Property management – The National Property Board and the Government’s direction
(RiR 2025:30)
Summary
The National Property Board primarily manages properties of cultural and historical value, and for which the Swedish state has a special responsibility. The Swedish National Audit Office has examined whether the National Property Board’s management of market-rent and subsidised properties that are leased as premises is effective. Market-rent properties have rental income that covers the property's management costs. Subsidised properties are those with a cultural and historical value that cannot bear their own costs and that are therefore financed through appropriations to the National Property Board. This audit also covers the Government’s direction of the National Property Board.
The overall conclusion of the Swedish National Audit Office is that, while the National Property Board’s management of market-rent and subsidised properties is largely conducted effectively, there are some shortcomings in both the National Property Board’s management and the Government’s direction. For example, there are some deficiencies in the National Property Board’s property maintenance, relations with tenants and adjustment of its property portfolio to increase revenues and reduce costs. The Government has instructed the National Property Board to more actively adjust its property portfolio. However, there is no longer-term solution for the subsidised properties, and neither has the Government reviewed the model for calculating the National Property Board’s required return, despite the Board’s earnings consistently overshooting it. This situation has significantly increased the National Property Board’s equity ratio.
Neglected maintenance needs for certain culturally and historically valuable properties
Certain subsidised properties have maintenance needs that the National Property Board is unable to meet. Maintenance and operation of subsidised properties is mainly financed through appropriations. However, these funds are used to finance urgent measures, while long-term maintenance is not done to the extent needed to preserve and develop the properties. The neglected maintenance needs of the subsidised properties have been identified by the National Property Board and the Government for at least 20 years. Although the Government has temporarily increased funding, there are no long-term solutions.
Tenants satisfied with the condition of the premises, but dissatisfied with insight into management
The National Property Board provides suitable premises for its tenants on the whole. Tenants are generally satisfied with the condition of the premises and the National Property Board’s service, although there are some shortcomings in tenants’ insight into property management. They feel that the National Property Board is unclear on maintenance planning of the premises. For example, they consider that the National Property Board issues information on planned measures at short notice, that it does not take sufficient account of the operations pursued in the premises, and that planned measures are not implemented.
National Property Board’s modifications of its property portfolio have not yet yielded the desired results
In recent years, the National Property Board has taken steps to more actively divest properties that do not need to be state-owned. It has also taken steps to reduce the burden on appropriations and increase revenue from its subsidised properties. However, these measures have yet to yield the desired results in the form of completed sales of market-rent and subsidised properties.
This audit also shows that there are currently no efforts to investigate potential strategic additions of culturally and historically attractive properties that should be state-owned.
Rents are generally below market levels
This audit does not provide any overall indication that the National Property Board’s rents are unreasonably high or low. The Board’s rent levels for premises leased on market terms are, on the whole, slightly below what could be considered market rents. On the other hand, the National Property Board’s property portfolio is unique, making comparison with commercial property rents difficult. For example, many of the National Property Board’s cultural and historical properties are subject to restrictions in terms of alterations and the operations they may house, which affects rent levels.
The Government has not reviewed required return
Required return for the National Property Board’s activities secures an annual transfer of funds from the National Property Board to the central government budget. The Board’s agency capital has increased and amounts to nearly SEK 8 billion, due to strong growth in rental income. An explanation for this surplus accumulation is that required return is not calculated based on profit or equity ratio, but rather on loans from the Swedish National Debt Office. The Government needs to monitor this growth in the agency capital and request an extra transfer to the central government budget from the National Property Board if the equity ratio is considered excessive. The Government has not reviewed how the required return is devised since the model was introduced in 2015.
The Swedish National Audit Office also notes a decrease in the number of objectives and reporting requirements in the cultural environment area in the National Property Board’s appropriation directions.
Recommendations
The Swedish National Audit Office makes the recommendations presented below.
To the Government
- Review the calculation model for the National Property Board’s required return going forward.
- Follow growth in the National Property Board’s accumulated agency capital and request an extra transfer to the central government budget from the Board if the equity ratio is considered excessive.
- Investigate means for ensuring a long-term solution regarding financing subsidised properties that is in line with the ambitions for these properties.
- Consider clarifying the responsibilities and principles for the process of supplementing the state property portfolio.
- Review and prioritise the objectives and reporting requirements of the National Property Board in order to establish more strategic and long-term governance and monitoring of its activities.
To the National Property Board
- Develop ways of involving tenants in maintenance planning to the extent justified by tenants’ operations and the properties’ needs.
- Develop support for the operational areas in the process of preparing realistic maintenance and investment budgets.