SHARE
COPY LINK

APARTMENT

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.

Illegal rentals thrive in Stockholm flat crunch

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

Follow Ann on Twitter here

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

PROPERTY

These are our readers’ top tips for buying a property in Sweden

Buying an apartment or house in Sweden can be a daunting process, but with rentals so hard to get, many foreigners end up taking the plunge. Here are the top tips from readers who have done it.

These are our readers' top tips for buying a property in Sweden

Get prepared! 

Most of the respondents to our survey stressed the importance of preparation. 

“Spend time on defining your requirements properly, including visits to different locations to narrow down your search,” advised Julian, a Brit living in Malmö. 

As well as working out your requirements, other participants argued, you should also get to grips with the way the bidding system works in Sweden, with one British woman recommending buyers “speak to professionals about the buying procedure”. One respondent went so far as to recommend hiring a buyers’ agent, something international employers sometimes provide for senior executives moving to Sweden. 

Elizabeth, a 26-year-old charity worker from South America, recommended that all buyers “learn to read a bostadsrättsförening årsredovisning”, the finance report for a cooperative housing block. (You can find The Local’s guide here.) 

Get to know the market 

Maja, an anthropologist from Hungary, said it was important to take time to get a feel for the market, suggesting buyers visit different areas to find the one that they like. 

“It will take 6-12 months easily,” she predicts. “Don’t rush. Visit the neighborhoods where you are thinking of buying.”
 
Others recommended spending time surfing Sweden’s two main housing websites, Hemnet and Booli, to get a better feel for how much different types of housing in different areas typically sell for, before starting to look seriously yourself, with one even recommending going to viewings before you have any intention of buying.  
 
“Start visiting houses and monitoring bids. That will give you a sense of the process,” recommends Shubham, 31, a software engineer from India.
 

 
Think about your expectations
 
While house prices have soared in Sweden’s cities over the past decade, the same is not the case in all rural areas, something some respondents thought buyers should take advantage of. “To buy a house at a lesser price, look at areas as far from urban areas as is possible for you and your family,” wrote Simon, a 61-year-old living in rural Sweden. 
 
Julian warned bidders against areas and types of homes that “will attract tens of ‘barnfamiljer’ (families with children), meaning “bidding wars will result”, pushing up the price. 
 
On the other hand, one respondent warned people to “avoid buying apartments in vulnerable areas, even though prices will be lower there”. 
 
An Italian buyer recommended looking at newly built apartments coming up for sale. 
 
 
Get a mortgage offer before your first serious viewing 
 
Getting a lånelöfte, literally “loan promise”, can be tricky for foreigners in Sweden, as our recent survey of banks’ policies showed. 
 
Shubham warned against applying for a loan promise from multiple banks, arguing that this can affect your credit rating if your finances are not otherwise good. He suggested using an umbrella site like Ordna Bolån and Lånekoll, although he warned that the payment they take from the ultimate mortgage provider might ultimately be taken from borrowers.  
 
READ ALSO: 
 
Get to know the estate agents, but don’t necessarily trust them 
 
Gaurav, a sales manager based in Stockholm, recommended getting to know local estate agents in the area where you are planning to buy, as they might be able to direct you towards owners who are in a hurry to sell. “Those can be the best deals as you have greater chances to avoid bidding on such properties,” he argued. 
 
Maja, from Hungary, warned, however, against believing that the estate agent is on the buyer’s side. 
 
“You cannot really make friends with them, they work for commission and they will also try to raise the selling price,” she said. “It’s how they present you to the seller that matters. Seem like a serious buyer.” 

 
Should you try to make an offer before bidding starts? 
 
Morgan, a 33-year-old marketing manager from France, said it was worth studying the kommande (coming soon) section on Hemnet and Booli to spot houses and flats before they are formally put on the market. “Be alert. Book an appointment asap and get a private visit to reduce competition. If the apartment is what you’re looking for, make a reasonable offer with a condition to sign the contract in the next 24 hours,” he recommends. “You will cut the bidding frenzy and save money.”
 
Gaurav also recommended getting a private viewing and making an offer while the property was still off the market, as did Julian. 
 
“If you are lucky, you might find owners who are in a hurry to sell,” Julian said. “Those can be the best deals as you have greater chances to avoid bidding on such properties.” 
 
But other foreigners warned against bidding before a property is publicly put up for sale on housing websites, arguing that estate agents used this as a way of getting higher prices than they would expect to get at auction.  
 
“You are essentially negotiating directly with the owner, without finding out the actual market price via bidding,” argued a 31-year-old Indian business analyst. “Usually this will work only for an apartment not in top condition.” 
 
What to watch out for in the bidding process 
 
Morgan advised buyers to take what estate agents say about rival bidders with a pinch of salt. 
 
“Estate agents will play the competition card. Don’t fall for their trick and keep a cool head. Ask yourself if it really worth it before increasing a bid,” he wrote. 
 
In Sweden, it is possible to make a hidden bid, which is not disclosed to other bidders. One Indian software developer warned that estate agents would often claim that there was such a bid to pressure you. 
 
“The hidden bids are really confusing as you don’t know the bid placed,” he said. “It’s a trap to get higher bids. “
 
A 21-year-old Romanian agreed it was important to watch out for estate agents who try to rush or panic you. 
 
“[Look out for] those that try to rush you into it by saying stuff like ‘this will be gone by Monday, the owner wants to sell fast’, or if they don’t want to include a two-week period to have the property inspected as a clause in the contract,” she said. 
 
Maja recommended choosing an estate agency that required all bidders to supply their personal number, with all bids made public, “because other agencies might cheat that price rise”. 
 
“Don’t be the first bidder,” she added. “Keep your cool, and if the agent calls or messages, just hold on. There is no official end to the bidding. Only when you sign the contract. So the best game is to seem very serious but not stupid. You have a budget, and try to sign the contract the same day or the next if you are the highest bidder.” 
 
Is now a good time to buy? 
 
The respondents were, predictably, divided. 
 
“It’s risky for both sellers and buyers,” said Carl, a Swede who recently returned home from China. “The market seems to correlate pretty well with central banks raising interest rates. If that’s the case, then it’s still a sellers’ market since central bank [Riksbank] will continue to increase interest rates until 2024.” 
 
“It’s difficult to predict anything at the moment,” agreed Gaurav. “Prices should fall a bit but that’s not happening in all the areas. Avoid buying or selling if you can for a few months.” 
 
“I see there is no difference in buying in total cost. You can get a property at a lower price but end up paying more in interest and the price is the same in five to ten years,” said one Indian software engineer. “Buying is still better than renting.”

SHOW COMMENTS