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HOUSING

Buying vs renting in Sweden: Which is best?

Whether you're planning for your move to Sweden to be permanent or not, accommodation is one of the key things to arrange, and choosing between buying or renting is a big part of that.

Buying vs renting in Sweden: Which is best?
Rent or buy? These are the factors to weigh up. Photo: Fredrik Sandberg / TT

Before weighing up the pros and cons of the two approaches, the first thing to know is that there are two main types of rental properties in Sweden.

With a ‘first-hand’ rental contract, you rent directly from the landlord. These properties are often subject to rent controls and you can stay long term, but they are often allocated via a queue system. A national housing shortage means you might be waiting for many years or even decades before you’re eligible for somewhere first-hand.

Second-hand renting is the Swedish term for subletting, meaning you rent either from someone with a first-hand contract themselves (known as hyresrätt) or from someone who has bought their property (called bostadsrätt if it’s an apartment).

These are very different options, with the most notable difference being that you can usually stay in first-hand rentals for as long as you want, whereas there are caps on the maximum time you can sublet.

The paperwork

There’s no rule in Sweden that prevents non-citizens or non-permanent residents from buying property, but it is significantly harder to get a mortgage as a new arrival.

You’ll need a Swedish social security number or personnummer and proof of stable finances in Sweden, and you’ll be subject to a credit check. This means that you’ll usually need a history of employment and paying tax in Sweden, although some banks are more lenient than others when it comes to, for example, self-employed people or recent arrivals.

Some housing queues will also require a personnummer, whereas for second-hand rentals the main requirement is to prove to the landlord that you’d be a responsible tenant, for example by showing proof of stable finances or providing references.


Whether renting or buying, in popular areas there’s often competition. Photo: Fredrik Persson/Scanpix/TT

Location, location, location

Sweden is a vast country and the best option for you will depend partly on where you’re searching. As mentioned above, Sweden’s larger cities tend to have fierce competition for rentals — but these are also the areas where property costs the most to buy. Some rural areas, meanwhile, may have limited rental opportunities but much lower property prices.

When deciding which option is right for you, your starting point should be using sites like Hemnet and Booli to find out the price and availability of housing to buy in your area, and compare this with rentals, which you’ll either find through the municipality or state-regulated housing queue, or through websites like Blocket, Samtrygg, and Qasa for sublets.

Check out The Local’s extensive listings of apartments and houses for rent in Sweden


Photo: Per Pixel Petersson/imagebank.sweden.se

House or apartment?

Whether you want to live in a house or apartment, there are usually options for both renting or buying, but of course what’s on offer varies by location.

Potential buyers also need to know that buying a detached house is quite different from buying an apartment in Sweden.

If you buy an apartment, you’ll almost always be part of a bostadsrättsförening (housing association), which means you pay a fee to this association in return for them managing the building. This also applies to some houses, usually terraced houses. 

Buying a house that isn’t part of an association means you’ll pay all your bills (electricity, water, heating and so on) directly to the providers and that you are entirely responsible for the building. That means arranging a survey before you buy and keeping on top of maintenance once you move in.

Photo: Fredrik Sandberg/TT

Cost

To buy a property in Sweden, you’ll usually need at least a 15 percent deposit. 

To see how much you should expect to pay on an owned property, use a few mortgage calculators (again, Hemnet and Booli can show you typical prices for your preferred size and location) and add on estimates for bills and fees.

Bills and fees vary based on property size and amenity usage, and for owners of a bostadsrätt your monthly fee varies depending on the assoication’s financial situation and exactly what’s included. 

These vary based on the size of property and your usage, and while owners of a detached house will pay all their bills individually, owners of a bostadsrätt will pay a fixed monthly fee (avgift) to the building association which covers things like water and heating, but also costs of building maintenance such as plumbing.

The actual process of buying is surprisingly cheap, at least for a bostadsrätt; you don’t usually get a survey and there are no legal fees. The extra fees for buying a bostadsrätt are a transfer fee (överlåtelseavgift, paid by either the buyer or seller depending on the association), and, if you’re taking out a mortgage, a one-time registration fee (pantavgift), which are usually less than 2,000 kronor in total. When buying a detached house, there are additional fees such as a survey.

When it comes to renting, first-hand contracts are subject to rent controls which makes them an attractive option if you can get your hands on one.

Officially, second-hand rentals shouldn’t be much pricier than the first-hand equivalents, but there’s often an added fee of 10-15 percent for a furnished property. If you are sub-letting from someone who owns the apartment, they have the right to set the price based on the property’s current market value, so these can be much pricier than sub-letting from someone with a first-hand contract even if the landlord is following the rules. And you’ll need to watch out for scams; there are cases of unscrupulous landlords charging much more than is reasonable – though Sweden has cracked down on this.

Is it an investment?

Comparing your monthly costs is one thing, but what about the chance to make money? If you’re buying a home, each month part of your mortgage goes towards paying off the loan, so that you own a greater proportion each month.

Buying property has historically been a good investment in Sweden, but this varies depending on the type and location of the property, and there’s certainly no guarantee you’d sell for a profit. That’s something foreign residents should consider especially carefully; if you had a job opportunity or family emergency that meant you needed to leave Sweden, you may not have the chance to wait out a bad spell in the markets.

Even if you do make a profit, sellers are required to pay Swedish capital gains tax on 22 percent of any property profits, although you can defer this indefinitely if you use the money to buy a new home either in Sweden or within the EU/EEA. 

Compared to many countries, the Swedish system is not designed for property owners to make money. In many cases, however, that’s exactly what happens, but it’s not a safe investment.


Photo: Hasse Holmberg/SCANPIX

Making a house a home

Keen to put your own stamp on a place? As a renter, you’ll be limited in exactly what you can do to the property. Even if you own your apartment, there will be some restrictions and you may need to apply for permission from the bostadsrättsförening for big projects, such as installing a washing machine or adding or removing a wall. 

One advantage of second-hand rentals is that you can often choose a furnished option, especially for shorter terms. This makes them convenient for people not in Sweden for the long haul, but remember that your landlord is likely charging up to 15 percent extra for the apartment being furnished, so weigh up whether it’s worth buying your own furniture.

Repairs and renovations

The flipside of having the right to make adjustments to your owned property is that you’re also responsible for fixing any issues that crop up. As a tenant, if a kitchen appliance breaks or you have a leak, it’s your landlord’s job to fix this, but as a home-owner these are things you should factor into your budget.

The extent of your responsibilities also depends on whether you buy a bostadsrätt apartment (or a house that’s part of a bostadsrättsförening) or buy your own house. The monthly fee paid to a bostadsrättsförening goes in part to building maintenance, and the rule of thumb is that you’re only resonsible for fixing things within your own four walls, while the association will take care of things like roofs, windows, doors, plumbing and electricity. 

In other words, anyone planning to buy should remember to budget extra for repairs and maintenance, and you should set aside a bit more if you own the entire building.


Responsibility for repairs might be a pro or a con. Photo: Vilhelm Stokstad/TT

How long will you stay?

You may not know the answer to this when you first arrive in Sweden, but this is one of the most important factors.

If you’re in the country on a fixed-term job or study programme, it may be a big gamble to invest in property, given the costs associated with furnishing, maintaining, and eventually selling your home. 

On the other hand, if you’re based in a city where queues for first-hand rentals are long, it’s likely you’ll need to move fairly often as a second-hand renter due to caps on how long people can sublet a property for. This could mean you’ll face the time, costs and stresses associated with moving, not to mention the difficulty of feeling truly settled in Sweden. 

Ultimately, there’s no right answer, but you can make an informed decision on whether to rent and buy based on your budget and finances, what’s available in your area, and your ideas about your future.

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RENTING

Five tricks Swedes use to avoid the long wait for rental apartments

The official waiting time for apartments in Stockholm, Gothenburg, and Malmö varies between three and eleven years. But Swedes have their own tricks for jumping the queue.

Five tricks Swedes use to avoid the long wait for rental apartments

There’s no requirement for landlords or renters to use the queuing systems run by the municipalities in the big cities, but most of the big ones do, the intention being to reduce corruption and increase fairness in the rental market. 

The Stockholm Housing Agency, or bostadsförmedlingen, has a queue between seven and eleven years long. Boplats Gothenburg has an average wait of 6.4 years, and Boplats Syd in Malmö has an average waiting time of nearly three years.

According to Kristina Wahlgren, a journalist at Hem & Hyra, Sweden’s leading rental property magazine, the system puts foreigners and recent arrivals to Sweden at a significant disadvantage. 

“It’s extremely difficult if you are from another country. You don’t have any contacts, and it’s quite difficult to understand if you haven’t grown up in this culture,” she says of the system. “There are some quite subtle aspects, and there’s vänskapskorruption [giving special advantage to friends]. ” 

Listen to a discussion about Swedish queue systems on Sweden in Focus, The Local’s podcast. 

Click HERE to listen to Sweden in Focus on Apple Podcasts, Spotify or Google Podcasts.

Obviously, the biggest advantage faced by locals in Sweden is that they normally joined the queue the moment they turned 17, so by the time they’re looking for an apartment as a young adult, they’re already near the front. 

But even for new arrivals in Sweden, it’s possible to wait a much shorter time if you know the tricks, says Wahlgren, who has been nominated for Sweden’s Guldspaden journalism prize for an investigation into how Malmö finds housing for homeless people. 

Kristina Wahlgren, a reporter for the Hem & Hyra newspaper. Photo: Hem & Hyra

1.  Apply for more expensive new-build apartments to start off with 

If you’ve got a good enough salary, and are willing to pay high rent for your first few years in Sweden, this can make it easier to get an apartment, as there is less competition for more expensive, new-build apartments, Wahlgren says.

“If you’re willing to pay high rent, then you can get an apartment within a couple of months [in Malmö]. If you want a cheaper apartment, it can take years. So it’s quite a big difference.”

2. Rather than wait for your perfect apartment, take what’s available and then swap 

The rules recently got a little stricter, but it’s still relatively easy to swap between apartments once you have a first-hand contract. There’s even a website, Lägenhetsbyte, which acts as an interface. 

This means, if you use the method above, and decide to rent a more expensive new-build apartment with a shorter queue, you can then downgrade to a cheaper apartment with someone who is after somewhere newer and swankier.

Rental queues are also shorter in less desirable areas of Sweden’s cities. For example, the waiting list in Norra Hissingen in Gothenburg is only five years, half what it is in Majorna. It can be quicker to make do with living in a relatively dreary area, and then swap with somewhere better, than to insist from the start on an apartment in your dream location. 

“If you can’t wait for the right department, just take the one that you get, then you can keep on looking and when you do have a lease, you can change the lease with someone else,” Wahlgren says. 

To change apartment, you need to have a so-called “acceptable reason”, such as needing a bigger or smaller apartment. With any luck, your landlord should accept the swap. If they refuse you can challenge their decision at your local hyresnämnden or “rental tribunal”.  

3. Use the tricks for contacting landlords directly  

Landlords in Sweden are not required to use the municipal rental queues to find their tenants, and if a suitable tenant presents themselves just as an apartment becomes free, they may prefer to take someone they know.

This is particularly the case with the smaller, private landlords. It’s possible to find lists of private landlords online, such as here. But Wahlgren recommends putting in a bit of legwork.

“One way to find who owns an apartment block, is to just go around and check on the buildings for the names of the landlords, and look in the stairwells for the number of the landlord’s agent.” 

Once you have the number, you have to ring both regularly, at least once a month, and also strategically. 

“It’s important to call at the right time,” Wahlgren says. “Because normally apartment rentals end at the turn of the month, so that’s when you’re going to call. You don’t call on the 15th, you call on the 31st or the 1st of the month.”

4. Exploit all the friends and contacts that you have 

When someone hands in their notice on a rental agreement, they may try to shorten their notice by finding a replacement for the landlord, or they might find a replacement simply as a favour. This is why it’s important to ask your friends and work colleagues if they know of any apartments becoming free. 

“If they use the municipal queue, they have to follow the rules. This way, they can choose their own tenants,” Wahlgren says of the appeal of this to landlords. “If you’re a nice person, you might be able to just talk your way into an apartment.” 

5. Be a student 

“If you’re a student, there are special housing companies in the university cities, different foundations that rent out apartments,” Wahlgren says. But then you have to study.” 

Illegal ways of getting an apartment

All of these ways of getting a rental apartment are legal, but there are some ways of getting a rental apartment more quickly which are not.

1. Paying a fee

You may also find landlords or intermediaries on websites such as Blocket, who ask for a one-off payment to jump a rental queue, or get a rental apartment. This is illegal. “You can lose your money, you can lose the apartment, and in the worst case, you can go to prison,” warns Wahlgren.

2. Getting an illegal subtenancy 

It’s perfectly legal to rent out your rental apartment to someone else for a period, if you have a valid reason for doing so and your landlord agrees. But such is the pressure to get housing that a market has sprung up in illegal subletting. Before signing a contract for a sublet, make sure that the landlord who owns the property has agreed to it. 

3. Bribing someone running the queue 

There have been cases of people working for municipalities logging into the housing queue and altering it, either as a favour to their friends, or for money. This is fairly rare, and in the unlikely event that someone offers to do this for you, it’s best to decline. 

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