(edit title) Government says yes to making subletting easier How this effects home buyers now? Options

[jaiho21]

Hello people,

FYI; http://www.thelocal.se/40230/20120412/

How this effects home buyers ?
Is it going to reduce property values now as rentals becoming easier? or still owning a house best bet in Sweden?

Gracias,

[byke]

Still not enough properties in desirable areas.
So certain Areas will retain and continue to flourish, regardless.

[entry]

It was my impression from reading the few sentences in the article that this might have something to do the condo laws in Sweden. The laws in the past restricted owners of condos from subletting their property. If that is the case, individuals who own condos will now be able to legally sublet their property. This would have the effect of increasing the availability of rental property in desirable areas.

[Yorkshireman]

Yes. It is going to be very interesting how they word the law change, and how they intend to implement. And what tricks will be used to prevent it's use!

Remember, when someone buys an apartment in Sweden, they buy a Bostadsrätt, which is owned by the Bostadsrättsförenging (BRF), like a building co-operative/form-of-company. You do not actually own the property, you buy the right to use that apartment. It is often viewed as owning property, but it legally is not.

There are no laws preventing people from renting apartments today. However, it is written into many, most?, BRF's own rules for members (those with the right to live there) that in order to rent out your apartment you need permission from the BRF board, and if given it is most often for a limited period. My BRF has a rule that it is maximum 12 months.

What the government is proposing, is overriding the BRF rules and allowing people to rent out their apartments without asking for permission.

[byke]

I think its really meant for city dwellings more so.

There has been an economic slump and ever increasing amounts of bumpkins etc, moving to cities for work etc .... and with such a shortage of flats and lack of investment in new builds to cope with this increase, it reflects badly on government.

Thus by removing one block to help house people may help take some of the pressure off the government.

[Yorkshireman]

That would be working with the assumption that there is a large number of apartments that are not being used already? and the BRF is stopping them being rented out!

Or, there are a lot of people wanting to move in with each other and rent out one of the apartments?

Or... which I believe is more likely, there are a number of people with a large amount of spare capital that would like to buy up apartments to rent out, which is not easy with todays BRF rules.

Most BRF's I have come across during the years are more than happy to let You rent out for a maximum period of time!.

[byke]

I think that part of the argument has been that many people often own apartments (or have first hand contracts) that they continue to own or pay rent for ... even if they dont use or live in them.

As such is the difficulty in renting out a flat you own, or the risks of subletting a first hand contract. That the risk of loosing such is so great, thats its better to be paid for and be empty.

[Shibumi]

That would be working with the assumption that there is a large number of apartments that are not being used already? and the BRF is stopping them being rented out![...]Mo ... (show full quote)

That would be working with the assumption that there is a large number of apartments that are not being used already? and the BRF is stopping them being rented out!
[...]
Most BRF's I have come across during the years are more than happy to let You rent out for a maximum period of time!. ... (hide full quote)

Early this month, I had to move for the second time in five years because of the BRF refusal to extend renting rights to the flat "owners". As a result, both of my landlords had to sell their places because they were working abroad and could not afford to leave the place empty. I am an exemplary neighbor, always doing my share of the common area cleaning, never leaving lint in the dryer's lint screen, etc. But I got kicked out both times just because "rules are rules- and if we make an exception for your tenant, then we have to make an exception for everyone, blah blah blah". Also, the first flat I found for my most recent move was taken off the market because the BRF refused to allow the sublet and I had to find another place in short order.

So in my experience, this is not at all a rare occurrence... at least not rare in Stockholm. I, for one, am delighted about the new measures and hope they are enforced before I have to move yet again.

[Yorkshireman]

I think that part of the argument has been that many people often own apartments (or have first hand contracts) that they continue to own or pay rent for ... even if they dont ... (show full quote)

I think that part of the argument has been that many people often own apartments (or have first hand contracts) that they continue to own or pay rent for ... even if they dont use or live in them.

As such is the difficulty in renting out a flat you own, or the risks of subletting a first hand contract. That the risk of loosing such is so great, thats its better to be paid for and be empty. ... (hide full quote)

This proposal will not change the rules about 1st hand contracts etc.. it is purely aimed at bostadsrätt and BRF rules.

I'm sorry to hear You have to move again for the 2nd time. I also moved very many times in the space of a few years when I 1st came to Sweden. But I understood the rules and that's how it is.

When someone buys a bostadsrätt, they are accepting the rules of the BRF. Pure and simple. Jeez... I know BRFs where in their rules it is clearly stated they reserve the right to ban selected guests!

This legislation is taking away the power from the BRF. ie. It is actually over-ruling the majority!. It has ALWAYS been possible to get a majority on the board of the BRF and change the rules to allow free sub-letting. Doesn't need a special law aimed specifically at that!

It would probably make more sense after the law change, for the BRF boards to buy back the bostadsrätt when they come for sale, and rent them out themselves, with the proceeds going to the BRF!

[Mo]

I don't see any significant impact on property prices (purchase)
I am not sure whether the new rule addresses the limit on the length of time for which you can let out a flat - which is essential to make a significant impact.
I am not sure to what extent tenants will be bound by their contracts & will be unable to appeal their rents to hyresnämden.
It is unclear as to whether this now opens a "buy to let" free for all - which I believe would be catastrophic - you only need to visit the UK to see the impact. In my opinion there should be a maximum number of flats (1 possibly 2) to which the new rules apply.

[jaiho21]

I think,

• Now that the owners can freely decide on renting out their places, there will be huge number of rentals available in market.
• This will reduce the necessity to buy apartments to have stable accommodation in Sweden (especially Stockholm)
• This in turn, reduces the values of real estate in and around Stockholm.
• So, Apartment buyers should wait for next 3-6 months to see the lowest of market rates.

Any takers or comments?

[Yorkshireman]

I think, Now that the owners can freely decide on renting out their places, there will be huge number of rentals available in market. This will reduce the necessity to buy apa ... (show full quote)

I think,

• Now that the owners can freely decide on renting out their places, there will be huge number of rentals available in market.
• This will reduce the necessity to buy apartments to have stable accommodation in Sweden (especially Stockholm)
• This in turn, reduces the values of real estate in and around Stockholm.
• So, Apartment buyers should wait for next 3-6 months to see the lowest of market rates.

Any takers or comments? ... (hide full quote)

Yes

Now that the owners can freely decide on renting out their places, there will be huge number of rentals available in market.

Bostadsrätt do not have owners, they buy the right to use the apartment, it is owned by the BRF, who current sets the rules with regards if You can rent it out.
Where is the evidence that there is a huge number of empty apartments in Stockholm, whats the number?

This will reduce the necessity to buy apartments to have stable accommodation in Sweden (especially Stockholm)

How?
It is more likely that whoever is renting out the bostadsrätt will want it back at some point, maybe even to finally move back or sell! They would only rent out, as now, for limited periods at a time with the right to recover the apartment.
Remember, as a tenant, if the owner of the apartment does a runner with the rent, and does not pay any mortgage, then the bank would take it over ... with a view to selling to recover the remaining debt quickly, or at least loss.
You are actually more vunerable if renting from a private person, than if via established companies.

This in turn, reduces the values of real estate in and around Stockholm.

No it doesn't. Rents are on the increase, especially in Stockholm ... in certain parts they have seen double digit rent % increases recently! This certainly would not reduce values, in fact may potentially increase them.

[jackityjack]

Is there a proposed timeline on when this change would be implemented?

[gplusa]

Hopefully never. I think that the last thing that people who have invested their money into buying a part share in the building they live in will want is to have people living long term in the building who are not answerable to the group. Bostadsrättsföreningar are not some faceless corporation who own buildings (like HSB), they are the people living in the building who collectively own the entire building together. As the joint owners of the property, they have a vested interest in the current and future wellbeing of the property. Tenants don't have that same interest. There's the issue of who has the right of power over along a term tenant in a BRF building. Can the styrelsen's ordförande tell a tenant that they need to turn their music down at 2am ? The tenant could tell them to piss off and take it up with their landlord who may not even live in Sweden. The current BRF occupancy restrictions serve to limit the amount of property speculation by a small group of people. It doesn't eliminate it, but it does restrict it compared to many other countries where rental properties are purchased by a select few, driving the cost of property purchase beyond the reach of the average person. Opening BRF purchasing up to property investors may well result in an increase of rental prices. BRF monthly operating fees generally run at "break even" whereas an investor purchaser is going to want that fee plus a tidy profit for their troubles.We bought into a BRF because we wanted to live as part of a community that cared about the atmosphere and value of their environment. That's the attraction of a BRF. Not all tenants are going to be bad people, but they are a higher risk of not having the same level of duty of care than a person who has their own private money invested in the joint ownership of the property. I understand it's tough finding housing in Stockholm etc, and there needs to be a solution found. Just not convinced that this is the solution. The densely populated areas need additional housing, not just having the existing housing moved around. It's not cheap to build housing in Sweden, and maybe there's some room to move there. Maybe the south of Sweden doesn't need to have triple glazed windows and 200mm thick wall insulation. I'm sure there is room for the building standards to be made more flexible in order to suit local conditions and requirements. That would surely help the building affordability and availability issue.

[entry]

The new regulations will neither inhibit the ability of the busy bodies that infest condo boards to call the police to make frivolous reports nor deter the busy bodies from excessively restricting the activities and modifications to property owned by other individuals within the buildings.

Individuals who travel and have second homes will be able to rent out their condo property, increasing the usage of space in a fiscally and socially responsible & legal manner as opposed to doing the same exact thing illegally.