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Stockholm sublets set for 'dramatic' rent hike

Stockholm sublets set for 'dramatic' rent hike

Published: 24 Jan 2013 11:18 GMT+01:00
Updated: 24 Jan 2013 11:18 GMT+01:00

Tenants' advocates warn that rents charged to sublet flats in Stockholm could double next month due to changes in Sweden's subletting laws, amid reports that rents are already higher than current laws allow.

Currently, the average cost of subletting a one-bedroom apartment in central Stockholm is 6,200 kronor ($950) per month, which is almost 1,300 kronor more than current rules allow.

The finding comes from an analysis of 71,000 subletting listings published over the last five years on Swedish buy-sell website Blocket and carried out by the Svenska Dagbladet (SvD) newspaper.

"This indicates that many people are charging illegally high rents today," Terje Gunnarsson, chair of the Swedish Union of Tenants (Hyresgästföreningen) in Stockholm, told the paper.

"The conclusion is that those with centrally located apartments are trying to earn as much as possible."

However, with a new law that kicks in on February 1st, property owners will be able to charge tenants rent in line with what it actually costs to own their homes.

The changes, approved by the Riksdag in December, are meant 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 legally charge whatever they want, instead they are restricted to setting a "reasonable rent" (skälig hyra) tied to the average price charged for rental properties in the area.

That proviso means owners cannot set rent to cover the actual costs of ownership.

But with the new law in place, questions have been raised about just how high the rent prices can soar.

The Swedish Union of Tenants fears that, for example, that the cost of subletting a 42 square-metre apartment in the centre of Stockholm could double to 10,300 kronor.

"This would be a dramatic rise in relation to what is allowed today and affects those who live in a sublet home because they're unsure of their place in the housing market," the tenant union's chief negotiator, Pär Svanberg, told SvD.

However, others welcome the changes.

"The subletting market has been too narrow, we need diversified growth and more homes," Martin Lindvall, the Swedish Property Federation (Fastighetsägarna), told the paper.

He considers the current laws mean that many Stockholm home owners have chosen not to rent out their homes because the rent they receive wouldn't have covered their costs.

"Most likely, there should be more housing now."

TT/The Local/og

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Your comments about this article

12:57 January 24, 2013 by expatdave
Of course rents will go up...that's a no brainer and they will keep going up until the supply increases or the demand reduces. Currently it's fair to say that there is more demand than supply just look at the waiting lists. I don't think that by giving home owners the right to charge what they want is going to increase supply because one of the main obstacles remains in place and that is home owners are not allowed to rent their own apartment out without the permission of the House....This is where the suits should have started......one rule is no good without the other and as of the 1st Feb this will be the case which is only going to hurt those people that are struggling to get ahead now by having to pay a massive amount more in rent.
13:50 January 24, 2013 by just a question
So they give the owners the right to charge what they want for their apartment. And they expect this to be a brilliant solution.

Are this people in the government making fun of the people?

But again, it's not strange. This goverment only care about make rich people even more rich.
13:52 January 24, 2013 by djmarko
Definitely agree, a tenant should be allowed to rent their apartment without the approval of the board, they should equally be alowed to set the rent to offset the expenses, then maybe there will loads of apartment on the market, right now it is a nightmare to find a place to live in central Stockholm unless you buy!
14:31 January 24, 2013 by EP
How is this different than subletting to companies. When I worked in Stockholm, I couldn't find a private sublet since everyone wanted to sublet only to companies, since then they could charge whatever they want. Perhaps the Union of Tenants should also look at that phenomenon???
15:49 January 24, 2013 by engagebrain
Licence to print money.
16:10 January 24, 2013 by hatim
How I see:

The people who would benefit from this

-Property builders

-Investors who want to invest into property

-People who want to rent out their apartment without a loss.

-People who can afford to pay the rent but cannot today due to competetion.

People who will be at a loss

-Those who are living beyond their means. Living in the city centre at a low rent because they were there first.

It will be even harder for some one who can barely afford to live in Stockholm to continue living here. This will indirectly force businesses to reinvent (fan out more out side of this city of Islands to some proper landmass)

I think it will stabilize the supply a bit, and demand might also go down.
19:45 January 24, 2013 by Mib
@just a question I'm sick and tired of this kind of BS comments. If you want people to rent out their homes, you have to allow them to at least cover their costs...not at a LOSS. Rent caps is part of the problem that private firms are not building enough new homes...wasn't it only 170 last year? Is that enough for you @just a question? Maybe if rents are raised to a market level, then property prices might lower.

We live in a capital society...not a communist state. However, I want a capitalist society with controls where property speculation is discouraged by private individuals as a home should be treated as a home....that is why the UK, Spain etc have the problems they have today! The principle is you study/work hard and in turn it is more likely you will earn better than average income and are able to afford to live in the more desirable areas. If you haven't worked hard or achieved a reasoanble level of education, then don't expect to live in Östermalm in Stockholm. That's part of life! The problem is the Government, but in the area of not setting an attractive environment where companies can massively increase their building of new homes.
21:18 January 24, 2013 by ochena
It's a most 'Nobel' idea came from the back of the body of the policymakers not from the brain....!!! 1st i agree that apartment owner may charge whatever they would like to charge, now think about the income level of the tenants...their salary should also be increased by the government and pvt company ..... or their should be supply enough so that the tenants could compare and the market could be competitive....

2ndly the income of the owner from the apartment or room should be covered by tax … he/she must pay tax over certain limitation….!!!
10:12 January 25, 2013 by rramirez
This is just a first step but an important first step. Look at the comments by Terje Gunnarsson as he destroys his own case. "People are charging illegally high rates"? Well, then people are willing to pay illegally high rates. "People are trying to earn as much as possible"? Of course. And renters are trying to pay as little as possible. As most people seem to realize, the official rate does not reflect equilibrium and Terje is defending the official rate. While housing is a complex issue, the policy that Terje is defending has played a role in a massive housing shortage in Stockholm and rather than defend the broken status quo he should be offering a solution. Maybe he has but its not written about here.

That said, I hope that there are restrictions on rent increases for existing tenants so that rates do not increase massively and immediately for people already living in a place. That could prove disastrous for many people, and jeopardize this important and sensible move.
17:07 January 26, 2013 by grymagnusson
subletting is always a temporary solution, usually on a one term contract basis. Everyone currently sub-letting knows that will have to move in 3,6,9 months or whatever.

The tenant's association defends its members - current tenants benefitting from the system at the cost of those on the outside. There are not interested in offering any solutions (except build, build - where?) and as rramirez says are only interested to "defend the broken status quo".

There has been a housing "shortage" in some areas of Sweden for decades and so it goes on.
19:54 January 27, 2013 by Brucelee@stockholm.sweden
Normally if you can not find a place to build more houses then you build high density buildings or skyscraper, that happened everywhere in large cities allover the world, it will not necessarily destroy, as some retarded pretends to concern, the beauty of a city. No
21:32 January 30, 2013 by Barlas
need a room in Stockholm..... looking a room for last month ((((((..... can any one help me or guide me ......us.barlas381@gmail.com
11:48 February 5, 2013 by BennyOBenny
It's called market value and I think people would rather that then sofa surfing
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