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Reinfeldt under fire over housing comments

Sweden's prime minister Fredrik Reinfeldt has courted criticism from some quarters for suggesting that Stockholm's rental housing market is not performing as smoothly as it could.

Published: 15 February 2011 15:41 CET
Reinfeldt under fire over housing comments

Reinfeldt waded in to the notoriously partisan issue of housing regulation in general and the situation in Stockholm in particular in an interview published in the Dagens Nyheter (DN) daily on Monday.

“Everyone who’s been near Stockholm’s inner city knows that the concept of secure-tenure rental apartments (hyresrätter) just doesn’t work there,” Reinfeldt told the newspaper.

Reinfeldt went on to point out that there is a thriving market in black market rental contracts and that there was little point to secure-tenure apartments in the inner-city as they almost never came onto the market for new potential tenants.

But the prime minister’s comments were not welcomed by all parties with an interest in the housing market.

Barbro Engman, the long-term chair of the Swedish Union of Tenants (Hyresgästföreningen), used her blog on Tuesday morning to chasten the PM that “he does not decide how we should live”.

“If one is to consider if the rental market works or not depends on the ambitions that one has,” Engman wrote, criticising those who argue that a free market in rental apartments would alleviate all problems.

Housing minister Stefan Attefall of the Christian Democrats argued in response to Reinfeldt’s comments that secure-tenure apartments are needed in Stockholm’s inner-city.

“He describes a problem. But the secure-tenure apartment is needed and has its place. And the government is working to strengthen the standing of the secure-tenure apartment,” he said to DN.

Attefall pointed out that an adjustment to greater differentiation of rents levied for apartments in areas in demand to those in the suburbs is underway.

“But the new system does not mean market rents,” Attefall pointed out.

Gustav Fridolin of the Green Party described Reinfeldt’s comments as “Kafka-esque”, arguing that the problems with a black market are no reason for not acting.

“It is important to build more,” Fridolin said, pointing out that the problem is not unique to Stockholm’s inner-city.

The debate has emerged following a series of articles in DN which highlighted the growing social divisions in Stockholm that come as a result of the city’s difficult housing market.

According to DN, people with higher incomes occupy an increasingly large percentage of downtown Stockholm’s housing stock, thereby undermining one of the key arguments used in the system’s defence.

Stockholm’s system of apportioning rental apartments thought secure-tenure rental contracts was developed as a way to guarantee all residents the ability to find housing even in more desirable neighbourhoods.

However, as demand to live in Stockholm’s city centre has increased, the system currently doesn’t function as originally intended, resulting in artificially low rents for inner-city flats and providing incentive for tenants who hold contracts not to relinquish them.

According to Hans Lind, a real estate professor with the Royal Institute of Technology (KTH), the key problem Sweden faces is that owners of tenant-owner apartments (bostadsrätter) can’t sublet their properties at market-based rents, a problem to which Reinfeldt also drew attention.

“If a rental market means having floating rents, then market-based rents are a pre-condition. If you look elsewhere in the world, there is a market for sublets in the downtown areas of major cities,” Lind explained to news agency TT.

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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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