The government wants to boost the supply of properties available for rent by removing the current cap on how much flat owners can charge would-be-tenants.
Currently, flat owners cannot charge whatever they want, instead they are restricted to setting a "reasonable rent" (skälig hyra).
That proviso means owners cannot set rent to cover the actual costs of ownership.
But starting on February 1st, 2013, property owners will be able to charge tenants rent in line with what it actually costs to own their homes.
The Riksdag's Civil Affairs Committee approved the government's proposal on Tuesday.
In addition to rent levels, the proposal strips tenants of the right to take landlords to court and reclaim money if they can prove they have paid too much rent according to the guidelines.
The Riksdag committee rejected, however, a related proposal that would allow tenants to rent out their homes without asking their tenancy organisation (bostadsrättsförening) for permission first.
Owners will still have to apply in writing before subletting their flats.
Tenant advocacy groups slammed the proposal, which should be voted into law on December 17th as the government leans on the minority Sweden Democrats to get a majority in parliament.
"The government and the Sweden Democrats don't care at all about renters," Barbro Engman, chair of the Swedish Union of Tenants (Hyresgästföreningen), said in a statement.
Engman thinks the new law is based on a "theoretical model" and will end up hurting those already struggling to find a place to live.
"Those who sublet are often young people who have a hard time breaking into the job market, so those who have the least ability to pay are going to be paying the most," she told the Metro newspaper.
Liberal Party (Folkpartiet) MP Nina Lundström, who serves as vice-chair of the Civil Affairs Committee, was optimistic that the new law would help ease the housing crunch that plagues Stockholm and many other cities in Sweden.
"I hope that we end up with more apartments with the guidelines on how sublet rents are set," she told the newspaper.
Story continues below…
However, she admitted that the effects of the new law remain uncertain.
"It's hard to say today how much the volume of rental apartments will ultimately be affected."