Alliance divisions over property taxes

Disagreement has broken out among parties in the centre-right Alliance after Moderate Party leader Fredrik Reinfeldt said that he would consider reducing mortgage interest tax relief to finance the Alliance's proposed abolition of property tax.

The four party Alliance has already agreed to get rid of property tax, which they plan to at least partially replace with a local property fee.

Reinfeldt said reducing the interest tax relief was just one option.

“I don’t have a finished proposal, I have no calculations, and the crucial factor will be how the local property fee is designed and what income it gives,” he told news agency TT.

The Christian Democrats’ have proposed a local property fee of 2,800 kronor for a villa and 900 kronor for an apartment.

Leader Göran Hägglund said he didn’t want to change the interest tax relief.

“I think that would make life harder for a lot of people, young people and others, when they want to buy and own their own property. That would of course be unfortunate,” he said. But he agreed with Reinfeldt that the property tax should be financed by changes to other aspects of taxation on property.

Stellan Lundström, professor of property economics at the Royal Institute of Technology in Stockholm, says that reductions in interest tax relief could hit people who own apartments in major cities, and who have large mortgages.

“In relative terms it is the people with large mortgages on apartments in attractive locations that will be worst hit. But it would also affect house-owners in places like [expensive Stockholm suburb] Danderyd.”

But Reinfeldt insisted that apartment owners shouldn’t worry – the consequences of different taxation models would be carefully investigated.

“We need to weigh things up so that we don’t have negative effects on particular groups, reduce predictability for them or upset their chances of supporting themselves. We don’t want to replace an arbitrary tax with another form of arbitrariness,” he said.

He also pointed out, however, that people who live in their own apartments or in houses in the cities will be the big beneficiaries when property tax is scrapped. Apartment owners will benefit from the Alliance’s decision to get rid of taxation on tenant-owners associations and to abolish property tax for apartment blocks.

“This means in reality around 1,000 kronor per year in reduction,” he said.

Göran Persson, Sweden’s prime minister, said that mortgage interest tax relief is part of a robust tax system that shouldn’t be changed.

“It is important that people who have taken out a mortgage to buy a home do not suddenly face changed circumstances. This is a condition for all young families who have put themselves in debt to buy a home,” he said.

He declared himself surprised by Reinfeldt’s suggestion to finance the abolition of property tax by reducing the tax relief.

“This means quite simply that people who live in really big houses and are getting on a bit get a big tax reduction, while people who are young and have just started out get big tax rises. That’s a bad policy,” Persson said.

The big losers would be young families with children who recently bought houses in the major urban areas, said Lars Kilander of Mälarsamfundet, which represents Swedish real estate agents.

“A combination of interest rate rises and a reduction in mortgage interest tax relief – that is a situation we absolutely don’t want to see,” he said.

For members


Five tricks Swedes use to avoid the long wait for rental apartments

The official waiting time for apartments in Stockholm, Gothenburg, and Malmö varies between three and eleven years. But Swedes have their own tricks for jumping the queue.

Five tricks Swedes use to avoid the long wait for rental apartments

There’s no requirement for landlords or renters to use the queuing systems run by the municipalities in the big cities, but most of the big ones do, the intention being to reduce corruption and increase fairness in the rental market. 

The Stockholm Housing Agency, or bostadsförmedlingen, has a queue between seven and eleven years long. Boplats Gothenburg has an average wait of 6.4 years, and Boplats Syd in Malmö has an average waiting time of nearly three years.

According to Kristina Wahlgren, a journalist at Hem & Hyra, Sweden’s leading rental property magazine, the system puts foreigners and recent arrivals to Sweden at a significant disadvantage. 

“It’s extremely difficult if you are from another country. You don’t have any contacts, and it’s quite difficult to understand if you haven’t grown up in this culture,” she says of the system. “There are some quite subtle aspects, and there’s vänskapskorruption [giving special advantage to friends]. ” 

Listen to a discussion about Swedish queue systems on Sweden in Focus, The Local’s podcast. 

Click HERE to listen to Sweden in Focus on Apple Podcasts, Spotify or Google Podcasts.

Obviously, the biggest advantage faced by locals in Sweden is that they normally joined the queue the moment they turned 17, so by the time they’re looking for an apartment as a young adult, they’re already near the front. 

But even for new arrivals in Sweden, it’s possible to wait a much shorter time if you know the tricks, says Wahlgren, who has been nominated for Sweden’s Guldspaden journalism prize for an investigation into how Malmö finds housing for homeless people. 

Kristina Wahlgren, a reporter for the Hem & Hyra newspaper. Photo: Hem & Hyra

1.  Apply for more expensive new-build apartments to start off with 

If you’ve got a good enough salary, and are willing to pay high rent for your first few years in Sweden, this can make it easier to get an apartment, as there is less competition for more expensive, new-build apartments, Wahlgren says.

“If you’re willing to pay high rent, then you can get an apartment within a couple of months [in Malmö]. If you want a cheaper apartment, it can take years. So it’s quite a big difference.”

2. Rather than wait for your perfect apartment, take what’s available and then swap 

The rules recently got a little stricter, but it’s still relatively easy to swap between apartments once you have a first-hand contract. There’s even a website, Lägenhetsbyte, which acts as an interface. 

This means, if you use the method above, and decide to rent a more expensive new-build apartment with a shorter queue, you can then downgrade to a cheaper apartment with someone who is after somewhere newer and swankier.

Rental queues are also shorter in less desirable areas of Sweden’s cities. For example, the waiting list in Norra Hissingen in Gothenburg is only five years, half what it is in Majorna. It can be quicker to make do with living in a relatively dreary area, and then swap with somewhere better, than to insist from the start on an apartment in your dream location. 

“If you can’t wait for the right department, just take the one that you get, then you can keep on looking and when you do have a lease, you can change the lease with someone else,” Wahlgren says. 

To change apartment, you need to have a so-called “acceptable reason”, such as needing a bigger or smaller apartment. With any luck, your landlord should accept the swap. If they refuse you can challenge their decision at your local hyresnämnden or “rental tribunal”.  

3. Use the tricks for contacting landlords directly  

Landlords in Sweden are not required to use the municipal rental queues to find their tenants, and if a suitable tenant presents themselves just as an apartment becomes free, they may prefer to take someone they know.

This is particularly the case with the smaller, private landlords. It’s possible to find lists of private landlords online, such as here. But Wahlgren recommends putting in a bit of legwork.

“One way to find who owns an apartment block, is to just go around and check on the buildings for the names of the landlords, and look in the stairwells for the number of the landlord’s agent.” 

Once you have the number, you have to ring both regularly, at least once a month, and also strategically. 

“It’s important to call at the right time,” Wahlgren says. “Because normally apartment rentals end at the turn of the month, so that’s when you’re going to call. You don’t call on the 15th, you call on the 31st or the 1st of the month.”

4. Exploit all the friends and contacts that you have 

When someone hands in their notice on a rental agreement, they may try to shorten their notice by finding a replacement for the landlord, or they might find a replacement simply as a favour. This is why it’s important to ask your friends and work colleagues if they know of any apartments becoming free. 

“If they use the municipal queue, they have to follow the rules. This way, they can choose their own tenants,” Wahlgren says of the appeal of this to landlords. “If you’re a nice person, you might be able to just talk your way into an apartment.” 

5. Be a student 

“If you’re a student, there are special housing companies in the university cities, different foundations that rent out apartments,” Wahlgren says. But then you have to study.” 

Illegal ways of getting an apartment

All of these ways of getting a rental apartment are legal, but there are some ways of getting a rental apartment more quickly which are not.

1. Paying a fee

You may also find landlords or intermediaries on websites such as Blocket, who ask for a one-off payment to jump a rental queue, or get a rental apartment. This is illegal. “You can lose your money, you can lose the apartment, and in the worst case, you can go to prison,” warns Wahlgren.

2. Getting an illegal subtenancy 

It’s perfectly legal to rent out your rental apartment to someone else for a period, if you have a valid reason for doing so and your landlord agrees. But such is the pressure to get housing that a market has sprung up in illegal subletting. Before signing a contract for a sublet, make sure that the landlord who owns the property has agreed to it. 

3. Bribing someone running the queue 

There have been cases of people working for municipalities logging into the housing queue and altering it, either as a favour to their friends, or for money. This is fairly rare, and in the unlikely event that someone offers to do this for you, it’s best to decline.