Housing system under fire

Renting an apartment may become considerably more expensive as a result of an ongoing state review of the Swedish rental system.

Housing system under fire

An excerpt from the report, viewed by newspaper Dagens Nyheter, argues that companies in the public housing sector should “strive for market rates”.

Public housing companies, including many owned by local authorities, 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 ($1.6 billion).

The touted reform would mean a removal of the current rental ceiling, as private housing companies would no longer be bound by the levels set by the public housing sector. Private organization Fastighetsägarna predicts that rents will increase by around 35 percent.

Such an overhaul of the Swedish rental market can expect to meet with resistance from some on the domestic front.

“This is a homemade interpretation of EU regulations. The government is taking the line preferred by private housing companies,” Barbro Engman, chairwoman of the Swedish Tenants Union (Hyresgästföreningen), told Dagens Nyheter.

The Swedish rental market has previously come in for strong criticism from the Organisation for Economic Cooperation and Development (OECD) and the European Union.

Heavy regulation of rent levels forces people who might have preferred to rent into buying property instead, particularly in Stockholm, according to an OECD report earlier this year. Rent controls also force people onto the black market, lead to the conversion of rental flats into tenant-owned apartments and lead to low construction levels of rental flats.

Eight percent of the population of Stockholm is queuing for an apartment, with an average waiting time of 10 years, while well-connected people are able to jump the queue. This benefits insiders and people who are already privileged, the report argued.

“Our main concern over rent controls is that prices do not respond to demand and supply,” said Felix Hüfner, one of the report’s authors, to The Local.