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Is Sweden’s housing shortage on the way to getting solved?

So many flats and houses are now being built in Sweden that the country's housing shortage could be over within just six years, a new prognosis from state mortgage provider SBAB has found.

Published: 21 September 2021 11:12 CEST

Is Sweden's housing shortage on the way to getting solved?

More small detached houses are required, according to SBAB. Photo: Frerik Sandström/TT

According to the lender, Sweden is estimated to now be building 50,000 new homes at present and in the coming years, comfortable above the 30,000 that are estimated to be necessary to keep up with population growth, meaning the housing shortage of about 90,000 homes should have disappeared by 2027.

“Home-building has continued apace during the pandemic and not dipped at all as we had feared in the spring of 2020, although it is expected to decline somewhat in the coming years. At the same time, Statistics Sweden has recently lowered its estimates of population growth significantly,” the lender’s chief economist, Robert Boije, said in a press release. “If these prognoses turn out to be right, we expect the housing shortage to be gone by 2027.”

READ ALSO: Is the rising trend in Swedish property prices beginning to reverse?

With Sweden’s economy now going at full pelt and inflation starting to pick up, Boije said that he also expected Sweden’s central bank, the Riksbanken, to increase interest rates earlier than previously predicted, which could also weigh down on prices, which have stabilised since the summer.

Even if the housing shortage comes to an end, however, Boije said that this would not mean the end of structural shortages in the housing sector.

According to the HMI index put together by SBAB and the online property market Booli, house-builders are still failing to construct sufficient small suburban detached and terraced houses, particularly in the suburbs around Stockholm.

“It’s high time we reassessed our priorities when it comes to home-building. It’s long been apparent that we need to build more small houses,” he said. “We need to make things easier for first-time buyers as well as for the elderly, who want to leave a big detached house with a bit plot of land, for a small house on a smaller plot.”

He said that there was a need for new, modern garden suburbs or garden cities to be built.

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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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