Home truths: fixed rents threaten new developments

Reform of Sweden's byzantine housing market is a slow business. And this week stories of rent controls, a desperate shortage of student housing in the main cities and a record level of borrowing were signs that finding a place to live isn't getting any easier.

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Thursday's Svenska Dagbladet reported that an official commission has proposed strict controls on rents for newly-built apartments. Tenants will be unable to take their landlord to court to challenge their rent levels, but in return landlords will have to agree a fixed rent with the tenants' association, which they will not be able to raise for ten years without agreement.

The new proposals, if enforced, mean that a landlord will have to enter a collective agreement with tenants before they move in. If they fail to reach agreement, the landlord will be able to set a market rent, but tenants will be able to challenge him in court after six months.

There was no doubting who was most pleased with the commission's findings. "This will lead to tenants getting more influence over rents in new buildings," said Barbro Engman of tenants' organization Hyresrättsföreningen.

No doubt landlords would agree with that diagnosis, but unsurprisingly they do not share their tenants' enthusiasm for the changes, and SvD says that they see the proposals as "giving tenants a right of veto over new building projects."

Perhaps a popular idea for a new building project would be some new student flats. DN reported that Sweden needs over 62,000 new homes for students. SFS, the Swedish national student union, released figures showing that in Stockholm alone, 31,680 students were queuing for just over nine thousand flats.

"If the situation doesn't improve dramatically, large groups of people will be unable to study," warned SFS vice-chairman Kristoffer Burstedt.

If any homeless students still think that anything is better than living at home, news from a block of flats in Rinkeby, a suburb of Stockholm, might prompt them to think again. Arguments in the laundry room in the block have prompted landlord HSB to install security cameras to watch over tenants doing their laundry.

"It's been hell for over five years," tenant Kerstin Nordström told DN, "I would get a pain in my stomach every time I had to come down here."

The source of the problem was people who did not live in the block coming into the laundry room with big bags of washing, then starting arguments when residents who had booked times came to complain. "They even stole toilet seats and washbasins by just ripping them away - pipes and all," HSB's Walter Tryggvason told the paper.

Renting might seem unattractive, but when it comes to buying Swedes are spending more than ever before. Rising house prices and low interest rates mean that Swedes' mortgages are now worth a combined 1,360 billion crowns. Between January and August this year, the figure increased by 4.6 percent.

Despite the high levels of loans, experts pointed out that there were big differences from the circumstances surrounding the property crash of the early nineties. The main difference was today's low interest rates.

"Despite the fact that debts are nearly as high, interest rates are less than half of what they were," Johan Hansing of the Swedish Bank Association told DN.

Sources: Dagens Nyheter, Svenska Dagbladet