Neglected maintenance of the state’s cultural and historical properties

The National Property Board primarily manages properties that are of cultural and historical value, and for which the central government has a special responsibility. The Swedish National Audit Office has examined whether the management of properties leased as premises is efficient.

The overall conclusion is that, while management is conducted effectively on the whole, there are some shortcomings in both property management and in the Government’s direction. For example, many culturally and historically valuable properties have neglected maintenance needs. These properties are unable to bear their own costs through rental income, and are rather financed through appropriations from the central government budget. The appropriations have been mainly used for urgent measures, while long-term maintenance has been inadequate.

“These issues have been investigated multiple times and known for at least 20 years. We note that these problems persist and that longer-term solutions are needed,” says Johanna Köhlmark, project leader for the audit.

For properties with rental income that cover the costs of management, maintenance prospects are better. In some years, however, no more than half of planned and budgeted measures have been implemented.

Many tenants also state that they do not receive adequate information about maintenance planning, planned measures are not implemented and the National Property Board does not take sufficient account of the operations pursued in the premises. For tenants, this may lead to lost revenues or a need to adjust their operations, for example. At the same time, this audit shows that tenants are usually satisfied with the condition of the premises as well as the availability and service of the National Property Board.

It has been expressed in various contexts that the National Property Board overcharges on rent. However, the Swedish National Audit Office’s audit shows that this is not the case. Rather, rent levels for the properties leased on market terms are generally slightly below market rent levels. At the same time, the property portfolio is unique, making comparisons difficult.

The National Property Board’s remit includes divesting properties that do not need to be state-owned. This audit shows that property sales are sluggish, and that the measures taken have yet to yield the desired results.

The Swedish National Audit Office also notes that the Government’s required return for the National Property Board was neither designed nor monitored based on today’s conditions. Leasing market-rent properties generates large surpluses and the National Property Board has accumulated agency capital amounting to nearly SEK 8 billion.

“The current calculation model for required return was drawn up ten years ago. We believe it is time to review it,” says Auditor General Christina Gellerbrant Hagberg.