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PROPERTY

Housing crisis forces record number of young Swedes to live at home: report

A record number of young Swedes continue to live at home with their parents out of necessity despite wanting to live on their own, according to a new report from the Swedish Union of Tenants (Hyresgästföreningen).

Housing crisis forces record number of young Swedes to live at home: report
Finding an apartment is not an easy task for young people in Sweden. Photo: Tomas Oneborg/SvD/TT

213,000 young people in Sweden aged between 20 and 27 are currently living with their parents – almost a quarter (24 percent) of the age group. That's the highest number since Hyresgästföreningen started researching the figures in 1997, when the proportion was 15 percent.

“Having a home is a prerequisite for a young adult to develop their dreams, their self-esteem and their lives. And that's crucial for the well-being of a society as a whole,” Hyresgästöreningen senior analyst Love Börjeson said in a statement.

“It is not fair that 213,000 young people who want to have their own home lack one. Far more must be built,” he added.

Just under 57 percent of Sweden's young people have their own home through either owning the property, a 'first-hand' rental contract from the owner of the building, or a bostadsrätt (the right to an apartment in a cooperative owned building), according to the report.

That is the lowest measured proportion ever, with a major contributing factor being the proportion of young adults with their own first-hand rental contract decreasing. At the same time, the proportion living at home with their guardians or through insecure forms of rental has increased.

READ ALSO: Here's what you can get from Sweden's property market for one million

Around a quarter of the 200,000 young people who have left their parental home meanwhile have a 'second-hand' (sublet) rental contract or are a lodger in someone else's home.

And 80 percent of the young people who still live at home with their parents said they want to move out within the next year.

“The study shows that those who still live at home in general have a significantly poorer economic situation and greater financial vulnerability than those who have moved. For example, unemployment is higher among them than people who have their own homes,” Börjeson noted.

As a solution the union proposes that Sweden's municipalities should create a housing guarantee for young people up to the age of 25, giving them priority when first hand rental contracts become available – a move that has already been trialled in some municipalities like Sundbyberg and Helsingborg.

Sweden's housing crisis means it is often a struggle to find stable rental contracts, with nine out of ten Swedes now living in a municipality facing housing shortages.

As of January 2017, the total number of people in queue for a rental contract from Stockholm’s Housing Agency (Bostadsförmedlingen) alone was 556,000 people, meaning it would take almost 50 years for all of those on the list to earn a standard long-term rental contract.

READ ALSO: Inside Sweden's housing crisis

For members

MONEY

How you can lower the monthly cost of your Swedish mortgage

It’s no secret that mortgages in Sweden have become more expensive over the last year or so, as interest rates have risen following high inflation. But did you know there’s a way you can lower your monthly mortgage cost?

How you can lower the monthly cost of your Swedish mortgage

Essentially, when you take out a loan in Sweden, the government gives you a discount on the interest you pay, in the form of a tax rebate.

This doesn’t include interest paid on all types of loans – for example, student loans are not included – but it does include your mortgage.

In order to qualify for the discount, referred to as ränteavdrag (interest deduction) or skatteavdrag (tax deduction), you need to fulfil some requirements: 

  • You’ve paid income tax and at least 1,000 kronor in interest in the last taxation year
  • You have a capital deficit (meaning that your interest costs must be greater than any capital income you’ve earned through interest or dividends)
  • You are either partly or wholly responsible for the loan or mortgage in question

If there are two of you who are both named on the mortgage who fulfil these requirements, you’ll each receive 50 percent of the total tax rebate.

The interest deduction is automatically subtracted from your yearly tax and listed in your yearly declaration, if you fulfil the requirements, meaning you’re likely to get it back as a lump sum when tax season rolls around in April.

How much do I get?

The actual sum you get back varies depending on how much tax and interest you’ve paid during the year, but there are some general calculations which can give you a guideline of what you might get.

You’ll get 30 percent of your interest costs back on the first 100,000 kronor you pay in interest over a year, and 21 percent on anything over 100,000 kronor. 

If there are two of you, you each have your own individual tax deduction, even if you’re paying the same loan, so as a pair you’ll get back 30 percent on the first 200,000 kronor, as well as 21 percent on anything over this figure.

To figure out how much you’ll get, you need to first find out how much interest you’ve paid during the year your declaration covers and subtract this figure from your capital income earned through interest or dividends.

If your figure is negative, that means you can subtract this figure from your tax paid during the year. Bear in mind that if you owe tax, then your interest deduction amount will be used to pay it back first, lowering the total amount you receive.

You can also change the proportion of the deduction applied to each partner if you share a mortgage, dividing it 60/40 or 70/30, for example, if you don’t share the mortgage 50/50. You can do this through your bank or by manually changing the figures in your tax declaration.

I don’t understand. How does this make my monthly mortgage payments cheaper?

Here’s where something called skattejämkning comes in. This literally translates as “tax equalisation”, and it’s a way you can spread your tax rebate for interest costs out over a year, lowering your mortgage costs each month rather than of getting a lump sum in the form of a tax rebate during tax declaration season.

In order to equalise your tax, you’ll need to contact the Tax Agency directly, filling out a form with the catchy title of SKV 4302 – Jämkning (ändring av preliminär A-skatt) or using their Jämkning online service.

To do this, you’ll need to have in-depth figures on things like your salary, pension payments, sick pay and any other income like unemployment benefit or maternity or paternity payments, as well as capital income and any business income for the tax year you’re applying for, as well as your expected income for the rest of the year.

If your application is accepted, the Tax Agency will tell your employer to subtract less tax from your payslip each month, effectively meaning that you get your tax rebate for interest costs back in your monthly pay instead of getting it paid out all at once.

Bear in mind that if you do go down this route it’s important that your calculations are correct. If you accidentally overestimate your interest payments or underestimate your tax owed, you could end up being hit with a hefty tax bill once your declaration comes through.

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