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Swedish tenants "could face market rates"

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12:25 CET+01:00
Sweden's public housing system has come under fire in an international report, which argues that state funding of the housing sector breaks EU law.

In its analysis, credit ratings agency Standard & Poors predicts that the public funding of housing companies owned by local authorities will be phased out, reported Svenska Dagbladet.

Such housing companies dominate Sweden's local property markets, with rents kept low by billions of kronor being pumped in by local authorities every year. In 2002 the publicly-owned property firms were subsidised to the tune of 11.5 billion kronor.

If the European Commission comes to the same conclusion as Standard & Poors then Swedes will see their rents gradually coming into line with market prices. At the same time, the local authority-owned housing companies will lose their stranglehold of the rental market.

In May 2005 the European Property Owners' union (EPF) reported the Swedish system of subsidies to the European Commission. The union is arguing that the subsidies, combined with the local authorities' role as regulators, limits the ability of private property owners to negotiate their own rental rates.

According to Svenska Dagbladet, discussions between the Swedish government and the European Commission about the matter has been on hold since the election in September, but the issue is now being addressed once again.

The Swedish Union of Tenants expressed concern about the consequences of the report.

"The risk is that we get a public housing system which is no longer in the public interest," said the union's press officer Peder Palmstierna to SvD.

"That's why we're open for discussions about how we should create a new ceiling for rents."

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