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APARTMENT

One in five flats sold before public viewings

Sweden's booming housing market has led to a trend in city apartments being sold to hand-picked customers rather than following open house public viewings, which are the norm in the Nordic nation.

Published: 13 April 2015 12:47 CEST
One in five flats sold before public viewings
One in five apartments in Sweden are sold without public viewings. Photo: Aline Lessner/imagebank.sweden.se
Rising prices and high demand for apartments in Sweden's three largest cities is leading to growing numbers of properties being sold without public viewings, according to a survey carried out by SBAB, the nation's state-owned mortgage broker.
 
Public and private brokers in Gothenburg, Malmö and Stockholm were asked to estimate how common it was for flats to get bought without going to auction.
 
The results suggest that one in five apartments across those areas are now sold without a public bidding process, rising to almost one in four in the Swedish capital.
 
Tor Borg, chief economist at SBAB told The Local: "Things are definitely changing. Of course some properties have always sold before auction but those were usually grander places with a specific kind of customer. Now it is more like 20 percent of properties. I don't remember the figure ever being that high before".
 
"This tells us that the market is really, really hot right now as there is a lot of demand and not very much supply," he added.
 
The study suggests that the trend is less common among those buying and selling whole houses but that more than one in ten of these kinds of properties across the major cities are exchanging hands without an auction.
 
In Sweden, homes are typically bought and sold after potential customers attend an open house viewing and then submit their bids for the property via text. Bidders usually need to be able to offer a deposit of at least 15 percent.
 
The shift brings Sweden closer to the approach favoured in other European countries such as the UK, where customers in property hotspots such as London or Brighton are often granted private viewings and can have their offers accepted by sellers before properties are even measured or photographed by estate agents.
 
 
SBAB says that while homeowners and buyers may benefit from a simple and fast transaction, sellers may end up making less money than they could have got at auction, while buyers could risk paying over the odds for a property that may not have reached the same price via public bidding.
 
Borg told The Local that his main advice for customers is to "keep your head calm and don't get engaged in offering a price that you cannot afford, however you are buying".
 
Many customers are attempting to buy and sell properties quickly in Sweden ahead of new mortgage rules which come into force in August.
 
Unlike in many countries, Swedish homeowners commonly never repay the full amount of money they borrow from banks or building societies, with many only paying off the interest earned.
 
Later this year, all buyers will be asked to repay back two percent of the total they have borrowed, plus interest, in a move designed to help stabilize the country's economy by reducing household debt.
 
The new strategy was put forward by Sweden's financial watchdog Finansinspektionen (FI) which sets the rules and regulations followed by mortgage brokers in Sweden.
 
On average, Swedes with mortgages currently hold a debt 3.7 times higher than their annual income. 
 
A study by Sweden's central bank in 2014 suggested that most Swedes with mortgages would die before repaying their debts.
 
But besides mortgages, which account for 95 percent of their debt, Swedes are not big borrowers.
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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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