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Government averts threat of market-set rents

TT/Christine Demsteader · 13 Nov 2009, 16:44

Published: 13 Nov 2009 16:44 GMT+01:00

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The government has been conducting a review into changes to the Swedish housing market affecting rental apartments.

Sweden’s utility based value system for allocating rental housing – which takes an apartment’s condition, location and the year it was built into consideration.

It also a system based on negotiated rents set by collective bargaining and those factors will remain, to the relief of the Swedish Union of Tenants (Hyresgästföreningen).

”Market-oriented rents would have been a catastrophe for the country’s tenants,” Barbro Engman, chair of the organisation said in a press statement.

”With the current housing shortage across the country, it would have resulted in substantial increases in rental fees.”

Rental fees can still be negotiated with the same principles as before and following the government proposal private housing companies can also use the same process.

Story continues below…

It means public housing companies consequently lose their roll in setting the standard for rental fees.

According to the government, the proposal brings a large-scale housing reform one step nearer in a bid to put the Swedish housing market on an improved course.

TT/Christine Demsteader (news@thelocal.se)

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Your comments about this article

18:13 November 14, 2009 by here for the summer
funny headline ..here's a few alternatives

Government ensures lack of rental housing in highest demand locations

Government endorses black market rental system for rental housing in Stockholm
17:47 November 15, 2009 by EtoileBrilliant
Totally agree.

Like everything else in Sweden that is totally "controlled" (Systembologet, etc), it suits the incumbents to keep the status quo, making it difficult for new entrants to enter the market.
09:59 November 16, 2009 by meldyer
I love the title of this article. Since when did the supply curve meeting the demand curve constitute a threat?

But then again, the writer was merely telling the truth. The fact is that this would be catastrophic here in Sweden. The government has controlled so many things for so long that losing this control would put people in quite a predicament.

I must say that the one advantage to having their hand in the market is the fact that the elderly and young can "afford" to live in the city center, making the city a more complete "slice" of Sweden's people. However, the negative ripple effects from price ceilings far outweigh this social benefit. As a result, the rest of us living in the city center face an absurd shortage of apartments and sickening rental prices as a result.

"Market-oriented rents would have been a catastrophe for the country's tenants", says Barbro Engman. Over time, consumers would only benefit. However, I think what Barbro really means is that this would be catastrophic for the politicians.
16:18 November 16, 2009 by here for the summer

I'm not sure it would be catastrophic. You seem to argue both aspects good and bad. In Sweden and other countries your good point about older people and young people in the cities are addressed by subsidized specialize housing of which Stockhlom already has built for retired people. The universities and dorms also help in the younger people department. Phasing these things in works. Maybe remove controls for new or increases housing stock could allow some new development near the city.

Beside there is already a big black market where controlled rents are basically sold combined with the lack of rental units which is really the problem ..
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