maintenance, which is mostly short-term repairs) are essential to for saving money on the long-term. Repairs include, amongst other things, upgrading apartments to keep them up to the necessary standards, and renovation of old locations. Usually done with a 5 years time frame, location-specific plans have resulted in the higher occupation rate (number of rented apartments) recently. This, in turn, has been a key element of the absence of a rise in rents this year.
46,45 euros are allocated to heating
Heating is, as one would expect in Finland, another important expense. And as does the weather, the costs related to keeping you warm also vary substantially from one month/year to another. For example, last year’s cold January resulted in as much as 200 000 euros in extra costs. It should also be noted that your location’s heating costs do not directly affect your rent, locations such as Henrikki would otherwise be hit pretty hard.
N.B. The fact you do not pay for heating directly does not mean you should heat your apartment with your oven. More than being dangerous, everyone eventually has to pay for it.
40,64 euros for maintenance
Simply defined, maintenance is related to all the small things needed to keep the apartments and their surroundings functional. Namely: cleaning, minor repairs, waste disposal, outdoor maintenance, etc.
26,13 euros pay the costs related to the administration and the staff of TYS
This fraction of the rent is allocated to pay the costs related to the administration of TYS (Board and delegation, HR expenses, etc.) and its staff (22 employees). More than salaries, it also includes the costs of trainings for the employees and other expenses related to the staff.
23,22 euros go to electricity
Easily forgot if you are not directly paying for it, electricity is nevertheless a crucial part of our lives. This perhaps includes what powers your laptop or your phone on which you are reading this, so worth paying for. TYS has a direct agreement with Turku Energia, the electricity provider.
23,22 euros for water and sewage
Once again, pretty much self-explanatory (beyond the possible improvement in efficiency, I don’t think anyone wants to cut down on sewage).
17,42 euros pay rents, taxes and insurances
Yes, yes, even TYS pays rents. Although these represent quite minor expenses, TYS has to pay rents for, amongst other things, printers and some pieces of land. Taxes and insurances (related to TYS’ liability over accidents on its property) are also included here.
26,13 euros for other expenses
This includes a wide variety of expenses which do not fit within other categories. For example, the budget of the different locations’ tenants’ committees are included there.
But then, why (and how) is TYS building new housing locations?
The student village foundation has for mission to provide housing for students in the city of Turku. As such, it is essential that the future need for housing is evaluated and that TYS adapts its strategy to the predicted need for housing in the next years. Following this logic, TYS is currently working on creating approximately a thousand new student housing units within the next five years. This includes the construction of three new locations in the student village.
But back to the money, what is important to understand regarding the effects of new buildings on your rent, is that the money needed for the new buildings is mostly coming from external sources.
Long term loans provide the core of the funds needed, and are sufficiently spread over time that the rent coming from the tenants of the newly created housing locations will bear most of the burden for repaying them.
If you want to know more
As mentioned above, because TYS is a non-profit foundation it is bound to transparency. If you have any questions about the way TYS functions, there are good chances TYS’ website can provide some answers.
Otherwise, don’t hesitate to ask in the comments, I’ll do my best to answer your inquiries.
To end this blog post, I would just like to thank warmly Tuula Kanervisto for her precious contribution and willingness to provide all the information needed for this post.