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Government says yes to making subletting easier

Government says yes to making subletting easier

Published: 12 Apr 2012 15:28 GMT+02:00
Updated: 12 Apr 2012 15:28 GMT+02:00

The Swedish government has proposed to loosen current restrictions facing flat owners who want to sublet their apartments in an effort to help ease the current housing crunch in large cities.

Homeowners will in future not need permission from the local housing association (Bostadsrättsföreningen) to rent out their apartments, while real estate taxes have also been reduced by 630 million kronor ($93.1 million) to speed up the construction process.

“We have a situation where we have small margins in the Swedish economy,” said Fredrik Reinfeldt in a press conference, wrote TT news agency.

“But most analysts are predicting that there can be a little more speed in the Swedish economy by 2013.”

He stressed that the investment in the property market was aimed at increasing labour mobility and open to short-term accommodation opportunities, without having to hire on the black market.

The new proposals come in the wake of a government inquiry submitted last month, investigating why home owners in Sweden were reluctant to sublet their apartments.

Currently, owners of tenant-owner apartments (bostadsrättlägenheter) in Sweden must first request permission from the board of the local housing association before subletting a flat.

Furthermore, flat owners aren't free to charge whatever rent they'd like to prospective tenants, but instead can only charge what is considered "reasonable" rather than a rent that is in line with actual costs of ownership.

One change proposed by the government was that the local housing associations’ permission will not be needed when an apartment is rented out second hand.

Annie Lööf, the leader of the Centre Party, was also present at the press conference, and stressed that the proposals were not only intended to increase the labour mobility, but also the housing supply.

She said the effort would lead to general improvements in the multi-housing market renting rates and that property taxes will be reduced from 0.4 to 0.3 percent. Furthermore, the maximum amount for a property tax has been cut from 1400 to 1200 kronor.

”If you look at an average student room it could mean that the rent goes down by one percent,” Lööf said, according to TT.

In leasing an apartment, the landlord can charge the cost of the monthly fee and associated capital costs. If the owner lowers the loan, then a lump sum basis shall apply.

This, according to Reinfeldt, will affect the supply, as many people today may not receive payment for their actual expenses when they sublet.

Stockholm’s housing market is such that you can buy a really expensive tenant-owned place for eight million kronor. And then the fee can be low, maybe a few hundred kronor,” said Reinfeldt.

The Prime Minister also stated that limiting the amount of apartments that housing associations can rent out will be the government’s “big proposal” in the Spring Budget plans.

While not giving exact figures, Reinfeldt estimated that around 20,000 homes will be now rented out in light of the new proposals, and 400 new apartments built per year due to the tax cuts.

However, not everybody is impressed with the new proposals. Ulla Andersson of the Left Party claims that reducing the property taxed will lead to new homes.

“I find it hard to see how it will lead to housing construction,” she said in a statement to TT.

TT/The Local/og (news@thelocal.se)

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Your comments about this article

16:40 April 12, 2012 by EtoileBrilliant
I'm no expert at this but isn't there a fiscal issue for Bostadsrätt about the maximum percentage (I think it's 15%) by area that can be given over to commercial or investment property.

Can anyone shine a light on this?
18:00 April 12, 2012 by Swedishmyth
How about the government "letting" private property be private. By what right do they interfere with renting and mutually agreed upon fees to begin with? Or perhaps they never saw homes as private property in the first place?
18:30 April 12, 2012 by Frobobbles
They should prohibit subletting instead. It's chaos out there, a large part of the population can never get a proper flat because others are hanging on to their old ones.
18:45 April 12, 2012 by engagebrain
People buy property on the basis that the neighbouring flats are owner occupied and, with minimal consultation, changes the rules for private associations. This is big intrusive government.
21:10 April 12, 2012 by robbz23
@Frobobbles Actually in this case by subletting I think they mean homeowners renting out apartments. It was confusing for me too because I think of subletting to mean a person who has rented an apartment then turning around and renting it to someone else. Which I agree I think they should restrict because it causes so many problems finding first hand apartments in big cities like Stockholm.
05:55 April 13, 2012 by Jeff10
The gov't shouldn't tell private HO associations what rules they may have in their by-laws. This should be determined by the members of the HOA. If a member disagrees, the member may sell the home.

If a HOA's rules allows for the renting homes, then the gov't shouldn't have any say in what is charged for rent.

To paraphrase Thomas Jefferson, one of the authors of the US Declaration of Independence:

'A gov't that has the power to give to you anyting, also has the power to take from you everything.'
07:00 April 13, 2012 by dusanka
Finally a right thing to do!! Now we foreigners who live here in Stockholm will be able to sublet an apartamnet and pay dearly to the owner.Up to now it was such a pain in the ass like nowhere else on this planet.

We are totally thankful to those who changed whatever rule that was to make our stay here in this great country absolutely fantastic!

Thanks guys,

kisses
09:23 April 13, 2012 by B Slick
Bad idea! There is a big difference between renting and owning. Renters pay their rent and care about nothing else. Owners care because someday they will want to sell their apartment, so they care about their apartment and the area around it. LET RENTERS RENT AND OWNERS OWN BUT DONT MIX THE TWO TOGETHER!!
09:43 April 13, 2012 by animal_politicum
It should be noted that Swedish law is constructed so that while you might own a house you may not directly own an apartment in a house but only indirectly as a member of the Bostadsrättsförning which owns the house; hence the restrictions of the rights of the individual owner of an apartment and the need for authorization to sublet by the board of the Bostadsrättsförning. In many other countries people own the apartment directly and are not subjected to such restrictions.
23:45 April 13, 2012 by skylarkpilot
Swedish law is an ass ! You either own property, in which case you should be able to do with it what you like, or you don't. Sweden has to be one of the craziest countries in the western world.
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