Illegal rentals thrive in Stockholm flat crunch

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Illegal rentals thrive in Stockholm flat crunch

The black market for first-hand rental contracts in Stockholm is alive and well as Swedes desperate for a place to live won't report illegal sales to the police, an investigation has revealed.

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An investigative report by the Svenska Dagbladet (SvD) newspaper showed that private landlords have not stopped selling rental contracts, at prices ranging from 40,000 kronor ($6,100) for the outer-lying suburbs to as much as 900,000 kronor for a two-bedroom flat in central Stockholm.

Greger Björkegren, chairman of the Stockholm chapter of the Swedish Union of Tenant (Hyresgästföreningen), underlined that big corporate landlords do not engage in under-the-table deals, as they respect the lawful housing queues.

SEE ALSO: Check out the latest home listings in The Local’s Property Section

But in the Swedish capital, there are more than a thousand landlords who own one or two buildings. As a result, these smaller players control several properties and aren't always as scrupulous at the city's larger landlords.

Björkegren said such smaller landlords often pop up in connection with the cash-in-hand transactions that he deals with as a member of the Rental Tribunal (Hyresnämnden).

"The housing-crunch is as it is," he told The Local. "People get to a point when they quite simply just have to find a place to live."

The biggest change in recent years, Björkegren said, has been the rise in fixed-term rental contracts, rather than open-ended permanent leases that allow tenants to stay in an apartment indefinitely, provided they pay rent and abide by house rules.

He believed it was part of certain landlords' longer-term strategy to empty buildings of tenants with permanent contracts in order to convert the building into cooperative apartments (the condominium-type housing solution that Sweden employs) and in so doing, turn a tidy profit.

The same strategy would also allow them to sell an emptied building to another landlord ready to make the switch and rake in money from the conversion.

And because of the acute housing shortage in Stockholm, tenants put up little resistance to fixed-term contracts, Björkegren said.

"You'll take anything, you don't complain about anything, and once they throw you out you say 'Thank you, would you happen to have another flat for me'?" Björkegren said, warning that fixed-term contracts leave tenants with little stability.

"Having a proper rental contract is like having a full-time work contract. You know your hours, you know your holiday entitlement, you know what the deal is," Björkegren said.

"If you take a fixed-term rental contract, however, you're in that grey zone and you don't know whom to turn to. You are totally outside of the system," he said.

Helena, 30, who did not want The Local to use her full name, revealed that through a friend of the family she had moved into a one-bedroom apartment in the centre of Stockholm. But when family obligations in the United States meant she had to leave Stockholm for six months, she was too afraid to sublet the apartment - which a tenant with a permanent rental apartment is legally entitled to do if studies or work require them to live elsewhere for a time.

The net effect for Helena was being stuck paying double rent, which nearly crippled her finances each month.

SEE ALSO: Find your next home with The Local’s Rentals Section

Björkegren said there are no proper estimates of how big a proportion of the rental housing stock in Stockholm switched hands illegally every year. Nor a proper inventory of the fixed-term contracts.

The official influx of new residents to the city of Stockholm every year is 10,000 people, while surrounding Stockholm County (län) adds about 25,000, according to Statistics Sweden (SCB).

While selling rental contracts does break the law - and law-abiding Stockholmers queue for years, sometimes decades, to access their dream pad or simply one big enough for their family - few buyers report black-market landlords to the police, reported SvD.

READ ALSO: Swede endures 28-year wait for Stockholm flat

Some flat-hunters resort to buying rental contracts because they have insufficient or bad credit history, which means Swedish banks are unlikely to lend them money to buy an apartment (bostadsrätt).

The SvD reporters also said that after trawling listings and going to several flat viewings with other prospective contract buyers, they encountered would-be tenants who had sold and made a profit on a cooperative apartment, and now wanted to transition to a rental apartment in order to live off the profit from their previous flat.

Others simply accepted that the black market was part of the complex Stockholm housing market.

At the Tenants Union, Björkegren said he doubted that an increase in reports to the police would do any good.

"This isn't a police matter, it's a matter for the politicians," he told The Local.

Ann Törnkvist

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