EXPLAINED: Sweden's plans to free up private rental market
Sweden's government has launched plans to make it easier to rent out privately owned and cooperative apartments and houses, with critics warning that this could create a new buy-to-let rental market.
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In a press release on June 22nd, Sweden's housing minister, Andreas Carlson announced that the government was appointing Thomas Edling, a judge in the high court, to carry out an inquiry into how the rules governing private rentals of properties can be changed to make it easier to rent properties out.
Edling has also been asked to look into reforming the law around how property investors who build rental apartments carry out collective bargaining over reasonable rents with the Swedish Union of Tenants, hoping to reverse the impact of a court-ruling last year, which investors have complained has sharply reduced the scope for building rental apartments for profit.
What is the government's justification for the reform?
Carlson said at a press conference that freeing up the private rental market would both help reduce the number of properties and rooms that are sit empty and unused, and also provide an additional income stream for property owners.
"Private rental is for many people something positive," he said. "You can rent out part of your property, strengthen your finances, and also help someone, perhaps a student coming to a new place."
He said that reforming the rental market was an efficient way of increasing Sweden's housing supply.
"How many detached houses are there that have a few extra rooms? A hell of a lot. How many cooperative apartments are there that sit empty? Also a hell of a lot. This is about finding a sustainable way to use the existing bank of properties."
READ ALSO: What rights do I have as a second-hand tenant in Sweden?
What does the Swedish Union of Tenants say?
Martin Hofverberg, chief economist at the Swedish Union of Tenants, predicted that the proposals, if enacted, would create a whole new sector of the rental market based around private individuals renting out buy-to-let apartments, making Sweden's rental sector look more similar to the rental market in the UK, Germany and France.
His concern, he said, was that more and more people would start to buy properties to rent them out as investments, pushing up the price of residential property and making it harder for first-time buyers to enter the housing market.
"It's not a liberalisation of the existing rental market, it's more an expansion of a part of the existing rental market, the part where you sublet apartments," he told The Local.
"With these changes, there's a big risk that we would in the long run walk down the same path as the UK, with fewer rights for tenants and people who want to own their homes being priced out. I see a great risk that you create a buy-to-let sector like you have in the UK."
How does Sweden's rental market work today?
Sweden's private rental market is highly concentrated and heavily regulated, with most rental properties owned by large property companies who agree rents with the Swedish Union of Tenants through collective bargaining.
Tenants in Sweden also often rent apartments from the municipality-owned companies who together own fully half of all rental apartments, often waiting in queues for as long as ten years to be awarded an apartment.
There's also a large market of subletting for those who don't have enough queue points to be awarded a secure lease with a municipality-owned company, with subletters having to move home often as short-term leases end.
What are the rules on subletting, buy-to-let, and renting out cooperative apartments today?
The rules are different depending on whether you are subletting a rental apartment or house, renting out an apartment or house you own as part of a cooperative, or renting out a house or apartment you own directly.
Edling has been asked to look at making it easier for the second two of these, rather than to look at reforming the strict rules limiting the subletting of rental properties.
If you want to rent out a room, apartment, or house owned as part of a housing cooperative or bostadsrättsförening, the rules are already more liberal than for subletting rental apartments (hyresrättsförening), with those subletting needing only a "reason" and not "considerable reasons", to do so.
"Considerable reasons" include moving elsewhere temporarily to study, live with a partner for a trial period, for temporary employment, or for treatment in hospital; "reasons" can include renting to a relative, or because market conditions make selling unappealing.
The board of the cooperative housing association is supposed to allow you to rent out your apartment unless they have "a justified reason" not to, but can impose strict time limits of only a few months, and can also refuse prospective tenants they disapprove of.
The rules are still more liberal if you own a property outright, although you can only sign one rental contract if you want to be covered by the privatuthyrningslagen, or law on private rentals. If you even rent out two rooms in an apartment to separate tenants, you are covered by the much stricter rules for commercial tenants, which, among other things, makes it harder to remove tenants without a good reason.
Whether you are renting out a property you own outright, or one owned as part of a housing cooperative, the law generally prevents you charging more than a cost-based rent, which is calculated by adding together the capital cost and the maintenance cost of the apartment.
What changes is the government suggesting?
The government is suggesting:
- extending the law on private rentals to make it easier for individuals to rent out more than one property without being covered by the stricter rules for letting by commercial property companies;
- changing the rules for renting out apartments in housing cooperatives, presumably by reducing the right of a cooperative's board to block rentals;
- looking into whether rents can be set "to a greater extent by how in-demand the property to be rented is".
"We want to make it both simpler and more profitable to rent out privately," Carlson said. "We also want to make it possible to rent out to more than one person: you might want to rent out both your attefallshus [an outbuilding] and your cellar. Right now you can't do that without being treated as a business."
In the directive, the government stresses, however, that the new rules "should not encourage speculative acquisitions where someone purchases a property solely with the intention of renting it out".
When will the proposals be finalised and will they be enacted?
Edling has been asked to submit his final proposals to the government by March 3rd 2025, after which it could take six months or more for any proposed laws to be submitted the parliament, with any legal changes probably not coming into force until the start of 2026.
As the government can probably rely on the backing for the reforms from the far-right Sweden Democrats and also of the opposition Centre Party, it looks very likely to be able to secure a majority in the parliament.
"The government has a majority in the parliament and the Sweden Democrats are behind this as well, so I don't see significant chance of this not happening," Hofverberg said.
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In a press release on June 22nd, Sweden's housing minister, Andreas Carlson announced that the government was appointing Thomas Edling, a judge in the high court, to carry out an inquiry into how the rules governing private rentals of properties can be changed to make it easier to rent properties out.
Edling has also been asked to look into reforming the law around how property investors who build rental apartments carry out collective bargaining over reasonable rents with the Swedish Union of Tenants, hoping to reverse the impact of a court-ruling last year, which investors have complained has sharply reduced the scope for building rental apartments for profit.
What is the government's justification for the reform?
Carlson said at a press conference that freeing up the private rental market would both help reduce the number of properties and rooms that are sit empty and unused, and also provide an additional income stream for property owners.
"Private rental is for many people something positive," he said. "You can rent out part of your property, strengthen your finances, and also help someone, perhaps a student coming to a new place."
He said that reforming the rental market was an efficient way of increasing Sweden's housing supply.
"How many detached houses are there that have a few extra rooms? A hell of a lot. How many cooperative apartments are there that sit empty? Also a hell of a lot. This is about finding a sustainable way to use the existing bank of properties."
READ ALSO: What rights do I have as a second-hand tenant in Sweden?
What does the Swedish Union of Tenants say?
Martin Hofverberg, chief economist at the Swedish Union of Tenants, predicted that the proposals, if enacted, would create a whole new sector of the rental market based around private individuals renting out buy-to-let apartments, making Sweden's rental sector look more similar to the rental market in the UK, Germany and France.
His concern, he said, was that more and more people would start to buy properties to rent them out as investments, pushing up the price of residential property and making it harder for first-time buyers to enter the housing market.
"It's not a liberalisation of the existing rental market, it's more an expansion of a part of the existing rental market, the part where you sublet apartments," he told The Local.
"With these changes, there's a big risk that we would in the long run walk down the same path as the UK, with fewer rights for tenants and people who want to own their homes being priced out. I see a great risk that you create a buy-to-let sector like you have in the UK."
How does Sweden's rental market work today?
Sweden's private rental market is highly concentrated and heavily regulated, with most rental properties owned by large property companies who agree rents with the Swedish Union of Tenants through collective bargaining.
Tenants in Sweden also often rent apartments from the municipality-owned companies who together own fully half of all rental apartments, often waiting in queues for as long as ten years to be awarded an apartment.
There's also a large market of subletting for those who don't have enough queue points to be awarded a secure lease with a municipality-owned company, with subletters having to move home often as short-term leases end.
What are the rules on subletting, buy-to-let, and renting out cooperative apartments today?
The rules are different depending on whether you are subletting a rental apartment or house, renting out an apartment or house you own as part of a cooperative, or renting out a house or apartment you own directly.
Edling has been asked to look at making it easier for the second two of these, rather than to look at reforming the strict rules limiting the subletting of rental properties.
If you want to rent out a room, apartment, or house owned as part of a housing cooperative or bostadsrättsförening, the rules are already more liberal than for subletting rental apartments (hyresrättsförening), with those subletting needing only a "reason" and not "considerable reasons", to do so.
"Considerable reasons" include moving elsewhere temporarily to study, live with a partner for a trial period, for temporary employment, or for treatment in hospital; "reasons" can include renting to a relative, or because market conditions make selling unappealing.
The board of the cooperative housing association is supposed to allow you to rent out your apartment unless they have "a justified reason" not to, but can impose strict time limits of only a few months, and can also refuse prospective tenants they disapprove of.
The rules are still more liberal if you own a property outright, although you can only sign one rental contract if you want to be covered by the privatuthyrningslagen, or law on private rentals. If you even rent out two rooms in an apartment to separate tenants, you are covered by the much stricter rules for commercial tenants, which, among other things, makes it harder to remove tenants without a good reason.
Whether you are renting out a property you own outright, or one owned as part of a housing cooperative, the law generally prevents you charging more than a cost-based rent, which is calculated by adding together the capital cost and the maintenance cost of the apartment.
What changes is the government suggesting?
The government is suggesting:
- extending the law on private rentals to make it easier for individuals to rent out more than one property without being covered by the stricter rules for letting by commercial property companies;
- changing the rules for renting out apartments in housing cooperatives, presumably by reducing the right of a cooperative's board to block rentals;
- looking into whether rents can be set "to a greater extent by how in-demand the property to be rented is".
"We want to make it both simpler and more profitable to rent out privately," Carlson said. "We also want to make it possible to rent out to more than one person: you might want to rent out both your attefallshus [an outbuilding] and your cellar. Right now you can't do that without being treated as a business."
In the directive, the government stresses, however, that the new rules "should not encourage speculative acquisitions where someone purchases a property solely with the intention of renting it out".
When will the proposals be finalised and will they be enacted?
Edling has been asked to submit his final proposals to the government by March 3rd 2025, after which it could take six months or more for any proposed laws to be submitted the parliament, with any legal changes probably not coming into force until the start of 2026.
As the government can probably rely on the backing for the reforms from the far-right Sweden Democrats and also of the opposition Centre Party, it looks very likely to be able to secure a majority in the parliament.
"The government has a majority in the parliament and the Sweden Democrats are behind this as well, so I don't see significant chance of this not happening," Hofverberg said.
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