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PROPERTY

Sweden experiencing ‘worst property construction crisis since 1990s’

The rate at which new properties in Sweden are being built continues to fall, new figures from Statistics Sweden show.

Published: 25 May 2023 12:22 CEST
Sweden experiencing 'worst property construction crisis since 1990s'
Homes being built in Hagastaden, Stockholm. Photo: Anders Wiklund/TT

The new figures show that the level of new builds in Sweden is at the lowest level in ten years, dropping 50 percent in the first quarter of 2023 compared to the same period a year previously.

Anna Broman, an expert in property policy at the Swedish Construction Federation, Byggföretagen, has called for a crisis commission.

“We are in the worst crisis since the 1990s. Property building rates are going to drop by more than half in the space of two years,” she said.

In 2021, around 70,000 homes were built, with that number expected to drop to 25,000 this year, according to the Swedish Construction Federation.

The Swedish National Board of Housing, Building and Planning, known in Swedish as Boverket, is expecting around 30,000 properties to be built this year. At the same time, 180 of Sweden’s 290 municipalities said in this year’s property market questionnaire that their property markets as a whole are running at a loss.

“It’s very clear that we’re seeing the brakes being slammed on, both regarding the rate at which properties are being built and the sale of new builds,” Boverket property analyst Hans-Åke Palmgren told Swedish news agency TT.

“It could take a worryingly long time before we see the market recovering. The situation affects young people and the level we’re at is much lower than what’s needed.”

“We lost a whole generation of construction workers [in the 90s],” said Anna Broman from Byggföretagen. “We need to learn our lesson so that doesn’t happen again. If the downturn is allowed to go too far, it will take a very long time to get the labour back into the industry.”

This could also affect the green transition, Broman argued.

“Those most affected by this are young adults and other groups who need to get onto the property market. But this also affects all of our new industrialisation – the green transition – in Norrland. How can we get labour onto these sites if there aren’t any homes?”

Sweden’s property minister, Andreas Carlson, claimed that the worsening conditions to a great extent are related to outside factors.

“It’s due in large part to external factors related to rising interest rates, inflation and increased energy prices,” he told TT.

“Then we have structural issues too. These issues have been deprioritised for a long time.”

In the short term, he said, the government can help by lessening the impacts of inflation and the economic effects on Swedish households.

“In the longer term, we want to increase access to ground suitable for building, increase the motivation to build and increase the possibilities of home ownership. There is in general a wide level of agreement on what the issues are, and we have support in parliament for carrying out these measures,” he said.

There have been many proposals for encouraging the building of new property. Removing the amortisation requirement, investment support, free market rents and subsidised housing are some examples mentioned in debate.

Carlson does not believe the latter suggestion would be particularly effective.

“We believe expensive housing subsidies are ineffective and not the way forward. What we need is structural reform.”

Member comments

  1. This seems to be the case everywhere in Europe and not only in Sweden.
    The building industry here in France also sounded the alarm to the government.
    Real estate prices plummeting, new building reaching sky high prices….we live in cloud cuckoo land all over the continent.

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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
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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