Government says yes to making subletting easier

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.

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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.