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Stockholm defends city housing sell-offs

Peter Vinthagen Simpson · 31 Mar 2010, 16:44

Published: 31 Mar 2010 16:44 GMT+02:00

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The recent advertised sale of two central Stockholm apartments for almost triple their original value has illustrated the sometimes significant gulf between the price paid for an apartment as part of a tenant-owner’s association, and their individual market value.

"It is a question of apples and oranges - you simply can not compare the markets, of which there are three. You can't compare the square metre price of a whole building sold to a tenant-owner association with an individual apartment sold on the open market," Joakim Larsson, chairperson of municipal housing firm Svenska Bostäder and Stockholm city councillor, told The Local on Wednesday.

Carin Jämtin, leader of the opposition Social Democrats in Stockholm, is among those arguing that the recent sales prove that the stock of municipal housing has been sold off by the centre-right majority on the cheap.

"We have previously expressed criticism that the valuations, especially in the inner-city give large discounts in relation to their market price. But these examples are some of the worst that we have seen," Jämtin told the Svenska Dagbladet daily.

Larsson responded that the buildings are valued independently and are in fact sold at a market price, but a price that refers to the commercial residential property market in the area, and not the market served by estate agents selling individual homes.

Larsson also explained that the tenant’s legal right of possession guaranteed under Swedish law stipulates that if a municipal-owned property is to be sold it has to be offered to the existing tenants first. The second alternative, selling to a new landlord, would attract a lower price, he said.

“The third alternative - to eject the existing tenants and then sell off the apartments individually - would be extortion and nobody supports that alternative,” he said.

The city councillor told The Local that the sales of Stockholm municipal property have raised 17 billion kronor ($2.5 billion) during the mandate period, of which 10 billion has been earmarked for investment in run-down municipal housing stock.

“Everybody wins - the tenants can remain in their homes, the buildings get renovated, and money is generated to improve the stock of municipal housing that remains,” he said.

The first apartment to raise the recent ire of the critics is located on the prestigious lake-view boulevard of Norr Mälarstrand in the Kungsholmen area of central Stockholm.

The property, at Norr Mälarstrand 24, was sold by Svenska Bostäder to a tenant-owner association for the equivalent of 30,000 kronor per square metre.

A top floor 100 square metre apartment in the property was put on the market on March 1st, less than a month after the takeover of the property, and is sret to fetch an anticipated price of more than 10 million kronor - more than three times the amount the new owner paid for the home.

A second apartment in the building has now been put on the market with an asking price of 13.5 million, representing a 7.5 million kronor profit for the fortunate tenant-owner.

Story continues below…

All of the residential space in the building is sold at the same square metre price, regardless of standard, size or location in the building. This means that those taking over more exclusive penthouse-style apartments pay the same for their homes as those with less desirable views or floor plans.

“The rents were previously on the same levels as suburban apartments - around 900 kronor per square metre per annum. Tenants are not going to be able to remain in their homes or find an offer attractive if their living costs more than double overnight,” Larsson told The Local.

The Local asked Joakim Larsson to comment on the critics who argue that the sales represent a theft of assets already owned by Stockholm residents.

“I don’t agree. The sales have generated large profits which are set to be re-invested. Had the opposition got to decide then there would have been no money generated to renovate the suburban housing estates,” Larsson argued.

Peter Vinthagen Simpson (news@thelocal.se)

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Your comments about this article

17:53 March 31, 2010 by Nemesis
How do I get more information on how to find apartments that the authority wants to sell of?
19:27 March 31, 2010 by subzero
Yess! Count me in, I want to have money given as gift too!
22:14 March 31, 2010 by wotist
Nemesis, Subzero: What you need to do is find out which apartmentbuildings the municipal property company in Stockholm wants to sell 20+ years into the future, then you get in line for an apartment in such a property and hope you get a first hand contract for an apartment in one of those buildings in time. I suggest enlisting the service of a fortune teller. The high demand and long wait is the key for the value of the individual apartments being worth so much more than the commercial value of the properties themselves. That, and rent control.
23:26 March 31, 2010 by Great Scott
This is typical tory rubbish; sell it to their friends make the people homeless, then sell it at a stupid price to make a profit, thatcher taught the UK that lesson years ago. Then you are left with run down housing estates that nobody wants to know about. torys scum of the earth.
05:17 April 1, 2010 by here for the summer
08:06 April 1, 2010 by biffweezer
"It is a question of apples and oranges - you simply can not compare the markets, of which there are three. You can't compare the square metre price of a whole building sold to a tenant-owner association with an individual apartment sold on the open market."

What??? It's eventually the same situation, when individual owners decide to take their windfall.

I am not sure what the third market is, however there are definitely two: one for rental (controlled), another for purchase (market driven). Therein lies the problem.
09:09 April 1, 2010 by Kronaboy
@Great Scott

You should know by now no one is going to pay attention to you until the next bubble bursts and people who have been made homeless are ranting about (probably blaming those horrible immigrants) why there is no public housing for them to rent????
09:24 April 1, 2010 by Puffin
It is a pity that much os Stockholm's rental housing is being sold off cheaply for political reasons. However it's not surprising given that (according to the Swedish press) one of the residents who stands to gain is a kommun Moderate Party Councillor ....
09:28 April 1, 2010 by Byggare Bob

he is not talking about rental markets, his three alternatives refer to buying and selling of property:

Larsson responded that the buildings are valued independently and are in fact sold at a market price, but a price that refers to the commercial residential property market in the area, and not the market served by estate agents selling individual homes.

The second alternative, selling to a new landlord, would attract a lower price, he said.

"The third alternative - to eject the existing tenants and then sell off the apartments individually - would be extortion and nobody supports that alternative," he said.
09:35 April 1, 2010 by Byggare Bob
furthermore in order to be in possession of one of these rental contracts means by definition being a long term tenant (as the process takes a long time) and presumably having had to wait a long time in a queue before eventually getting the contract.

The "profits" (which are of course only theoretical unless you move market - they will pay the same /sq.m for an equivalent) could be viewed as compensation for having missed out on the climb in the property market boom that has continued unabated since the mid-1990s. Not fair according to the market principle of risk bringing reward, but hardly morally reprehensible on social grounds.

This is not (or at least only in the third alternative that Larsson refers to above) speculation - anyone who knows anything about the paralysed rental market in Stockholm will know that.

This sell-off is a way out for a significant number of people who have been trapped by a relic from Sweden's socialist past. BTW the ratio of HR to BR in central Stockholm remains 40:60 - a very high figure by comparison.
11:59 April 1, 2010 by Kronaboy
So your way of freeing Sweden from the relic of its social past is to free them into doomed Thatcherite policies, you know people like you should be forced to live in Hackney for 6 months.
13:14 April 1, 2010 by Audrian
The richest people (billionaires) in Russia and East Europe were bureaucrats in communist apparatuses. When the communist system went under, they gave themselves loans from banks they controlled and sold themselves factories, mines and banks and almost at zero price and became extremely rich in one to five years.

Robber barons are not yesterday's people. They do exist everywhere. In the US the majority of the banks and some financial institutions were bankrupt just as some house owners did in 2008. The former got tax free loan from the state and made billions in just one year. America's robber barons paid themselves billions of dollars in bonuses while the ordinary persons lost their homes or became unemployed or homeless!

Because of its social democratic history Swedish governments might not be able to do what the Bush and Obama administration did in the US. It does not mean that they are not capable. It is up to this society to be vigilant and prevent it from happening.
13:23 April 1, 2010 by Byggare Bob
thanks for the tip kronaboy. You know I actually did live in Turnpike Lane for a year - affordable semi with a garden, found at a month's notice.
10:23 April 2, 2010 by Kronaboy
Did you live in Boradwater farm, West Green Rd etc..., or were you you one of those middle class English Crouchend ponces just moved from the sticks roughing it just on the wrong side of the railway bridge who finds it reasonable to pay £2000 PM (now that £ the pound has dropped like a rock approx 21,000SEK) + £300 minimum in bills (for those of you who are not familiar the median pay in UK is approximatively £1500 PM before tax). Did you have any kids who were forced to attend the local run down schools rife with crime and drugs (i.e. Langham, Tottenham Tec etc.. where it is cheaper and easier to buy a fix of heroin than alcohol and police are forced to patrol the halls because there have been so many assaults and rapes). Don't tell me what a though life you had just because you roughed it for a couple of day as you rushed to the tube station on way to the West End, because I'm one those who had to negotiate the police road blocks of the 80's each morning to get to school, before we got pushed out when rent controls were removed and Public housing was sold off. I tell you what white boy go and live on one the Estates off West Green road (it's only km away from where you lived in such a rough life for a whole year) for one month then come and talk me about how you roughed it.
15:04 April 2, 2010 by here for the summer
@Byggare Bob

Per the earlier local ariticles many of the people who go these didn't even live in them they had illegally or legally sublet them .

Plus the valuations were totally out of wack with the real value. The valuation as to location view etc was ignored so some people made a fortune at taxpayer expense ( these are the peoples assets ) .
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