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Reinfeldt under fire over housing comments

Reinfeldt under fire over housing comments

Published: 15 Feb 2011 15:41 GMT+01:00
Updated: 15 Feb 2011 15:41 GMT+01:00

Sweden's prime minister Fredrik Reinfeldt has courted criticism from some quarters for suggesting that Stockholm's rental housing market is not performing as smoothly as it could.

Reinfeldt waded in to the notoriously partisan issue of housing regulation in general and the situation in Stockholm in particular in an interview published in the Dagens Nyheter (DN) daily on Monday.

"Everyone who's been near Stockholm's inner city knows that the concept of secure-tenure rental apartments (hyresrätter) just doesn't work there," Reinfeldt told the newspaper.

Reinfeldt went on to point out that there is a thriving market in black market rental contracts and that there was little point to secure-tenure apartments in the inner-city as they almost never came onto the market for new potential tenants.

But the prime minister's comments were not welcomed by all parties with an interest in the housing market.

Barbro Engman, the long-term chair of the Swedish Union of Tenants (Hyresgästföreningen), used her blog on Tuesday morning to chasten the PM that "he does not decide how we should live".

"If one is to consider if the rental market works or not depends on the ambitions that one has," Engman wrote, criticising those who argue that a free market in rental apartments would alleviate all problems.

Housing minister Stefan Attefall of the Christian Democrats argued in response to Reinfeldt's comments that secure-tenure apartments are needed in Stockholm's inner-city.

"He describes a problem. But the secure-tenure apartment is needed and has its place. And the government is working to strengthen the standing of the secure-tenure apartment," he said to DN.

Attefall pointed out that an adjustment to greater differentiation of rents levied for apartments in areas in demand to those in the suburbs is underway.

"But the new system does not mean market rents," Attefall pointed out.

Gustav Fridolin of the Green Party described Reinfeldt's comments as "Kafka-esque", arguing that the problems with a black market are no reason for not acting.

"It is important to build more," Fridolin said, pointing out that the problem is not unique to Stockholm's inner-city.

The debate has emerged following a series of articles in DN which highlighted the growing social divisions in Stockholm that come as a result of the city's difficult housing market.

According to DN, people with higher incomes occupy an increasingly large percentage of downtown Stockholm's housing stock, thereby undermining one of the key arguments used in the system's defence.

Stockholm's system of apportioning rental apartments thought secure-tenure rental contracts was developed as a way to guarantee all residents the ability to find housing even in more desirable neighbourhoods.

However, as demand to live in Stockholm's city centre has increased, the system currently doesn't function as originally intended, resulting in artificially low rents for inner-city flats and providing incentive for tenants who hold contracts not to relinquish them.

According to Hans Lind, a real estate professor with the Royal Institute of Technology (KTH), the key problem Sweden faces is that owners of tenant-owner apartments (bostadsrätter) can't sublet their properties at market-based rents, a problem to which Reinfeldt also drew attention.

"If a rental market means having floating rents, then market-based rents are a pre-condition. If you look elsewhere in the world, there is a market for sublets in the downtown areas of major cities," Lind explained to news agency TT.

TT/Peter Vinthagen Simpson (news@thelocal.se)

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Your comments about this article

17:13 February 15, 2011 by big5
Wake up, The Local!

Dagens Nyheter grossly misrepresented Reinfeldt's interview comments, and his press secretary has released the tapes to prove it.

This is a non-story as of the last few hours. You need to move a bit more quickly.
18:51 February 15, 2011 by mojofat
Reinfeldt under fire for stating the obvious!
20:22 February 15, 2011 by Jan M
He must have a brilliant job. Leader of the government, representative of Sweden and the all he needs to describe a problem rather than get his ^£*% in gear and produce a solution that benefits Sweden. What a waste of taxpayers' money he is.
21:40 February 15, 2011 by big5
@Jan M You wrote (of Reinfeldt) "What a waste of taxpayers' money he is. "

The only PM to actually lower taxes you're calling a waste of taxpayer's money? To me he's a godsend. I get like 12 000 a year more thanks to his tax breaks. That's a nice travel purse.

If you want to talk about wasting taxpayers' money, look no further than the Social Democrats who have managed to combine the world's highest taxes with crumbling infrastructure, perennial unemployment, and mediocre public service. Where the hail does all that money disappear to?
05:01 February 16, 2011 by UScitizen
Seems that Rienfeldt is under fire almost every time he opens his mouth. But that's what hapens when you're the main man. All those who didn't like you to begin with are going to speak out against you every chance they get. That's politics.
08:47 February 16, 2011 by just a question
yes Reinfeldt, you should privatize the rental market, build more and create a housing bubble. Nothing we haven´t seen it before. And of course, we need more immigrants to work as construction workers, we need more people in this country! then we send the youth to Norway to work peeling bananas.
11:07 February 16, 2011 by Byggare Bob
@big 5.

the fact that the tapes of the interview have been released by FR only confirm that the story - Reinfeldt under fire - remains very much relevant.

Interesting that the PR specialists are saying that this is part of a deliberate plan to open up this infected issue for debate at the same time as the PM issues a denial.

One thinks that TL and the rest of the Swedish media may return to this issue in the near future.
11:12 February 16, 2011 by jwlundgren
there is an 8-10year waiting list in my kommun. I'd say the housing system isn't working at all.
12:22 February 16, 2011 by corentin
Banks also have a share in the responsability of the system, as some accept to include the right when valuating one's assets : in some cases, the right can be considered as a collateral...
12:22 February 16, 2011 by Jan M
'big5'. You get like 12000 a year more thanks to tax breaks. Fantastic. How much does it cost the economy and individuals when the rail system fails, when crime rates raise and power costs rocket? 12000 per year. Joke money.
13:57 February 16, 2011 by violet76
It is a fact the rental market here for owners and tenant is not as free as some other countries. Wise up the ignorants
15:50 February 16, 2011 by big5
@JanM

Blame the social democrats for the deregulation of the electricity market, not Reinfeldt. That happened under Göran Persson. As for crime rates, they've also been rising steadily since long before Reinfeldt took power.
20:52 February 17, 2011 by Jan M
Doesn't really matter who started it. Reinfeldt has the financial capacity to take responsibility for things. Sweden can afford to do that right now. Instead he's in to cut price sell offs, some extra cash for some people as fixed rebates etc. It worked in the UK in the short-term. In the long-term private sector prices go on rocketing and the benefits you get from lower taxes are pegged to low inflation-pegged pay increases. Overall the cost of living then outstrips wages earnings and the quality of life deteriorates. Believe me whilst your country still has the money to make smart choices for the long-term or end up indebted and broke like Britain.
22:53 February 17, 2011 by dan_sparrow
@ just a question , WORD!!!!
23:19 February 21, 2011 by rumcajs
Gimme a brake. Sweden is one of the coolest places to live in Europe (Europe I said, so please DO NOT compare with USA) thanks to the regulated rents. In most of other european capitals and other big cities (London, Madrid, Paris, Rome, Prague, Barcelona, Milano, etc) one pays around the 70% of an average salary for the rent of a small flat..... in Sweden one pays the 50% or less. Please, let's keep it the way it is.

Everytime some1 tries to make things here like in US, I remember my cousin a long time ago : The guy went to the hair dresser and asked him to cut his hair in layers like Glenn Tipton's (from Judas Priest), but Glenn has straight hair and my cousin had it VERY courly = he looked like a puddle dog, not like a rock star.
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