‘Egalitarian’ Stockholm rents feed black market

A charming one-bedroom apartment in one of Stockholm's trendiest neighbourhoods for a mere €410 rent-controlled (3,900 kronor, $520) a month: too good to be true? It was for Johannes, writes AFP's Marc Preel.

'Egalitarian' Stockholm rents feed black market

The catch was steep. To lay his hands on the rental contract, the 36-year-old engineer had to pay a whopping 130,000 kronor ($17,000) under the table.

“It’s unfortunately the price to enter the system in Stockholm,” he said, asking that his last name not be given for fear his contract would be revoked if his black market dealings were revealed.

In the Swedish capital, an egalitarian-minded rental system put in place more than half a century ago to help erase social differences by permitting rich and poor to live side-by-side in the centre of the city has a very large flipside.

The publicly regulated system has created a flourishing black market for aspiring tenants willing to dish out huge sums to skirt multi-year-long waiting lists for a rental contract.

“I don’t know anyone in my building who got his apartment through the queues,” Johannes said, sitting in a large living room overlooking a well kept courtyard in the heart of trendy Södermalm.

Virtually the entire Stockholm rental market falls within various queue systems regulated by the municipality. More than 300,000 people are currently waiting in line for a rental contract in the capital, a city of around 2 million inhabitants.

Taking part in the system requires more than a small dose of patience.

“The waiting times have been largely stable, around four years for an apartment in the suburbs and around 12 in the center,” said Per Anders Hedkvist, who heads up Stockholm’s Housing Service (Bostadsförmedlingen).

The public agency controls about 85 percent of all rentals in the Swedish capital. It and other queuing services aim to keep rents stabilised and ensure that apartments of the same size and standard cost the same, regardless of their location.

Seniority on the waiting list, not wealth or social standing, is the only criterion determining who gets in. While this may sound utopian in theory, critics claim that the system has given rise to acute housing shortages and an enormous underground market for such coveted “first-hand” contracts.

Once in, “first-hand” renters are entitled to hold onto their contracts at a fixed low rate basically forever, to swap contracts, or apartments, with anyone they wish inside the system and to purchase the flat at a very advantageous rate if it is ever put up for sale.

As a result, renters who finally land an apartment in a plush location are rarely willing to give them up and hand them over to the next in line, even when they decide to move.

Instead, many opt to sublet and make a bundle under the table — where they are not subject to controlled rents — or, as in Johannes’s case, “sell” their contract to the highest bidder.

The housing lists may be long, but proponents of the system point out that anyone over the age of 18 with a Swedish social security number can queue up.

By planning ahead, residents can secure a long-term, low-rent apartment when and where they need it with no threats of sudden rent hikes or evictions.

However, for students and workers moving into the capital from elsewhere in Sweden, immigrants to the city and foreigners passing through for a few years, it is a different story.

Not able to wait for years to land a place even in the outskirts of town, some take up a mortgage to purchase a place outright, but most are relegated to the treacherous “second-hand” market, bouncing from short-term sublet to sublet and handing over bundles of cash under the table.

Cecilia Bonde, a 27-year-old hotel receptionist, says she for years has been moving between sublets that rarely last longer than six months at a time, with short-to-no notice and rents up to double what the “first-hand” contract-holder is paying.

“I have lived here, here. And here. Oh, and there…there, and there,” she told AFP, pointing to at least 15 different locations on a map of a single Stockholm metro line.

Despite its egalitarian intentions, the system, critics say, contributes to a certain level of segregation: a recent study by the Swedish Property Federation (Fastighetsägarna) showed that people living in the city centre have higher incomes than renters in the suburbs.

“Stockholm is a closed market,” federation spokesman Henrik Tufvesson said, pointing out that while this might be beneficial for native residents, newcomers suffer.

“The system has some adverse effects [like the fact that] it’s difficult to get in…that grandparents pass on the contracts to their grandchildren or that there is a black market,” acknowledged Hedkvist. “At the same time, there’s a big advantage: nearly everyone can afford renting an apartment in Stockholm.”

According to studies, rents in the city centre would likely skyrocket between 40 and 50 percent if the rental market was liberalised. If that happened, “Some people could not afford anymore to live in the center,” Hedkvist pointed out.

However, Tufvesson refutes that argument.

“The rich already live in the centre,” he insisted.

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Stockholm Open set to serve up a storm

The ATP Stockholm Open hits the Swedish capital on Saturday with international players vying for a piece of the €530,000 ($718,000) pie. Will it be a local Swede who takes out this year's title? The Local chats to the tournament organizer to find out more.

Stockholm Open set to serve up a storm

“All the sponsors, players and organizers are getting ready, I’m really excited,” tournament spokesman Christian Ahlqvist told The Local over the phone, with the sound of tennis balls thwacking around in the background.

Held inside Stockholm’s Royal Tennis Hall, the tournament has been played every year since 1969, attracting some of the biggest tennis names in Sweden and the world.

“All the big Swedish players have played in the Stockholm Open, Björn Borg, Mats Wilander. Former world number one Roger Federer won the title in 2010. We’ve had some really great players, its always been one of the tournaments to play in,” explained Ahlqvist.

IN PICTURES: See Swedish tennis legend Björn Borg’s career in pictures

Headlining this year’s contingent is Spanish world number four David Ferrer who is tipped to take home the trophy.

“Ferrer is coming from Shanghai, he’s a great player and he’s always performed very well here,” said Ahlqvist.

But if you thought it was a one horse race, think again. Bulgarian Grigor Dimitrov and Polish giant Jerzy Janowicz (who is over two metres tall), both 22, are two young players looking to challenge Ferrer and show the tennis world that they belong at the top.

However the odds are against Sweden netting the championship. World number 444 Markus Eriksson is the only confirmed Swedish player so far, although more may find their way through in Friday’s final qualifications. But statistically, the odds aren’t historically in the Swedes’ favour, with the last winner, Thomas Johansson, in 2004.

A strong Swedish presence in the singles may be lacking, but the Swedish men are expected to do better in the doubles.

“Jonas Björkman is making a comeback in the doubles with one of the best doubles players in the world, Robert Lindstedt. So that will be interesting to see,” said Ahlqvist.

As for a tip for the winner, Ahlqvist likes world number 41 Jarkko Nieminen from Finland.

“Jarko is someone who’s been a bit on and off the court with injuries. He’s played here so many times before, he’s almost a Swede. Everyone would love to see him win one.”

Saturday marks the opening ceremony for the Open, which will be held on centre court and is free for everyone. The tournament begins on the same day, with the final scheduled for Sunday the 19th.

Josh Liew

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