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REAL ESTATE

Crisis hits Sweden’s housing market

Shockwaves from the financial crisis are rippling through Sweden’s housing market, resulting in falling prices and accelerating the already slowing pace of new construction.

Published: 21 October 2008 11:51 CEST
Crisis hits Sweden's housing market

The slump in housing prices between July and September has been felt primarily by owners of apartments rather than houses, and for people living in the Stockholm area.

According to a survey by state-owned mortgage company SBAB, estate agents project that prices will continue to fall in Sweden’s larger cities.

Final sale prices are now often lower than publicized offer prices, with few bidders competing for any given property.

Three of four agents polled said that the financial crisis has had a major impact on the market for apartments, while six out of ten reported the same trend for houses.

A record number of estate agents reported that housing prices sank during the third quarter.

SBAB’s estate agent barometer comes from questionnaire distributed to 210 estate agents located in Stockholm, Gothenburg, and Malmö between September 25th and October 8th.

Furthermore, a new forecast from Sweden’s National Board of Housing, Building and Planning (Boverket) projects that the number of new housing starts through the end of 2008 will decrease by 40 percent, or 16,000 units, compared with the number of houses and apartments built in 2006.

According to a statement from the agency, the number of rental units currently under construction has been cut in half since 2006 as a result of increased construction costs and the loss of state-sponsored supports.

Boverket also reports that demand for houses and cooperative apartments for purchase (bostadsrätter), has started to drop, adding however that its forecast remains uncertain.

“The consequences of the financial crisis and the weakening economy cannot be overlooked. We see, however, the possibility of a slight increase in the construction of rental apartments in the next few years,” said Boverket in a statement.

According to the agency’s own assessment, Sweden needs to build around 38,000 new homes a year between 2008 and 2012.

While 2008 has been marked by a relatively high rate of new housing starts, Boverket projects activity to cool off substantially in 2009 and 2010.

Nor is the agency optimistic about the chances that Sweden will meet what’s needed to maintain the current standards of the country’s housing stock.

As a result, says Boverket, residents in Sweden’s larger cities can expects the housing situation to become even more strained in the years ahead.

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PROPERTY

INTERVIEW: ‘Most foreigners in Sweden don’t know they can get back excess rent’

In Sweden, people subletting apartments are not allowed to charge more in rent than they themselves pay. But foreign subtenants don't always know this. We asked Roland Sjölin, lawyer at the Swedish Tenants' Association, about how to get back excess rent.

Published: 18 April 2024 15:19 CEST
Updated: 21 April 2024 08:12 CEST
INTERVIEW: 'Most foreigners in Sweden don't know they can get back excess rent'

More and more of the people asking the Swedish Tenants’ Association, Hyresgästföreningen in Swedish, for help with excess rent are foreigners, Sjölin told The Local in an interview.

“The problem is that if you’re coming from another country, and you’re subletting an apartment, you’re probably not familiar with the rules in Sweden, because in other countries, it might be okay to overcharge your tenants.” 

He said that clients from India in particular seeking help from the association were now “very common”. 

“Many people come here to work as engineers in the IT sector and then have to rent somewhere,” he said, adding that as a group Indians appeared to be “very aware of their rights.”

Sweden’s rental sector is heavily regulated, with first hand contracts negotiated between landlords and the Tenants’ Association, and the rent that can be charged for second-hand contracts limited to only a small fraction above what the first-hand renter pays. 

“You’re not allowed to make any profit subletting an apartment in Sweden,” Sjölin explains. “You can only charge the subletting tenant the same rent as you [the first-hand tenant] are paying to your landlord, and then you can add the costs for internet and electricity, and perhaps a parking lot, if that is included.” 

Tenants’ Association lawyer Roland Sjölin. Photo: supplied.

You can also add a påslag or “markup”, if you are renting out the apartment fully furnished, but this cannot exceed more than 15 percent of the rent. 

That doesn’t mean that most landlords follow the law. The competition for rental apartments, especially in Stockholm, is so intense, that unscrupulous sublet landlords often try to get away with charging well over the legal amount, charging what is known in Sweden as ockerhyra, or “excess rent” and hoping that their tenants are too desperate to complain.  

What many foreigners do not realise is that even after the rental period is over, they can still get back any excess rent they have paid by applying to the Rental Board or Hyresnämnden, which functions like a court judging rental disputes. 

“If you have the evidence then it’s fairly easy,” Sjölin said. “I get a new case every second week on repayment of unfair rent, and I think that I win most of them.” 

“Nowadays, you can get paid back excess rent up to 24 months back in time, so people tend to get more money,” he added. “In some cases, they can get 200,000 kronor. In other cases, perhaps it’s only 30,000 kronor or 60,000 kronor. It depends on how long you have rented the apartment, and how excessive the rent you’ve been paying has been.”

The first step is to establish what would have been a fair rent, either by asking your landlord what they themselves pay directly or by checking with the Tenants’ Association.

“Because we negotiate most rents in Sweden, we normally know what the firsthand rent is,” Sjölin explained.

Then you need to collect together your evidence.

“It’s a good thing to have a written contract and also papers from your bank showing that you paid rent every month, and perhaps photographs of the apartment, so the rental board can get an idea of the apartment you were renting and what would be a fair rent, and also the termination for the contract so you can show the court how long you’ve been living in the apartment.” 

But Sjölin underlined that since Sweden has free burden of evidence, none of this is essential. 

“Even if you’ve been paying in cash, if you have witnesses who can testify what you were paying each month, you still have a chance of getting your money back. It’s a bit more tricky, but I’ve won two cases like that this year.” 

People in Sweden, he explained, tend to wait until the rental period is over before seeking to get paid back excess rent rather than challenging their landlord while they are still living in the apartment. 

“You don’t have any legal protection for your home for the first two years, so if you bring the matter up with the person you’re renting the apartment from you risk losing your contract and having to move out, so most people wait until they’re supposed to move anyway,” he said.

If you apply to the rental board for a refund close to the day you move out, you can then make your landlord pay back all excess rent paid in the 24 months leading up to the date you contacted the rental board.

If you are a member of the Tenants’ Association, you can contact them and ask for help with your application, but there are also specialist companies, like Orimlig Hyra AB who will buy your case off you and give you a refund within 48 hours, saving you a long wait in exchange for a cut of the money reclaimed. 

Sjölin said that the rental board normally took about 8 months to come to a judgement, but that if the person with the first hand contract appeals, that could extend the waiting time by between six months and a year.

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