SHARE
COPY LINK
For members

PROPERTY

Sweden cracks down on black market rentals: What the new laws mean for you

A number of changes to Sweden's housing law will come into effect from October. Here's what the new rules mean for anyone subletting or renting out an apartment.

Sweden cracks down on black market rentals: What the new laws mean for you
The laws should make it harder for unscrupulous landlords to rip off tenants. Photo: Niclas Vestefjell/imagebank.sweden.se

Sweden's parliament has voted through a range of regulations which will tighten up the housing market.

There are two major parts to the legislation: firstly, it will become illegal to buy or sell a rental contract, and secondly, landlords who overcharge second-hand tenants could lose their own first-hand rental contract.

In its summary of the new changes, a parliamentary statement said: “The proposal is made up of measures against trading of rental contracts and other abuse of the right to rent, with the aim of getting a better functioning rental market. The measures should lead to a better turnover of first-hand contracts, better rental conditions and healthier living environments.” 

Apartments in Sweden are rented out through a queue system, which means people join a housing queue and are offered rent-controlled apartments based on their position in that queue. Due to population growth and a housing shortage in the major cities, these queues can be long, with many residents needing to wait ten years or even longer to be able to rent in Stockholm, Gothenburg or Malmö.

HOUSING ESSENTIALS:


Photo: Tomas Oneborg/SvD/TT

People with one of these elusive first-hand contracts are able to sublet these apartments in special circumstances, usually for no more than one to two years – for example, if they have temporary employment elsewhere. But private individuals are not supposed to make a profit from subletting, and the new law changes aim to crack down on black market rentals, where some unscrupulous landlords charge second-hand tenants far more than the market value of the apartment.

Statistics from the National Board of Housing (Boverket) shared with The Local earlier this year showed that the average second-hand rental is around 65 percent more expensive than an equivalent first-hand contract.

“You can find people from all demographics struggling with housing, but it's mostly the young, newly arrived people and foreign workers. We know there's a substantial black market, but it's very hard to map this,” Assar Lindén, a lawyer at Boverket, told The Local at the time.

Under the new regulations, the punishment for selling or helping someone to sell a first-hand contract has been increased. The laws also make it a crime to buy a first-hand rental contract.

People found guilty of these offences face losing the rental contract immediately, and the typical punishment will be fines or a jail sentence of up to two years, although this could be increased to four years in serious cases.

READ ALSO:


Photo: Björn Lindgren/TT

Landlords who charge too high a rent to second-hand tenants will also risk losing their own rental contract, even if their own landlord approved the price. In principle this means second-hand tenants should pay the same rent as first-hand tenants. Landlords can still charge extra for furniture, equipment and other items the tenant has access to, but the amount added on for this must be considered 'reasonable'.

Previously, landlords who overcharged tenants could be forced to repay the difference between the amount charged and the amount considered 'reasonable', but now the stakes have been raised as those who fall foul of the law could actually lose the apartment altogether.

The measures were based on a four-party agreement between the ruling Social Democrats and Green Party as well as the Centre and Liberal parties. The 73-point deal included proposals linked to immigration, labour law, and housing, including cracking down on black market rentals and abolishing rent controls on newly built properties.

IN DEPTH: What does Sweden's government deal mean for internationals?

These rule changes do not affect landlords who own their apartment, known as having bostadsrätt (literally 'right to the property'), rather than hyresrätt (literally 'right to rent the property', or a first-hand rental contract). 

Landlords in this category can charge rent at the cost of the property's current market value (even if they have fully paid off the mortgage) and they may also add on four percent of the home's market value to cover the 'cost of capital'.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
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.

SHOW COMMENTS