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Stockholm rent controls favour the wealthy: report

Stockholm's rent controls benefit wealthy residents in the city centre and do nothing to fight economic segregation with those living in the suburbs, according to a new report from the Swedish Property Federation (Fastighetsägarna Stockholm).

Published: 23 August 2013 10:12 CEST

Stockholm rent controls favour the wealthy: report

“Rent control is a shield for well-established insiders who already have a home. Not for those households that it was meant to shield,” Christer Jansson, the CEO of the federation, wrote in an opinion article published in the Svenska Dagbladet (SvD) newspaper on Friday.

SEE ALSO: Find the newest home listings in The Local’s Property Section

According to Jansson, rent control works as a protection for those already living at sought-after addresses and that residents who have first-hand rental contracts in desirable neighbourhoods near the city centre have higher incomes.

“One of the strongest arguments made by those protecting the current rent control system is that it works against economic segregation and makes it possible for the economically weak households to live in attractive areas in the centre of the city,” he said in a statement.

“Our report shows that this is not the case.”

The report measured the median income around the city by suburb, as well as the percentage of the population in each area receiving some kind of public benefits.

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

In Norrmalm, central Stockholm, the annual average disposable income per family was found to be 67 percent higher that that in Rinkeby/Kista in the northern reaches of the city. Norrmalm has just 1 percent of its residents receiving support, compared to 18 percent in Rinkeby/Kista.

Income was found to be 25 percent higher on the island of Södermalm than in Farsta, with just 3 percent of Södermalm residents reliant on support compared to 8 percent.

Jansson argued that the rental market in Stockholm suffers from a range of problems including low production levels for new homes, housing queues that are decades long, and a demoralizing black market.

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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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